COST TO COMPLETE IS ALWAYS WRONG.
Cost to complete estimates are structurally biased optimistic, because the person estimating the remaining cost is usually the same person whose performance that number reflects. The fix isn't a better guess. It's a WIP process that forces the estimate to be checked against production data every month, by somebody who doesn't own the outcome.
Nobody is lying. The bias is built into who does the estimating. A project manager asked how much is left to spend on his own job is being asked to grade his own work, and the honest answer costs him something. So the number comes in a little light, and next month's estimate uses that light number as its starting point. Three or four months of that stacks into a difference big enough to change the job's outcome, and it only becomes visible at closeout when nothing can be done about it. The correction is process, not personnel.
WHAT IT MEANS.
Cost to complete is the estimate of what's left to spend on a job, and it's the number percentage of completion accounting uses to calculate how much revenue you've earned so far.
The number doesn't stay inside the job report either. Percentage of completion accounting uses cost to complete to calculate earned revenue, so an optimistic estimate on one job travels straight onto the company's financial statements. That's how a WIP schedule can read healthy for months while a job underneath it's heading for a loss.
THE PERSON ESTIMATING HAS A REASON TO GUESS LOW.
Cost to complete is self reported
The PM who reports cost to complete is usually the same person whose job performance that number reflects. Reporting a higher cost to complete means admitting the job is running worse than planned. So the number slides toward fine instead of toward accurate, and nobody had to decide to be dishonest for it to happen.
Optimism compounds every month
A cost to complete estimate that's slightly low in month three becomes the baseline for month four's estimate. Each month's optimism stacks on top of the last one, so the distance between reported remaining cost and true remaining cost grows without anybody watching it. Closeout is what finally forces it into the open, and closeout is the one point where you can't do anything about it.
WIP reporting inherits the error
Percentage of completion accounting uses cost to complete to calculate earned revenue. An optimistic cost to complete number doesn't just mislead the PM, it overstates earned revenue on the company's own financials. That's how a WIP schedule can look healthy right up until the month a job closes out underwater.
WHAT MAKES THE NUMBER RELIABLE.
Cost to complete gets checked against the actual production rate monthly rather than at milestones. A phase burning labor faster than it's putting work in place will show the problem in the month it happens. Waiting for a milestone review means the correction comes a quarter late, and on most jobs a quarter late is the same as never.
Any job whose cost to complete hasn't changed across two consecutive reporting periods gets flagged. Owners tend to read a stable number as evidence the job is under control. Usually it's evidence that nobody re-estimated it, which is a very different thing.
The review asks for the labor hours left, the burden rate on those hours, the material still to be bought, and the equipment still needed. A single percentage is an opinion. A cost build up is something you can check line by line, and the work of building it up catches most of the optimism before it ever gets reported.
Cost to complete gets reconciled against committed costs: open subcontracts, outstanding purchase orders, and remaining labor hours. Those are documents rather than feelings. A gut feel percentage can't be checked by anyone and a committed cost schedule can, which is the whole difference between an estimate and a guess.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing, no payroll, and no add-ons.
| Last 12 months revenue | Monthly fee |
|---|---|
| Up to $1M | $1,900 to $2,900 |
| $1M to $3.5M | $2,600 to $3,900 |
| $3.5M to $6.5M | $3,800 to $5,700 |
| $6.5M to $9.5M | $5,100 to $7,100 |
| $9.5M to $12.5M | $6,100 to $8,500 |
| $12.5M to $15.5M | $7,400 to $11,000 |
| $15.5M to $18.5M | $9,400 to $13,500 |
| $18.5M+ | Quoted individually |
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions rather than a report.
Your bookkeeper keeps doing the books.
You stop touching the books.
Everything in Core, and we run the bookkeeping and the controllership as well. Nobody in your office is answering coding questions or chasing a reconciliation at month end.
We do the books. No payroll.
Every job shows its margin while it's still running.
Everything in Executive, plus the job costing and WIP platform set up, loaded with your cost codes, and managed for you every month. You never have to learn it.
We do the job costing.
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