Metrics Libraryby Semaphor
Library
Construction

Construction metrics

How contractors run and measure their business, the metrics they rely on, and the terms you need to read them.

How a contracting business runs

A contractor's business is a portfolio of jobs. Each job has a contract with the owner, a budget broken into cost codes, and a project manager responsible for delivering it.

As work happens, costs post to the job from payroll, suppliers, subcontractors, and equipment. Each month the PM updates an estimate of what it will cost to finish. Scope changes go through change orders, which adjust the contract value and the budget once approved. The contractor bills the owner on a schedule, usually monthly, and the owner often holds back a share as retainage until the work is done.

How it is measured

Most construction reporting answers three questions:

  1. Is each job on budget? Compare the budget to what the job is now expected to cost.
  2. Is billing keeping pace with the work? Compare what has been billed to the revenue earned.
  3. Is there enough profitable work ahead? Look at backlog and the projected margin on open jobs.

Numbers are reviewed job by job, then rolled up by project manager, division, and company. The monthly close and the WIP schedule are the main review points.

The metric set

Job cost

Job cost variance

Is this job heading over budget?

Revised budget − estimate at completion Cash and revenue

WIP over/under billing

Have we billed ahead of the work or behind it?

Billed to date − earned revenue Job profitability

Gross margin by job

Is this job making money, and is it fading?

(Contract value − EAC) ÷ contract value Pipeline and capacity

Backlog

How much signed work is left?

Revised contract value − earned revenue
Change order cycle timeHow long until extra work is approved? Coming soon.
Labor productivity by cost codeAre crews installing at the estimated rate? Coming soon.
Retainage receivableHow much billed cash is held back? Coming soon.

Data you need, at a glance

Metric Main data Usually lives in
Job cost variance Budget by cost code, approved change orders, cost to date, PM cost-to-complete forecasts Construction ERP and accounting, project management, spreadsheets for forecasts
WIP over/under billing Contract value, change order revenue, cost to date, cost to complete, billings and retainage Construction ERP and accounting
Gross margin by job Contract value, original budget, change orders, cost to date, monthly cost-to-complete snapshots Construction ERP and accounting, estimating, spreadsheets for forecasts
Backlog Signed jobs and status, contract value, change orders, earned revenue from WIP Construction ERP and accounting, sometimes a CRM or preconstruction tool

The most common gaps are change orders not entered and cost-to-complete forecasts that are stale or kept outside the system.

Interactive example

A sample dashboard with made-up data for a contractor with eight jobs. Filter by project manager, division, and date, and ask questions in plain English.

Interactive example · Construction, made-up dataOpen full screen

Glossary

  • Backlog: contracted work not yet performed, usually contract value minus earned revenue on open jobs.
  • Change order: an approved change to a job's scope, with a revenue side (contract value) and a cost side (budget).
  • Cost code: a category of work or cost within a job budget, such as concrete or electrical.
  • Cost to complete: the PM's estimate of the remaining cost to finish a job.
  • Estimate at completion (EAC): cost to date plus cost to complete.
  • Fade: a decline in a job's projected margin over time. The opposite is gain.
  • Percent complete: how far along a job is. Under the cost-to-cost method, cost to date divided by estimated total cost.
  • Retainage: a share of each billing that the owner holds back until the work is accepted.
  • Surety: the company that issues performance and payment bonds for a contractor.
  • WIP schedule: the monthly work in progress report listing each open job's contract, costs, percent complete, earned revenue, billings, and over/under billing.

FAQ

What are the most important KPIs for a construction company?
For most contractors: job cost variance, WIP over/under billing, gross margin by job, and backlog. They show whether jobs are profitable, whether cash is keeping pace, and whether there is enough work ahead.
Who uses the WIP schedule?
Controllers and CFOs use it monthly. Sureties and lenders also review it when evaluating bonding capacity and credit.
Are there construction financial benchmarks?
CFMA publishes an annual Construction Financial Benchmarker. We do not reproduce its figures here until we confirm citation terms.

Construction roles: what each role looks at monthly · Download the construction metrics pack (PDF) · Plan your metrics

Related guide: Building customer reporting for construction software