Project Management for Profit

CHAPTER 5

MEASURINGPERCENTCOMPLETE

How far along is your project? Estimating progress is a key part of keeping the job on track and on budget.

Generally Accepted Accounting Principles, or GAAP, call for measuring the progress of a project by costs incurred—that is, by costs already spent or committed as a percentage of total forecast costs. We saw in chapter 2 why that method is a nonstarter. Using GAAP, total costs include materials or COGS, and in many projects, you order most of your materials near the beginning of a project. You can be out half your total budget yet just barely getting started on the actual work.

Another method might be to compare actual labor expenses to total budgeted labor costs. That could work in theory, but it can ...