There is one question that tells me more about a contractor or service company than any financial statement:
"After a job is finished, do you compare what it cost with what you bid?"
Most owners say no. There is no time. The next job has already started, the crew has moved on, and the invoice is out the door.
That is understandable. It is also why the same kind of job keeps losing money year after year, and nobody finds out until the accountant calls in March.
Why the losers stay hidden
Your profit and loss statement shows the total for the month. Twenty jobs go in, one number comes out. If fifteen jobs made good money and five lost it, the total still looks fine. The winners are quietly paying for the losers.
You can go years without knowing that one type of work, one customer or one estimator is costing you money every time.
The 15-minute review
When a job closes, fill in four lines:
| Bid | Actual | Difference | |
|---|---|---|---|
| Labor hours | |||
| Materials | |||
| Subcontractors and other costs | |||
| Profit |
Then answer one question in a sentence: why was it different?
That is the entire system. A spreadsheet is enough to start.
What you will find
Do this for 90 days and sort the jobs from most to least profitable. A pattern almost always appears in the bottom of the list. It is usually one of these:
- A job type that always takes longer than you think. Old buildings, custom work, anything with access problems.
- A customer who changes the scope, calls you back for extras and pays late.
- An estimating habit, like forgetting travel time, setup, cleanup or the second trip for parts.
- Change orders nobody wrote down. The work was done. It was never billed.
- A crew or a process problem: waiting on materials, rework, the wrong people on the job.
Each of those has a different fix. You cannot choose the right one until you know which it is.
What to do with the answer
- If a job type always runs over, raise the price on it or add the hours to your estimate template.
- If a customer is the pattern, change their terms or their price.
- If change orders are leaking, nothing extra gets done without a signed line and a number.
- If the problem is scheduling or rework, that is an operations fix, and now you can put a dollar figure on it.
Start with the last ten
You do not have to wait 90 days. Pull your last ten finished jobs this week and run the comparison. It will take an afternoon, and I would be surprised if it did not change at least one of your prices.
If you want help reading what you find, that is what our free BOI Snapshot is for.