The company profit and loss shows whether the company made money this year. Profit and loss per project shows which projects make money and which eat into it. Without it, a losing project hides behind others, and the same mistake comes back in the next tender.
How a project profit and loss is laid out
| Line | Contents |
|---|---|
| Contract revenue | Contract value including approved variations; while the project runs, revenue recognised by progress |
| Direct costs | Material, labour, subcontract and equipment, per section of work |
| Site overhead | Site costs: site manager, site office, power, water, security |
| Penalties and other costs | Late penalties, repairs in the maintenance period |
| Project gross profit | Revenue minus all the costs above |
| Share of head office overhead (optional) | If you want net profit per project |
Example: a Rp1 billion project after completion
| Section | RAP | Actual | Difference |
|---|---|---|---|
| Preliminaries | Rp18 m | Rp19 m | minus Rp1 m |
| Foundations | Rp100 m | Rp104 m | minus Rp4 m |
| Concrete structure | Rp205 m | Rp212 m | minus Rp7 m |
| Walls | Rp125 m | Rp123 m | Rp2 m |
| Roof | Rp105 m | Rp110 m | minus Rp5 m |
| Floors and finishing | Rp180 m | Rp186 m | minus Rp6 m |
| Electrical and plumbing | Rp77 m | Rp79 m | minus Rp2 m |
| Variations | Rp6 m | Rp6 m | Rp0 |
| Site overhead | Rp40 m | Rp47 m | minus Rp7 m |
| Total cost | Rp856 m | Rp886 m | minus Rp30 m |
| Plan | Actual | |
|---|---|---|
| Revenue (Rp1,000 m contract + Rp7.65 m variations) | Rp1,007.65 m | Rp1,007.65 m |
| Total cost | Rp856 m | Rp886 m |
| Project gross profit | Rp151.65 m (15.0%) | Rp121.65 m (12.1%) |
Profit fell Rp30 m short of plan. The biggest causes were site overhead (the project ran longer than planned, so site costs grew), the concrete structure and finishing. That is the lesson for the next tender: the duration estimate and overhead per month.
Steps
- Make sure every cost carries a project code and a work item code when it is recorded.
- Include costs incurred but not yet billed, and leave out materials still in the store.
- Use revenue recognised by progress while the project runs, and the final contract value once it is complete.
- Compare section by section with the RAP, including variations.
- Write down the cause of every large difference, and keep it for the next tender.
- Prepare this report every month while the project runs, not only at the end, so there is still time to act.
Common mistakes
- Revenue taken from billing instead of revenue recognised, so profit follows the billing schedule.
- Head office costs and several projects’ costs mixed with no project code.
- Retention treated as not yet revenue, though it is part of the contract value earned; only the cash is pending.
- Penalties and maintenance-period repair costs left out.
The full guide is in How to create a construction finance report in Google Sheets. It has a free template (Excel or Google Sheets) and a checker that reads your own workbook.
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When your workbook is complete, apply for a pilot: we help connect your project data to the Finance, Cost and Scheduler agents and review the first reports with you.
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Common questions
How is project profit and loss different from company profit and loss?
Project profit and loss looks at one project: its own revenue and costs. Company profit and loss adds up all projects plus head office costs.
When is project profit and loss prepared?
Every month while the project runs, and once more when it is closed.
Is retention part of project revenue?
Yes, retention is part of the contract value earned. Only the cash is delayed.
Why compare with the RAP and not the RAB?
The RAB is the selling price. The RAP is the cost plan, so actual cost against RAP shows where the margin went.