Project Profit Calculator

Why Contractors Lose Money Here

Tender-stage margins assume standard consumption rates, on-schedule execution and no rework. Real projects accumulate small overruns across every cost category — none individually dramatic, but combined they routinely consume 30-50% of the tendered margin. Because profitability is usually reviewed only at close-out, every overrun has already happened by the time it becomes visible.

Real Site Example

A ₹3 crore contract tendered at 12% margin (₹36 lakh planned profit) running a combined 6% material and labour overrun loses roughly ₹18 lakh — nearly halving the realized profit to about 6%, with retention and unbilled revenue on top of that tying up further working capital until certification catches up.

Professional Best Practices

Disciplined contractors track actual cost against BOQ-planned cost monthly, not just at close-out, and treat any category running more than 3-5% over plan as an immediate investigation trigger. Variation orders are priced and submitted for approval as soon as extra work is instructed, not batched up for a final claim at project end.

Engineering Checklist

• Reconcile actual cost to date against BOQ-planned cost, by category, monthly
• Track unbilled revenue and retention as a standing cashflow report, not just at close-out
• Price and submit variation orders as soon as extra work is instructed
• Monitor schedule against the LD-triggering completion date, not just the internal target
• Review realized margin against this project type's typical range, not a flat expectation

How Experienced Contractors Handle This

Disciplined contractors track actual cost against BOQ-planned cost monthly, not just at close-out, and treat any category running more than 3-5% over plan as an immediate investigation trigger rather than a year-end surprise.