Nine jobs in ten hit the estimate. The tenth took the quarter’s profit.

Average job margin is one of the most misleading numbers in a project business, and the reason is structural, not statistical bad luck.

By Steve 5 min read
Abstract bridge artwork for Nine jobs in ten hit the estimate. The tenth took the quarter’s profit.

A firm doing project or job-based work looks at its year and sees an average gross margin of, say, 28%. The estimating process feels sound. Most jobs land close to where they were quoted. And yet the year’s profit is thinner than the average implies, and nobody can quite say where it went. Usually it went into a handful of jobs. Not many, often two or three out of forty. And the reason those jobs are able to do so much damage is not bad luck. It is the shape…

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