On a housing project, payments received from the client and money spent on subcontractors, materials and the site sit in different teams' files. So profitability is usually calculated as the project closes, when the chance to correct course has long gone.
What makes up profitability
- Income: Client payments and price escalation.
- Subcontractor cost: Approved subcontractor payments, net of deductions and delay penalties.
- Materials: Concrete, rebar and other purchases, with delivery notes and invoices.
- Site and overhead: Staff, machinery, site running costs and head-office share.
Looking by block and work item
A job that looks profitable overall may be losing money on one block or one work item. When income and cost are kept by the same block and work item, a variance shows up together with where it is.
Forecast: what will happen by completion?
- Budget: The cost estimate from the tender stage.
- Actual: What has been approved and spent so far.
- Forecast to go: What is expected by completion from the work left and the current unit cost.
Put side by side, the variance updates every payment period and leaves time to act.
Hidden losses in concrete and rebar
A few percent between design and actual pour quantities adds up to large amounts on big projects. Comparing per pour is the most effective way to catch waste and overuse early.
Nitrogen progress payment management brings client and subcontractor payments, purchases and costs into one structure, and profitability updates by block and work item every period.
