Costing & FinanceFree calculatorPDF, Excel, Word exportIndustrial Machinery

Percentage of Completion (Cost-to-Cost) Revenue Calculator

Machine builders with long engineer-to-order contracts often recognize revenue over time. The cost-to-cost method measures progress by the share of total estimated cost already spent, then applies it to the contract price.

Your numbers

Total contract price

Estimated total cost at completion

Update this every month. It is the most important input.

Cost incurred to date

Include only costs that reflect progress. Exclude uninstalled materials that are not yet used.

Billed to date

Your results

Percent complete

50%

Revenue recognized to date

$600,000

Gross profit to date

$150,000

Estimated gross profit at completion

$300,000

Unbilled (+) or overbilled (-) position

$100,000

Positive is a contract asset (underbilling). Negative is a contract liability (overbilling).

Total expected contract loss

Additional loss provision needed now

Under the usual rule the whole expected loss is recognized immediately; this is the part not yet absorbed by progress.

Educational calculation of the cost-to-cost input method. Your accounting policy, contract terms and auditor determine actual recognition under ASC 606 or IFRS 15.

Free, optional. Reopen it on any device.

Save results:

Revenue and position vs cost to date

Sweeps Cost incurred to date from 0 to 1000000, holding your other inputs fixed.

Automated WIP schedule from your ERP

Optional: ask how project cost and billing data could produce this schedule each month.

Optional. The tool and every export work without this. No spam.

Was this tool useful?

How to use it

Enter the contract price, the current estimate of total cost at completion, the cost incurred to date and the amount billed so far. The calculator returns percent complete, the revenue recognized to date and gross profit to date. It then compares revenue with billings to show whether you have a contract asset (revenue recognized ahead of billing) or a contract liability (billing ahead of revenue). If the estimated cost now exceeds the price, it shows the full expected loss and how much additional provision is required. Run it per contract at each month end, using the cost estimate the project manager signs off.

The method

Percent complete equals cost incurred divided by estimated total cost. Revenue to date is that percentage times price. Gross profit to date is revenue minus cost incurred. The billing position is revenue minus billed amounts. This is an input method permitted under ASC 606 and IFRS 15 when the performance obligation is satisfied over time. Costs that do not reflect progress, such as large purchased equipment delivered to site but not yet installed, are normally excluded from the measure or recognized at cost with no margin, depending on the policy you adopt.

Revise the estimate at completion whenever scope or supplier prices change.
Catch-up adjustments flow through current-period profit.
Keep a loss provision as soon as the estimate exceeds price.

Reading the output

In the default case, 450,000 of 900,000 spent means 50 percent complete, so 600,000 of revenue is recognized against 500,000 billed, leaving a 100,000 contract asset. A large positive position means invoicing is lagging the work and cash is being financed by you; check the milestone schedule. A large negative position means the customer funded the project ahead of progress, which is good for cash but must be shown as a liability. The chart sweeps cost to date and shows both lines moving together.

Common mistakes

The biggest error is a stale estimate at completion: if engineers have found extra work but the number is unchanged, percent complete is understated and profit overstated until a painful catch-up. A second error is counting purchased material at full value as progress. A third is forgetting that warranty cost and commissions belong in the estimated cost. In an ERP, the project cost ledger and billing milestones should feed this calculation automatically at each period close.

Frequently Asked Questions

Is cost-to-cost the only way to measure progress?

No. Output methods such as milestones reached, units delivered or surveys of work performed are also allowed. Cost-to-cost is popular because costs are already tracked and verifiable, but the right method depends on how value transfers to the customer.

What happens when estimated cost exceeds the contract price?

The contract is onerous and the entire expected loss is recognized immediately, not spread across the remaining progress. This calculator shows the total loss and the part not yet absorbed by percent complete.

Does overbilling mean I recognized too little revenue?

No. It means you invoiced more than the revenue earned so far, so the excess sits as a contract liability on the balance sheet. It is a timing difference, not an error, provided the progress measure is sound.

How often should the estimate at completion be updated?

At least every month close, and immediately after any significant change order, supplier cost change or schedule slip. Many companies also require the project manager to document the forecast and have finance review it.

If your project costs and billing milestones are in an ERP, we can build a read-only agent that drafts the month-end percent complete schedule for your controller to review.

Talk to an Expert Explore More Free Tools