What this guide helps you decide
Use this guide to find why a job's hours, cost, price, or margin moved—and to decide which assumptions deserve changing before the next quote.
Start with the Estimate vs Actual Profit Calculator, then review time, material, disposal, hauling, change work, and revenue in matching categories.
Match the estimate and actual in the same units
Keep paid labor hours separate from machine meter hours. An operator may still be paid while checking grade, loading tools, or waiting with the engine off. Compare material in the same unit and state: supplier tons, loose truck yards, and compacted placed yards are not interchangeable.
Collect timecards, meter readings, delivery and dump tickets, invoices, subcontractor costs, callbacks, and final revenue. Use the same cost boundary on both sides. If the machine rate includes fuel and maintenance, do not add the receipts again; either compare at the loaded-rate level or rebuild both sides from their underlying costs.
Preserve the original estimate
Keep the accepted estimate unchanged and record approved changes separately. Compare the original scope with the original actual, then review change work on its own. Rewriting the estimate after the job hides the information needed to improve production assumptions, minimums, allowances, exclusions, and the process for documenting customer-requested work.
Worked estimate-versus-actual example
These illustrative figures show the review method, not expected margins or local prices. The accepted estimate has $8,500 revenue and $6,000 cost: $2,500 planned profit and a 29.4% margin. Final revenue is $8,900 after a $400 approved addition, and actual cost is $6,900. Actual profit is $2,000 at a 22.5% margin.
Overall profit is $500 below the original plan, but that number alone does not explain why. Suppose the records show:
- Original scope: $8,500 revenue and $6,400 actual cost. The $400 cost overrun consists of $300 extra paid labor and $100 extra disposal. Profit on that scope is $2,100, which is $400 below plan.
- Approved addition: $400 revenue and $500 cost. This part loses $100 even though it was approved and billed.
- Combined result: $2,100 − $100 = $2,000 profit. The original-scope overrun and the underpriced addition together explain the $500 shortfall.
To reproduce the combined result in the estimate versus actual calculator, enter $8,900 in Quoted Price, $6,000 Estimated Total Cost, 50 Actual Paid Hours, $100 Actual Loaded Cost per hour, $1,200 Actual Materials, and $700 Actual Other Costs. Here the hourly cost includes the example's labor and machine cost; the other entries are separate. The tool reports $6,900 actual cost and a $900 cost variance against the original estimate. Keep the $500 change-work cost identified in your records because that combined variance is not all an original-scope estimating error.
Turn the explanation into one specific change
Investigate the extra labor before raising the production hours. If the customer requested more area, it belongs with the change. If the crew waited on a late delivery, review scheduling. If comparable work consistently requires more hand finishing, add that step to future estimates. A slower day from an isolated breakdown belongs in the job record and maintenance review, not automatically in every production assumption.
For the example above, check the disposal tickets to find whether the extra $100 came from more material, a different fee, or a missed minimum. Rebuild the addition's cost before quoting similar change work. Keep the useful lesson specific enough to apply to the next job.
Closeout checklist that improves the next estimate
- Freeze the accepted estimate and list each approved change separately.
- Match estimated and actual labor, machine, material, hauling, disposal, subcontractor, and revenue units.
- Assign a cause to each material variance: estimate, execution, customer change, unknown condition, or concession.
- Update a production default only when the work type, units, machine, crew, and conditions are comparable.
- Recalculate markup and margin with the markup vs margin calculator after all revenue and cost are recorded.
Source note: Use the signed scope, approved change records, timecards, meter logs, supplier invoices, scale or dump tickets, payment records, and closeout photos. The pricing checklist helps carry the resulting evidence into the next customer-ready quote.
Optional project software
Keep the evidence behind the variance
The downloadable tracker and a job folder can support this review. If several people enter hours, expenses, and changes, Contractor Foreman is one option for shared estimates, change orders, daily logs, and project expenses. Test whether your setup makes the original scope and approved additions easy to review separately.
For equipment cost, its equipment logs record information such as fuel and meter readings; they do not allocate project cost on their own. Equipment usage entered through Daily Logs uses the hourly rate configured in the Cost Items Database. Check the rate and recorded hours against your estimating assumptions before relying on the comparison.
Equipment Rate Calc is a Contractor Foreman affiliate. We may earn a commission if you purchase through this link.
Explore Contractor Foreman (opens in a new tab)Job closeout questions
Which variance should I review first?
Separate approved scope changes from the original estimate first. Then review paid time, production, material or disposal quantities, and unbilled work in dollar order.
When should the review be completed?
Close each job as soon as final time, tickets, invoices, approved changes, and revenue are available. Review repeated production and cost patterns at least quarterly before changing standard assumptions.
Should one poor job reset the estimating defaults?
Usually not. Identify whether the cause is repeatable and whether the machine, crew, units, scope, and conditions match future work. Keep one-off events in the risk record.
Turn production variance into a better default
Compare the estimated and observed cycle assumptions with the production and unit-cost calculator. Change a default only when the unit and field conditions are comparable.