1. What is Construction Backlog?

Construction backlog refers to the value of work that has been contracted but not yet completed. It represents future revenue for construction companies and is a key indicator of business health and future workload.

2. How Backlog is Calculated

The backlog is calculated using a simple formula:

Where:

• Total Contract Value — The full contracted amount for the project
• Completed Work Value — The portion of work already completed and billed

Explanation: The difference between the total contract amount and the work already completed represents the remaining work to be done (backlog).

3. Importance of Backlog Tracking

Details: Tracking backlog helps construction companies:

• Forecast future revenue and cash flow
• Plan workforce and resource allocation
• Assess business growth and stability
• Make strategic decisions about bidding on new projects

4. Using the Calculator

Tips:

• Enter the total contract value in dollars
• Enter the value of completed work to date
• Ensure completed work value doesn't exceed total contract value
• Update values regularly to track backlog changes

5. Frequently Asked Questions (FAQ)

Q1: How often should backlog be calculated?
A: Most companies calculate backlog monthly as part of their financial reporting process.

Q2: What's a healthy backlog amount?
A: Typically 8-12 months of work, but varies by company size and project duration.

Q3: Does backlog include potential change orders?
A: Only approved change orders should be included in backlog calculations.

Q4: How does backlog differ from accounts receivable?
A: Backlog represents future work, while accounts receivable represents completed work that hasn't been paid yet.

Q5: Should subcontractor work be included?
A: Yes, include all contracted work regardless of whether it will be performed in-house or subcontracted.