Most contractors look at their total profit and loss (P&L) statement at the end of the month or quarter and breathe a sigh of relief if there’s a positive number at the bottom. But here’s the kicker: your overall profitability doesn’t tell you which jobs are making money and which are bleeding you dry.

You could have one big profitable job covering up three losing ones — and never know it. That’s why job-level profitability is one of the most important financial metrics a contractor can track.

Job costing — done properly — shows you the revenue, direct costs (labor, materials, subs), and gross profit on every job. It helps you spot underperforming crews, poor estimating habits, vendor overruns, or pricing mistakes. But too many contractors don’t track it at all, or they do it inconsistently.

Real World Mistake & Lesson: I recently worked with a contractor doing about $1.5 million a year. On paper, he was showing a 12% net profit, which isn’t bad — until we started digging into the jobs individually. One crew was hitting gross margins of 38%, while another crew doing “identical” jobs was at 18%. The difference? The second crew consistently went over budget on labor hours and rushed their material orders, leading to expensive last-minute supply runs.

Without job-level tracking, the owner would’ve kept assuming the problem was market pricing or customer type. But once he had the job cost data, he made smart decisions — retrained that crew, improved the estimating process, and tightened ordering procedures. Within 90 days, that team was hitting 32% gross margins, and profits skyrocketed.

 Pick up your free copy of my new book, “The 7 Minute Conversation-How to Hear the Story Your Small Business Financial Statements Are Telling You-CONTRACTOR EDITION”.  Go to www.7MinuteConversationBook.com

Ready to find out where your cash and profits are really going? Book your free 15-minute Profit and Cash Flow Call with me. No pressure. Just real clarity. I’ll help you see where your money’s hiding — and what to do about it. Schedule at www.CashFlowCallWithLarry.com