What it means
A quote or project budget begins with assumptions. Once work starts, material prices, labour hours, subcontractor claims and site conditions may differ.
A reforecast combines posted costs, known commitments and a realistic estimate of remaining work. Start by confirming the job's current scope, comparing quantities, progress and deliverables with the latest work records.
Ask the people doing the job what remains, including testing, handover, defects and clean-up. A vague percentage-complete guess can understate the final effort if the last stage is complex.
Reconcile actual costs to the ledger and check whether all work performed has been invoiced, since goods received but not yet billed, approved timesheets, contractor work and freight can be missing. Avoid counting a purchase order twice as both a commitment and an incurred cost.
Note uncertain claims and contingencies separately so the forecast is transparent. Consider productivity observed so far, access restrictions, rework and capacity, and estimate material needs at current prices and availability.
Include required subcontractor, testing and completion costs. A reforecast should be updated more often when the job is short, volatile or near a decision point.
Explain changes rather than simply presenting a new number, splitting them into approved scope changes, price increases, quantity differences, productivity, errors and timing. If the expected margin has fallen, assess remedies such as a legitimate variation claim, rescheduling, supplier negotiation or a change in delivery method, without sacrificing safety or agreed quality.
Agree who can approve a revised forecast and who can change the working budget, so that sales, operations and finance see the same current estimate while the original baseline remains available to measure performance. Incentives to hide overruns until job close make the information less useful.
For owners, a job reforecast links daily decisions to final margin and cash needs. Accuracy improves when estimates are revised with evidence rather than simply carried forward from last month.
In practice
Real-world examples.
Example
A contractor's plasterboard cost rises after a supplier quote expires. The project manager updates the remaining material estimate and explains the margin impact. The original budget stays on file so the size of the change is visible.
Example
A repair workshop discovers extra testing is needed on several units. It adds the actual labour and forecast testing hours rather than leaving the original budget unchanged. The service manager then decides whether the extra cost can be passed on under the customer agreement.
Example
A design team completes a paid variation. It adds approved revenue and its related future cost, keeping unapproved requests outside the baseline. The job lead records the variation reference so finance can match the revenue to the cost.
Formula
Calculation
Estimated cost at completion = Actual job cost to date + Forecast cost to complete
Worked example. An invented installation has incurred $120,000 and is expected to require another $95,000.
- Estimated cost at completion = $120,000 + $95,000 = $215,000.
- Against a revised approved cost budget of $200,000, the forecast overrun is $215,000 - $200,000 = $15,000.
- If the job is priced at $260,000, the forecast margin is $260,000 - $215,000 = $45,000, or about 17%, compared with $60,000, or about 23%, at budget.
Check whether committed but unbilled costs are already in actuals or belong in the remaining forecast to avoid double counting.Case study
Seen in the real world.
This illustrative and entirely fictional example follows Crestline Signs, an invented maker of large outdoor signs. Its job dashboard showed spending of $180,000 against a budget of $250,000. The sales lead believed the job was safely under budget, but the installation manager knew that specialist lifting equipment, two site visits and final testing were still ahead. Finance reconciled invoices, receipts and contractor commitments.
The team estimated the remaining work task by task and found a final cost forecast of $275,000, which was $25,000 above budget. Part came from approved extra work; another part came from a failed installation attempt. Crestline had to absorb the rework. The owner reviewed the risks and changed the lifting plan before a second costly failure.
The approved variation was documented separately from the rework. The job still finished with a lower margin than first hoped, but the revised estimate arrived early enough to guide decisions. On later jobs, managers reviewed forecast cost to complete every week during installation rather than relying on actual spending alone.
Watch out
Common mistakes.
- Treating current spending below budget as proof that a job will finish below budget.
- Counting a purchase commitment twice or omitting work completed but not yet invoiced.
- Replacing the original budget with the new forecast so the cause of change disappears.
Questions
People also ask.
How often should a job be reforecast?
Match the cadence to its duration and risk, and update promptly when new evidence changes expected final cost.
Is a forecast overrun the same as a customer claim?
No. A cost increase does not establish entitlement to charge the customer; check the agreement and approved variations.
What should be shown with the new number?
Keep the original and approved baseline, actual cost, remaining estimate, key assumptions and reasons for the change.
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