How to Calculate Finishing Project Profitability Step by Step

Finishing project profitability is calculated at the item level: you prepare the bill of quantities, determine the contractor cost and client price per item, subtract the two for the profit, and compare expected with actual. Here are the steps in detail:

Step 1: Prepare the Bill of Quantities (BOQ)

Break the project into clear items with their quantities and units. This is the foundation you will build the calculation on. Read what is a bill of quantities.

Step 2: Determine the contractor cost per item

For each item, calculate quantity multiplied by the contractor rate = total contractor cost. This is what you will pay the executor.

Step 3: Determine the client price per item

Calculate quantity multiplied by the rate agreed with the client = cost to client. This is what you will charge.

Step 4: Calculate the expected profit

Expected profit per item = client price minus contractor cost. Sum all items to get the project expected profit, and add the supervision rate if present.

Step 5: Track actual vs. expected

During execution, record actual costs and compare them with the expected. The difference reveals which item went off plan and helps you improve pricing on future projects. See profitability management and project details.

Conclusion

Manual calculation is possible, but it is slow and error-prone with dozens of items. A specialized system performs these steps automatically and updates the numbers instantly. Discover Bonyan software.