Construction Reports

Absolutely.  Let me poll our consultants and we’ll compile a list!

I also have a list of KPI’s that would be excellent dashboard widgets for Owners and Senior Finance Executives.  This list is compiled from multiple sources and many of our competitors use them but must produce them in Excel with all the related data issues.  If we could offer them in our Dashboards it would be a huge benefit.  Also, many of these are recommended by CFMA (Construction Financial Managers Association), one of our industry partners and a key player in construction finance.

Profitability

• Gross Profit Margin = (Revenue – Direct Cost of Work)/Revenue
• Net Profit Margin = (Gross Profit – Indirect Costs)/Revenue

Cash Flow - A broad cash flow reading is the cash demand period. It is driven by three balance sheet accounts: accounts receivable, accounts payable, and over-billings/under-billings: 

•  Cash Demand Period = Average Days Required to Fund Operations – Average Days to Pay Creditors. This is essentially the difference between the length of time it takes to receive payment for work and the time you take to pay your creditors.
• Days in Accounts Receivable = 365/(Revenue/Accounts Receivable). Top-performing contractors reduce this by managing client relationships and collections carefully. This number reflects the average length of time between credit sales and payment receipts. It is crucial to maintaining positive liquidity. The lower the better.
• Days in Accounts Payable = 365/(Direct Cost/Accounts Payable). Prudent use of trade credit helps maintain flexibility. This ratio shows the average number of days that lapse between the purchase of material and labor, as well as payment for them. It is a rough measure of how timely a company is in meeting payment obligations. Lower is normally better.
• Overbillings/Underbillings = (Billings – Earned Revenue)/Earned Revenue. Aggressive billing practices can help reduce underbilling for work performed and promote prudent overbilling.

Liquidity – Liquidity indicators measure your company’s ability to meet short-term obligations. They are particularly important to financial partners and creditors.

• Current Ratio = Current Assets/Current Liabilities. This compares the availability of current assets to satisfy current liabilities. Generally, this metric measures the overall liquidity position of a company. It is certainly not a perfect barometer, but it is a good one. Watch for big decreases in this number over time. Make sure the accounts listed in “current assets” are collectible. The higher the ratio, the more liquid the company is.
• Working Capital Turnover = Revenue/(Current Assets – Current Liabilities). Working capital measures the funds available to invest in operations to generate more revenue. Working capital turnover measures how aggressively these funds are being used to generate income.

Leverage – Financial leverage indicators directly affect your company’s risk profile as well as its ability to repay debts and take advantage of new opportunities.

• Debt to Equity = Total Liabilities/Owner Equity. One of the most important financial ratios, this measures how highly leveraged your company is. A higher ratio creates additional risk. A ratio of 3.0 or lower is usually desirable.
• Revenue to Equity = Revenue/Owner Equity. A high ratio indicates you have less flexibility to absorb project losses.

Forecasting – Top performers carefully monitor work in the pipeline, and project sales and revenue at least one year out.

•  Backlog to Equity = Backlog/Owner Equity. Too little backlog and your company stumbles; too much backlog and you’re overwhelmed.

• Backlog — Backlog/(revenue/12) — that can help you measure efficiency. More specifically, it reflects the number of months it will take to complete all signed or committed work. A lower ratio may mean your company needs to refocus its sales and marketing efforts to ensure a strong stream of new contracts is coming in.

• Gain/Fade Analysis - Change from month to month or year to year in total estimated or actual gross profit on each contract

Thank you, @pchappell19!!

Angela,

We are getting assistance from Tammy Snyder and Bronwyn Duprey to build a version of the current Project Summary report - but with more fields from the WIP report. 

This inquiry will give me essentially all of the details from the WIP but without all of the formatting so that I can export and utilize the power of excel to analyze our projects. i anticipate this report being the basis for many of the dashboard items for managers and PMs.

John Wiebke

Envelop Group