Industry

Architecture, Engineering & Construction

Understand Profitability From the Project Level Up

Hard hats and rolled drawings on a table before a building site

Construction and A&E firms face accounting issues that ordinary bookkeeping systems often do not adequately capture.

Projects may span months or years. Costs change. Change orders occur. Customers retain portions of billings. Revenue recognition may differ from invoicing.

We help firms establish accounting processes that provide greater visibility into individual projects and overall company performance.

A site supervisor in a hard hat and safety vest reading a tablet on a building site

Job Cost Accounting

Effective job costing tracks costs by project and, when appropriate, by phase or cost code.

We can help track:

Labor
Materials
Subcontractors
Equipment
Permits
Direct project expenses
Allocated overhead
Change orders

Accurate job costing helps management compare actual costs with estimates and identify projects moving away from expected margins.

A laptop showing a progress chart beside drawings and a hard hat, a building site through the window

Work-in-Progress Reporting

A WIP schedule can provide valuable insight into active projects.

Typical WIP information may include:

Contract Value → Estimated Total Cost → Costs Incurred → Percentage Complete → Revenue Earned → Amount Billed → Over/Under Billing

This helps management understand project performance before the project is finished.

A site manager in a safety vest and an adviser reviewing figures at a laptop

Percentage-of-Completion Accounting

Certain long-term contracts may require revenue to be recognized as work progresses rather than when cash is received or the project is completed.

The percentage-of-completion method, including applicable rules under IRC §460, can therefore have significant tax consequences.

Certain contracts and taxpayers may qualify for exceptions or alternative methods. We evaluate the circumstances rather than assuming one accounting method applies to every contractor.

A site supervisor in a hard hat reviewing a progress billing on a building site

Retainage

Construction contracts frequently allow customers to retain a percentage of billings until specified project milestones are achieved.

Proper accounting should separately track retainage receivable and, where applicable, retainage payable to subcontractors.

A man and a woman reviewing charts and papers across a desk

Tax Planning

Construction and A&E tax planning may address:

Long-term contract accounting
Accounting method considerations
Section 179
Bonus depreciation
Equipment acquisitions
Vehicle deductions
Repair vs. capitalization
S corporation compensation
PTET elections
Estimated taxes
Multi-state projects
Worker classification
Retirement contributions

An adviser and a business owner in discussion at a desk covered with charts

Business Advisory

We help owners use their financial information to evaluate:

Gross profit by project
Labor performance
Backlog
Overhead
Cash flow
Billing cycles
Equipment purchases
Hiring
Project pricing

What We Help You Manage

Job Costing
WIP
Percentage of Completion
Retainage
Project Margins
Equipment
Cash Flow
Tax Planning

Frequently Asked Questions

What is percentage-of-completion accounting?

It is a method of recognizing revenue and income from certain long-term contracts as the work progresses.

What is a WIP schedule?

A work-in-progress schedule summarizes active projects and typically compares contract values, estimated costs, costs incurred, billings, and recognized revenue.

What is overbilling?

Overbilling generally occurs when amounts billed exceed revenue recognized based on project progress.

What is underbilling?

Underbilling generally occurs when recognized revenue exceeds amounts billed to the customer.

Why is job costing important?

Company-wide profit can hide poorly performing projects. Job costing allows owners to see profitability at the project level.

Can construction equipment be deducted immediately?

Certain qualifying property may be eligible for accelerated deductions, including Section 179 or bonus depreciation, depending on applicable law and circumstances.

Services