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Ratio Analysis. The fun stuff! (Part 2)

Updated: Aug 23, 2022

Did you hit your budget targets? Part 2 of this lesson will be less cumbersome as most of the analysis is pretty self-explanatory. If you haven't downloaded the Ratios spreadsheet from Part 1, go ahead and do that now and scroll down to the second half of the spreadsheet on row 56.

These ratios are primarily tied to your open and closed job schedules and offer decent insight into how you're performing overall. The ratios provided are meant for more of a birds eye view of how your projects are performing. Do your best to disaggregate projects by project manager, general contractor or project owner, contract size, industry, geographic location, etc. The idea here is to identify recurring themes in the profit gains/fades. There are always a few projects that are home runs or stinkers, but it's best to identify the commonality between them. That's the name of the game when it comes to ratio analysis!

Look at your project cost breakdown as well. What percentage is labor, material, subcontractor, or overhead costs? Again you know your business better than anyone else. Do the ratios make sense? Are you working towards obtaining your goals? The best expectations are the ones you set for yourself. These ratios are there to help you evaluate your business goals.

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