A company can be profitable every year and still not know which of its jobs pay for the others.
The annual number is real, and it is also useless for the decision in front of you. It arrives once, long after every choice that produced it, and it averages everything together. Nothing in it tells you what to charge for the job you are quoting this afternoon.
Limo Mont is a family construction business in Belgrade, working in sheet metal, roofing, ventilation, insulation, and metalwork since 2007. They priced by instinct, and the instinct was good. They were profitable before any of this, and they are profitable now. This is not a story about a company being rescued from its own numbers.
It is a story about a company that was right without being able to show its work.
Three numbers, and they had one
The profit on a job is what you charged, minus the material that went out to it, minus the hours the people spent on it.
They had the first one. The invoice exists, it is issued, it is paid. That part of the arithmetic was never in doubt.
The other two were not recorded against any particular job. Material left the warehouse and became a general expense. Wages were paid, correctly, and dissolved into payroll. Both showed up at year end as one large figure each, which is the right shape for a tax return and the wrong shape for the question of whether one particular roof paid for itself.
So the work was to make the second and third numbers exist per job. The second one was already half done.
The material half was the warehouse
We wrote about that system already. A tradesman takes what he needs, sends a message saying so, and the stock count drops. It was built to stop the warehouse count from drifting.
It also produces, as a side effect, a record of what went out and when. Attach a job to that record and the material cost of a job stops being a guess.
The labour half is two different people
The site engineer records who turned up. Not a timesheet, not a portal to log into at the end of a shift. He already knows who is on his site, because knowing that is the job, and he already raises his hand when he needs another pair of hands.
Overtime works differently, and the difference is the part worth stealing. The worker reports his own overtime, and he is paid for it.
Each worker’s rate is on file. Attendance gives the days, overtime gives the extra hours, the rate turns both into money.
Notice who is doing the reporting in each case. The engineer has the knowledge about who showed up and no particular stake in it. The worker has the knowledge about his own extra hours and a direct reason to report them accurately, because reporting them is how he gets paid.
The previous post put the rule as moving the data entry to the place where the data is born. This is that rule with a second clause. Ask the person who knows, and where you can, ask the person who also has a reason to be right. The second clause is why the overtime numbers are the most reliable figures in the whole system.
What the three streams add up to
The invoice, the material drawn against the job, and the hours logged against it all land in the same place. From those, spending per project, and from spending, profit per project.
Nothing exotic is happening here. The value is not in the calculation, which is subtraction. It is in the fact that all three inputs now exist in a form something can read, which they did not a year ago.
Someone always forgets
They do. A day gets missed, an entry does not go in.
It gets filled in the next morning, and the company keeps pushing for it to go in on the day. That is the whole failure mode and the whole fix. There was no crisis, no month of corrupted numbers, just an ordinary habit that has to be maintained like any other.
It is worth saying plainly because the temptation with a system like this is to describe it as self running. It is not. It is a record kept by people, and it is accurate because they keep it, not because a machine is watching.
What actually changed
Not the profit. They were making money before and they are making money now.
What changed is that the question became answerable. Before, if you asked which of last year’s jobs was the best one, the honest answer was a feeling held by one or two people. Now it is a number, and it points at the next quote. A comparable job can be priced from what a comparable job actually cost, rather than from a memory of how that one felt.
Instinct is not the enemy
Pricing by feel is not a failure of management. It is what you use when nothing better exists, and here it carried the company for years and kept it in profit.
But instinct cannot be inspected, handed to someone else, or checked against what happened. It lives with one or two people and leaves when they do. Measuring per job does not overrule the person with the feel for it. It gives that person something to compare against, and it makes the judgment visible to everyone else in the company.
If you run a project business and can name last year’s profit but not the profit on the job you finished last month, bring one finished job to the discovery call. Thirty minutes, no charge, and we will try to assemble its real cost out of whatever you already record. What we cannot assemble is the answer.