The data you collect throughout the year for each job holds a wealth of information about what aspects of your business are running smoothly and what parts are costing you money. In a perfect world, you would evaluate critical numbers weekly or at least monthly, but an end-of-year review is essential. Here's a checklist of what to look for.

Estimated vs. actual

Compare actual direct costs (materials, subcontractors, and labor) and indirect costs (all overhead) with estimated values, then see if gross and net profit match projections. Odds are you'll find discrepancies due to one or more of the following:

Poor estimating. You omitted or seriously miscalculated some part of the work.

Poor sales packaging. Details were dropped or left unresolved in communication between sales and production teams.

Poor product-selection management. You didn't adjust your price when customer choices were more expensive than planned.

Undocumented change orders. Your crew or subcontractors performed work outside the project scope without your knowledge or approval.

Poor production planning. Crew members are making too many trips to the supplier, or work is delayed while waiting for special-order items.

Incorrect manpower mix. Skill level didn't match the work, resulting in underskilled workers taking longer than planned to complete a task or expensive employees performing work that should have been assigned to lower-paid workers.

Subcontractor supervision. Your highest-skilled (and highest-paid) field employees may be spending more time than you think supervising subcontractors.

Owner overhead. The company owner is overestimating the amount of time he or she will spend in the field.

Lack of expense controls. Cell phone use, vehicle mileage, tool allowances, and other discretionary expenses are unmonitored.

Schedule overruns. In addition to raising costs directly, many of the items in the list above create double jeopardy by extending a job's completion date, resulting in increased overhead and domino-effect delays for upcoming projects.

Fraud. In rare cases, you may experience embezzlement, or employees using your accounts to supply side jobs or billing hours spent on side jobs to your projects.


How much work a company can sell and how much it can produce in a given year are not necessarily the same. A productivity review of both sales and field crews will inform decisions about growth rate and labor needs. If current rates vary significantly from historical values, check the following:

Site changes. Slight variations on standard procedures can affect productivity. Among the possible causes are training of new employees, working with unfamiliar subcontractors, dealing with higher-end products, and managing fussy clients.

Change in project size. If you typically take on smaller projects, you may notice a drop in productivity on a larger job, mainly because of the increased complexity and need for added supervision. Alternatively, mobilization-demobilization requirements may reduce productivity for companies unaccustomed to small projects.

Increased travel time. Working outside your normal geographic area can be especially costly for companies who require -- and pay for -- field crews to travel from the office or other central location to the jobsite. Also, working remote sites will exacerbate any problems you may already have with over-travel to and from suppliers during working hours.

Sharp increase in sales. This could signal a salesperson who is underpricing work or otherwise promising more than you can deliver.

Sharp drop in sales. Check your marketing program before you drop your price or fire your salesperson. Chances are you are attracting too many unqualified customers.

Change orders

Unless you have a specific policy designed to eliminate them, change orders and additional work orders will average about 10% per job. If your totals are lower, you are probably giving some work away through undocumented changes.

Scope of work. Make sure the field crew and subcontractors understand what's included in the project and what's not. Any questions should be directed to you, not the homeowner or subs.

While-you're-here syndrome. Likewise, make sure homeowners understand that your crew is not their personal handyman service.

Eager-to-please employees. Some employees will take care of small requests just to keep the homeowner happy.