How to Track the Profit & Loss for a Project

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Tracking the profit and loss for projects is often a difficult activity, especially if your company has more than one project at the same time. The profit and loss for a project is calculated by adding up the revenue from the project minus all of the expenses incurred. To track this on a particular project, you must keep good records, and many companies use job order numbers or names.

  • Name the project. This is important, especially if more than one project is being completed at the same time. Give the project a name or number that is used as a reference for all invoices and time sheets.

  • Use a spreadsheet. Spreadsheet programs are ideal for tracking profits and losses for projects. Name the spreadsheet the title of the job and leave room for all revenue amounts at the top of the page.

  • Enter revenue payments or billed amounts. Each time your company bills for the project, enter the date and amount of the bill. This will track the total revenues of the project.

  • Enter invoices. Every time material is purchased, the date, vendor and amount is placed in a column of the spreadsheet labeled expenses. Include all invoices that are directly related to this specific job. This includes invoices for material, labor, services, rentals and administrative expenses directly associated with the job.

  • Calculate labor from employees. Ensure that all employees working on this job know the job number. Require them to place this number on their time cards each time they work at this job. Stress the importance of accurate labeling of project numbers or names. Add up all labor costs for the job and include the amounts as expenses in the spreadsheet.

  • Add any additional expenses. Often there are indirect expenses that are hard to calculate for a particular job. This includes things like administrative salaries and vehicle costs. Many contractors determine a fair rate to charge for these items after performing many projects. They are able to average an approximate cost for these amounts.

  • Total everything. After the project is complete, add up all revenues and expenses. Subtract the expenses from the revenues to determine the profit or loss for the job.

References

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