Live margin tracking — knowing what a job makes while it runs

Your commercial manager closes the month on the 12th. The cost report says the job is making 14%. Everyone exhales. Then over the next fortnight the subbie claims roll in — work that was done back in the period you just closed — and three variations get priced that everyone forgot to cost. By the time the picture settles, that 14% was really 9%, and you found out a month after you could have done anything about it.

That gap — between the margin you reported and the margin that was actually true on the day — is the entire case for live margin tracking. The month-end number isn't wrong because someone made a mistake. It's wrong because it's a photograph of three weeks ago.

The end-of-month problem

Traditional cost reporting lags reality by three to six weeks, structurally, for reasons that have nothing to do with effort:

• Engaged-contractor claims arrive after the cost was incurred. The crew worked in week one; the claim lands in week five.
• Variations get priced after they're done, not when they're instructed.
• Dockets get coded at month-end, so the cost report only sees them once a month.

Stack those lags and the number on your month-end report is always the number from three weeks ago. In a market where a job's margin can turn in a fortnight, that's not a report — it's a memory.

What "live margin" actually means

Live margin is revenue earned today minus cost incurred today — including the cost that's already happened but hasn't been claimed or invoiced yet. That last clause is the whole game.

It is not forecast (a guess about the future). It is not committed spend (what you've ordered). It's earned versus incurred, as of right now.

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Lagging margin tells you what the job made last month. Live margin tells you what it's making while you can still change it.

The five numbers on every budget line

For margin to be live, every budget line has to carry five numbers that move in lockstep:

The fifth is variance — forecast against budget — and it's the one your project manager actually acts on. When all five track together on every line, variance updates the moment a docket is approved, not the moment the month closes.

The cost that's incurred but not yet claimed

This is the precise difference between live margin and lagging margin, and it's worth being concrete about.

When a docket is approved on site today, the cost is incurred today — even though the subbie won't claim it for a month. A lagging cost report doesn't see that cost until the claim arrives. A live one rolls it into the cost-code total the moment the docket is approved, alongside finalised diary cost. No guessing, no accrual gymnastics — the docket is the source, and it's already in the system.

That's why docket discipline and live margin are the same problem wearing two hats. The roll-up is only as live as the cost feeding it.

The four contract types

One more wrinkle: the revenue side of the margin depends on how the contract recognises it. Schedule of Rates, Bill of Quantities, Lump Sum, and Cost Plus each treat earned revenue differently. The same docket evidence sits underneath all four — but a lump-sum job earns revenue against progress, where a cost-plus job earns against incurred cost. Live margin has to model both sides correctly, or you've made the cost live and left the revenue lagging.

What changes when margin is live

The behaviour shift is the point of the whole exercise:

• Project managers see variance the day it lands, while there's still room to recover it.
• Commercial managers stop closing the month on guesses — the number is already current.
• Contractors know which jobs are bleeding before the bleeding reaches the P&L.

A job losing money doesn't announce itself at month-end. It leaks, line by line, in real time. Live margin is simply the discipline of watching it leak while you can still turn the tap.

Where tectm fits

The bet underneath tectm is that construction teams should know their margin while the job is still running. That means:

• Approved dockets and finalised diary cost roll straight into cost-code totals — incurred cost is live, not month-end.
• All five numbers compute per budget line, with variance updating on every approval.
• Revenue recognition is modelled per contract type, so margin is right on SOR, BoQ, Lump Sum, and Cost Plus alike.

The result is the number the worked example at the top was missing: a margin that's true today, not true three weeks ago.

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