The Loss You Book at 90 Percent Was There at 40
Every contractor has finished a job that made money right up until it didn't. The estimate said 14 points. The final accounting said 4. Nobody stole the difference. It bled out a few $1,000 at a time across 8 months, and the first time anyone said the word "problem" out loud was at 90 percent complete, when there was no job left to fix it on.
Construction accountants who read work-in-progress schedules for a living will tell you profit fade is the most common financial problem in the trade. Not fraud. Not one catastrophic job. Slow erosion on work that looked fine the day you bid it.
The number moves whether you watch it or not
A fixed-price job carries one honest question underneath it the whole time. What will it cost to finish from here, and does that still leave the margin you bid. That number changes every week. Material lands over the estimate. A crew that was supposed to be off the site in June is still there in July. A change gets built before it gets priced, then it gets argued about instead of billed.
The cost side is moving faster than usual right now. The Associated Builders and Contractors, reading federal producer-price data, reported nonresidential construction input prices climbing at roughly a 12.6 percent annualized rate in the first 2 months of 2026. Engineering News-Record put its building cost index up 4.2 percent for 2025, with structural steel up almost 12. If your estimate assumed last quarter's prices and your job runs 18 months, some of the fade is already baked in before a shovel moves. The only open question is when you find it.
Find it at 40 percent, not 90
The tool that finds it is the work-in-progress schedule, and most contractors under $50 million treat it as something the accountant produces once a year for the bank. Run it monthly and it turns into an early-warning system. Cost to date against total estimated cost tells you percent complete. Percent complete against the contract tells you what you have earned. Earned against what you have actually billed tells you whether you are ahead of the customer or behind.
When your estimated cost to complete quietly rises month over month on the same job, that's fade, and you can see it at 40 percent done. At 40 percent you still have moves. You can push the unpriced change order to resolution. You can tighten the crew before the next phase. You can stop the bleed while there's still job left to protect. At 90 percent all you can do is book the loss and write the explanation.
Finance people who watch these schedules closely tend to catch the fade around the halfway mark and renegotiate scope before the loss sets. That's the entire value of the report. It buys you time to act while acting still changes the outcome.
Estimating is where fade is born
A job that fades in the field was often mispriced in the office. The estimate carried no escalation on material for work that would run through 2 buying seasons. It assumed a production rate the crew has never once hit. It priced the scope on the drawings and left the change-order process to sort itself out, which it never does in your favor.
Estimating discipline is unglamorous, and it's where the margin actually lives. Price escalation into anything running more than a few months. Estimate labor off your own historical production numbers, the real ones from past jobs, not the optimistic figure that wins the bid. Build a change-order procedure that prices the work before the work happens, and hold to it even when the customer is in a hurry, because the customer is always in a hurry.
The contractors who carry their bid margin all the way to the final accounting are rarely the ones who bid the sharpest. They're the ones who read the number every month and act on it early. Pull your WIP this week and look at the cost-to-complete column on your 3 biggest open jobs. If it has moved and nobody told you, you just found next quarter's problem while you can still do something about it.