What it means
Start with a stable baseline using the accepted quote and original cost estimate, plus properly approved changes, and separate changes in scope from true overruns. If a customer ordered additional work, compare its added revenue and cost explicitly.
An estimate rewritten after the event can make a poor outcome look on target, so keep earlier versions and the reason for each revision. Gather complete costs by checking purchase orders, goods issues, time records, overtime, subcontractor applications, freight, equipment rental, waste and returns, and confirm work in progress and accruals for costs received but not yet invoiced.
A supplier credit expected for faulty materials is not cash already recovered, so show it as uncertain until validated under policy. Match cost to the correct job rather than a convenient project code.
Verify revenue and commercial status by asking whether the customer has accepted the work, whether milestones are billable and whether credits or penalties are likely, since a final invoice may depend on sign-off while retention is collected later. Distinguish revenue recognition under accounting policy from cash received.
For a fixed-price job, extra hours reduce margin even if the customer owes no more, whereas for time-and-materials work missing timesheets may also mean missed billing. Explain variances by cause, because estimate errors, material price changes, access delays, rework, approved scope changes and productivity differences call for different responses.
Compare with similar jobs to see patterns rather than drawing broad conclusions from one unusual site. Include quality and customer outcome, since a cheap completion that leaves defects is not genuinely efficient, and ask the delivery team for context while the work is still fresh.
Decide what follows by finalising accruals, chasing valid supplier credits, billing approved work, closing unused purchase orders and assigning warranty or punch-list owners. Feed lessons into pricing, scheduling and procurement standards.
Do not set a target that pressures staff to hide hours or defer costs until after a reporting cutoff, and document whether the review is provisional because a dispute or final invoice remains open. For owners, completion cost review reveals which types of work truly make money.
It connects an individual job to decisions about future prices, staffing and scope control, while keeping the customer promise and final cash separate from a neat spreadsheet margin.
In practice
Real-world examples.
Example
A service firm finds that a fixed-price job used ten extra technician hours, reducing margin even though the invoice stayed unchanged.
Example
A fit-out contractor accrues a subcontractor's completed work before calculating final job profit.
Example
A project team separates a customer-approved change from an unplanned material waste variance.
Formula
Calculation
Final job contribution = Recognised job revenue - Direct materials - Direct labour - Direct subcontract and other attributable costs
Worked example. An invented completed job has $100,000 of supported revenue, $35,000 of materials, $25,000 of labour and $12,000 of other direct costs.
- Contribution = $100,000 - $35,000 - $25,000 - $12,000 = $28,000, a contribution margin of $28,000 / $100,000 = 28%.
- If an unposted $4,000 subcontract bill is verified, contribution falls to $24,000, a margin of $24,000 / $100,000 = 24%.
If the original estimate had planned a $30,000 contribution, the variance against estimate is $24,000 - $30,000 = -$6,000, of which $4,000 arrived late through the subcontractor and the remaining $2,000 needs a cause. Use the company's actual cost-allocation and revenue policies for reporting, not this simplified teaching example.Case study
Seen in the real world.
This illustrative and entirely fictional example follows Brook Fit-Out, an invented shopfitting firm. It reported a strong margin on a completed store. The project manager then received an extra transport invoice and learned that a subcontractor had not submitted its final claim. The first report made the job look more profitable than it was. Brook checked purchase commitments, time entries, approved change orders, customer sign-off and supplier statements.
It accrued verified work, billed an approved variation and kept a disputed freight charge separate pending evidence. The final review showed that a narrow site-access window had driven overtime. Estimators added a site-access question to future quotes rather than merely increasing every labour allowance. The owner got a truer job result and a useful change to the sales process. Closing the cost record became a decision based on evidence, not just a project status switch.
Watch out
Common mistakes.
- Declaring final profit while material supplier bills or time entries are still missing.
- Mixing approved extra scope with unplanned overrun so neither can be understood.
- Improving the reported margin by hiding costs or assuming an unconfirmed credit will arrive.
Questions
People also ask.
When should a completion review happen?
Soon after physical completion, with a provisional status if customer acceptance or final costs remain open.
Is contribution the same as cash collected?
No. Revenue, direct costs, invoices, retention and cash receipts follow different records and timing.
What is the most useful output?
A supported margin, open financial actions and specific lessons for similar future jobs.
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