The windows are ordered. The plasterer is booked. The customer has asked for an extra bit of work, although nobody has agreed the price yet.
Meanwhile, the accounts show £50,000 of costs against a job worth £110,000. That looks comfortable until you remember how much of the job is still ahead of you.
The useful check is straightforward: agreed job value minus the whole expected job cost. To make it reliable, every cost needs one place in the calculation, and somebody who understands the work needs to own the estimate of what remains.
This guide is for the owner of a small building company delivering extensions or refurbishment jobs in England. It is a live-job management check, rather than a calculation of how much revenue or profit to recognise in the statutory accounts.
Establish what the customer has actually agreed
Start with the accepted quote or contract, then add approved changes. Keep a short record of each variation: what changed, the agreed price, the supporting approval and its effect on costs and timing.
Keep requested, disputed and unpriced extras in a separate list. A conversation on site is something to follow up, not a reason to assume the original margin has been rescued.
Where the quote contains allowances or provisional sums, check what has changed as selections become firm. Compare the expected final selling value and final cost on the same scope. Otherwise, you can end up comparing an old price with a new job.
Use the list to chase missing approvals. A disputed amount still needs resolving under the contract.
Put the expected costs into three separate groups
You need the records up to a stated date, the current order and booking list, and the project owner's estimate of the remaining work.
Scroll across the table to read every column.
| Cost group | What belongs here | The check that matters |
|---|---|---|
| Costs recorded so far | Job-coded materials, labour, subcontractor work and other direct costs, including agreed adjustments for costs incurred but not yet invoiced | Include credits and check for missing bills or work already done |
| Open commitments | The cost of orders and booked work still to be included in job costs | Remove amounts already included in the first group |
| Further work not yet committed | Materials, labour, finishing work and specific risk allowances still needed, but absent from the first two groups | The responsible builder checks quantities, rates and overlap |
Reliable bookkeeping and supplier reconciliations support the first group. Check the merchant account against delivery and return notes, not just the bank payment. One statement can cover several sites, while a credit for returned materials can arrive after the job has moved on. Match the credit to the original job and account for any agreed restocking deduction; do not assume everything sent back has been credited in full.
For labour, use a consistent cost basis. Include the relevant employment costs and the site supervision you intend this job view to cover. If owner time has been left out, say so; otherwise, a job can appear attractive because some of its labour has been treated as free.
Keep costs that have not yet been assigned to a job visible. Leaving them in a general account does not make them disappear from the business.
Here is the whole-job calculation
This fictional example uses VAT-exclusive figures and assumes any input VAT is recoverable. It includes direct job costs, with head-office overheads, financing costs and tax excluded. The estimates cover the agreed work, including an explicit allowance within the remaining-work figure for identified risks.
Scroll across the table to read every column.
| Job forecast at the review date | Amount |
|---|---|
| Original contract | £100,000 |
| Approved variations | £10,000 |
| Current agreed job value | £110,000 |
| Costs recorded so far | £50,000 |
| Remaining open commitments | £20,000 |
| Further work not yet committed | £25,000 |
| Estimated total direct job cost | £95,000 |
| Expected contribution before the excluded costs | £15,000 |
The total expected cost is £50,000 + £20,000 + £25,000 = £95,000. That leaves £110,000 − £95,000 = £15,000 towards overheads, finance costs, tax and profit.
The cost still to be included after the £50,000 already recorded is £45,000. Some of that is ordered; some still needs pricing or booking. Both parts matter.
There is also a proposed extra worth £5,000. It is not approved, so it stays outside the £110,000 base case. If it is agreed later, add both its selling price and its additional costs. An extra £5,000 of sales is not automatically an extra £5,000 of profit.
If work on that extra has already started, include the costs already incurred even while its selling price remains unresolved. Record any further unavoidable costs too. Keeping uncertain income out must not become a reason to hide real costs.
A purchase order becoming an invoice should not create a second cost
Suppose £8,000 of the open commitments is delivered and its invoice enters the job costs. The agreed price and all other expectations stay unchanged.
Scroll across the table to read every column.
| Cost position | Before invoice | After invoice |
|---|---|---|
| Costs recorded so far | £50,000 | £58,000 |
| Open commitments | £20,000 | £12,000 |
| Further uncommitted work | £25,000 | £25,000 |
| Estimated total job cost | £95,000 | £95,000 |
The cost moves between groups. The total does not change. Leaving the full order open as well as recording the invoice would overstate the forecast by £8,000.
The same principle applies when a bill replaces an estimate for work already done. Replace or adjust the existing cost allowance; do not simply stack the bill on top. Paying a supplier deposit also needs separate treatment: a payment on account is not necessarily a cost already consumed by the job.
Where CIS applies, a deduction is part of the subcontractor payment withheld for HMRC, rather than an extra job cost on top of the underlying invoice. Reconcile the invoice, net payment and deduction together. The actual deduction depends on HMRC verification and the eligible calculation base. HMRC's contractor deduction guidance.
Challenge the estimate while you can still act
The £25,000 remaining-work estimate needs an explanation: quantities, labour, rates, finishing tasks and the risks allowed for. Include the awkward last visits: snagging, a trade returning after another finishes, waste removal and final clean. A job that looks nearly finished can still have several paid days left in it.
Check the remaining weeks as well as the remaining materials. Site-running costs, often called preliminaries, can continue while progress waits: welfare hire, supervision, temporary services or plant still on hire. Separate any fixed setup cost from charges that continue with time. Check the actual hire terms and agreed off-hire date; the last day you used a machine is not enough evidence of when its charges stop.
Keep those job-specific costs in the forecast even though head-office overheads are excluded from this example. If delays increase them, update the cost first. Whether the customer owes more is a separate question under the contract.
If another £5,000 of unavoidable cost emerges without an agreed price increase, the expected contribution falls from £15,000 to £10,000. That is a decision prompt. You might need a revised purchasing plan, a variation conversation or a change in how the remaining work is organised.
A weekly review may suit an active job; a material change should trigger an update sooner. Keep the previous estimate and a short explanation of what changed, so the latest total does not erase the warning signs.
Finance support can assemble the records, check the arithmetic and challenge gaps. The builder or responsible project manager must confirm the physical work remaining. A tidy spreadsheet cannot inspect the roof.
Then check whether the cash arrives in time
Expected job contribution and available cash answer different questions. Put the next customer payment beside the dated supplier, subcontractor and payroll amounts that fall due before it. Include delays, retentions or approval conditions where the contract contains them.
For example, a fictional job may expect a £20,000 stage receipt on the 30th while £14,000 of payments fall due on the 25th. If only £4,000 is available after other commitments, the business has a £10,000 gap to address before the receipt. The expected £15,000 job contribution does not fund that gap today.
Use the actual payable and receivable amounts for this cash check, including the correct VAT treatment. The construction domestic reverse charge is conditional; it does not apply to every invoice just because building work is involved. HMRC's reverse-charge guidance.
Leave the review with a short action list
For each live job, keep one dated page showing the agreed value, the three cost groups, expected contribution and the next cash pinch point. Beside it, list the missing bill, unapproved change or estimate that needs attention, with a named person responsible.
That is enough to make the next conversation useful. You can see which job has changed, why it changed and what needs a decision.
If producing that page means rebuilding the records yourself every time, let's talk. In Good Order can agree support for the underlying records, management reporting and handoffs between quotes, approvals and finance.
Technical estimates stay with the project team. Forecasting, CIS, payroll, tax work and historical clean-up are included only where agreed. The initial conversation is free, with any subsequent work scoped separately.