Project-based businesses live and die by the accuracy of their job costing. A construction firm or architecture practice without reliable project-level accounting is not just missing information. It is making bidding, staffing, and project management decisions on guesses.
Job costing means tracking every cost, labor, materials, subcontractor billing, and equipment, against the specific project that generated it, so you can compare actual costs to your original budget at any point during the project, not just after it closes out.
We maintain detailed job costing for every active project, broken out by cost category, so you can see exactly where a project stands against budget while there is still time to address overruns, adjust scope, or have a conversation with the client before the damage is done.
Work-in-progress accounting builds on that foundation. Your WIP schedule shows the relationship between costs incurred, billings to date, and earned revenue across every active project, calculated using percentage-of-completion methodology, so your financial statements reflect the true status of work in progress rather than a distorted picture based purely on cash collected or invoiced.
A project is either on budget or it is not. The only question is whether you find out while you can still do something about it, or after the final invoice is sent.
Construction contracts commonly include retainage, a percentage of each billing withheld by the client until project completion or a defined milestone, as security for the work. Retainage gets recorded incorrectly more often than almost any other line item in construction accounting, either left out of receivables entirely or lumped in with collected revenue in a way that obscures what is actually outstanding.
We track retainage separately and accurately, both what your business owes as retainage held back from subcontractors and what clients are holding back from you, so your accounts receivable and accounts payable both reflect the true amounts outstanding, not just what has changed hands so far.
Subcontractor billing is handled with the same level of detail, tracking what has been billed, what has been paid, and what retainage is being held at each tier of the project, so your job costing reflects accurate subcontractor cost data, not a simplified approximation.
Retainage held on a single large project can represent a meaningful percentage of your total receivables. Tracking it accurately is not a minor bookkeeping detail. It is essential to understanding your real cash position.
Architecture practices typically bill by project phase, schematic design, design development, construction documents, and construction administration, often through a combination of fixed fees and hourly billing depending on the phase and the client agreement. That structure requires a different accounting approach than the materials-and-labor job costing a construction firm needs, closer in some ways to professional services billing, but still tied to a defined project scope and budget.
We track revenue and cost by project and by phase, so you can see whether a project is profitable at each stage of the engagement, not just at final invoice. That means understanding how staff hours, consultant fees, and reimbursable expenses are tracking against the fee for each phase, and flagging when a phase is running over budget while there is still room to adjust scope or staffing before it affects your margin on the engagement.
For practices that also take on fixed-fee or value-based engagements alongside hourly work, we apply the appropriate revenue recognition treatment for each, consistent with how we handle mixed billing models for professional services firms generally.
A project that is profitable in schematic design and unprofitable in construction administration is not one project. It is two different financial outcomes that deserve two different conversations.
Metric | Why it matters |
Job cost variance | Shows the gap between budgeted and actual costs on each active project, the earliest warning sign of a project running over budget. |
Work-in-progress (WIP) position | Reveals whether your billings are ahead of or behind your earned revenue across active projects, a key cash flow and reporting indicator. |
Gross margin by project | Shows which projects or project types are actually generating margin, essential for smarter bidding and project selection going forward. |
Overhead allocation rate | A consistent method for spreading indirect costs across projects, so project-level profitability reflects true cost, not just direct expenses. |
Accounts receivable aging by project | Identifies which clients or projects are slow to pay, including retainage held, so collection efforts can be prioritized accordingly. |
Backlog and pipeline value | Shows committed future revenue from signed but not yet completed work, important for staffing and cash flow planning. |
Metric | Why it matters |
Job cost variance | Shows the gap between budgeted and actual costs on each active project, the earliest warning sign of a project running over budget. |
Work-in-progress (WIP) position | Reveals whether your billings are ahead of or behind your earned revenue across active projects, a key cash flow and reporting indicator. |
Gross margin by project | Shows which projects or project types are actually generating margin, essential for smarter bidding and project selection going forward. |
Overhead allocation rate | A consistent method for spreading indirect costs across projects, so project-level profitability reflects true cost, not just direct expenses. |
Accounts receivable aging by project | Identifies which clients or projects are slow to pay, including retainage held, so collection efforts can be prioritized accordingly. |
Backlog and pipeline value | Shows committed future revenue from signed but not yet completed work, important for staffing and cash flow planning. |
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