Profit fade: tracing where a job's margin went, month by month
A townhouse job began with a healthy forecast surplus. Ten months later, the latest report shows less than half that figure. Each monthly report looked explainable on its own, but nobody has put the movements together to see the pattern.
Plot the job's forecast result month by month using one consistent definition, then assign each movement to the evidence behind it. Distinguish new exposure from a correction to an earlier assumption. Investigate the causes on your own job rather than assuming a standard list explains every loss. The sequence matters: a cost discovered in month nine may belong to work performed much earlier.
Build a bridge from the estimate to today
- Fix the comparison basis. Retain the bid result, approved changes and each dated forecast. State whether your chart shows project dollars or a percentage and which costs it includes. A different denominator or cost scope should not look like unexplained deterioration.
- Reconcile every movement. Connect the change in forecast revenue and cost to identifiable events or assumptions. Separate approved revenue from proposed recovery. Keep an adjustment for missing inputs visible instead of assigning it to whichever code has room.
- Name the evidence and timing. Identify an award above allowance, repeated work, changed labour assumptions or an extended site period where the records support it. Show when the cause occurred and when it entered the forecast; these dates answer different management questions.
- Challenge the earlier forecast. Compare the assumed remaining quantities and rates with information available at that time. If an optimistic completion estimate was corrected late, record that reporting issue alongside the operational cause. Do not describe a correction as a sudden new site event.
- Select actions that fit the cause. Choose the main actionable exposures, such as an unresolved scope gap or remaining work using an unrealistic rate. Assign a current-job response and a separate lesson for estimating. Neither should promise to recover a cost already spent.
- Carry the bridge forward. Reconcile the next monthly point to the same chart and review whether the named action changed the remaining-work assumption. Preserve earlier issues; replacing the old points with today's estimate removes the history you are trying to understand.
Common mistakes
- Comparing percentage results with changing revenue and no reconciliation.
- Blaming the latest month for costs only discovered then.
- Calling a future improvement an offset before its remaining-work effect is supported.
Action list
Trace one drop this week
- Retain its before-and-after forecasts.
- Name the cost and revenue basis.
- Identify the supporting event or assumption.
- Separate occurrence from discovery.
- Assign a remaining-work response and an estimating lesson.
Check your understanding
A late correction reveals that earlier forecasts omitted remaining work. Is the entire reduction a cost created this month?
