How do you know a job is over budget before it's finished?

The calculation

Burn rate = hours used ÷ (budget hours × percent complete).

Here is an example. A part of the job budgeted at 1,000 hours has used 500 hours and is 30% complete. At plan, 30% complete should have used 300 hours. 500 ÷ 300 is about 1.67, so the job is burning about 67% faster than plan.

If that rate holds, the full scope will take about 1,670 hours, not 1,000. You find that out at 30% complete, not at the end.

What you need to make it work

Two things: hours logged against the estimate's activities, not just against a name, and an honest percent complete. Foremen log hours, the task, the quantity installed and any blockers. The estimate becomes the baseline the job is measured against.

Percent complete is the weak point. Base it on quantities installed where you can, such as metres of conduit or squares of roofing, not on a feeling.

Why job-end reports are too late

Most companies find out a job lost money when it closes. By then the margin is gone. Ask how a job is going and everyone is optimistic. A question with numbers in it, such as how many of the budgeted hours have we used, gets a different answer.

What to do with a high burn

Ask why while recovery is still possible. Common causes: scope that grew without a change order, the wrong crew or equipment mix, materials late, access restricted, or an estimate that was too thin. Some you can fix on this job. The rest go back into the next estimate, so every finished job makes the next price better.