Examine job quality, not just the order-book total
Separate completed work, signed work yet to be performed, quoted opportunities and variations awaiting approval. Each carries a different level of certainty. A large order book may bring lower-margin jobs or require additional labour, subcontractors and funding.
Compare estimated and actual margins on completed projects. That helps test whether current budgets are realistic. Review cost-to-complete assumptions and explain changes, rather than recognising all expected profit while ignoring the spending still needed to finish the work. Include allowances for rectification or warranty work where the available evidence supports them.
Work in progress and retentions need context
Billing, accounting revenue and cash collection can occur at different times. Reconcile work in progress, progress claims, retentions and outstanding debtor balances. Identify disputed amounts and costs already incurred against future claims.
Cash timing matters when wages, materials and subcontractors must be paid ahead of receipts. Growth can increase this funding gap. A business that looks profitable may still need substantial operating funds, so working-capital assumptions should be visible in the valuation.
Separate plant value from the financing attached
Equipment purchase cost and accounting written-down value are not automatically market value. Age, condition, utilisation, ownership and demand for the asset can matter. Significant plant may need specialist asset valuation input beyond the business valuation scope.
Check finance and lease schedules against the assets, including any equipment owned personally or by another entity. Avoid adding the entire plant value to an earnings-based operating value if those assets are already assumed to generate the earnings. The asset and income approaches must be reconciled consistently.
Bring project records and the balance sheet together
Disclose material disputes, guarantees and warranty obligations at scoping. Their legal effect may require specialist advice, and the report should state how uncertainty is treated.
Before we begin
Your industry information checklist
- Accounts and current monthly reporting
- Job margins, WIP and cost-to-complete records
- Contract pipeline and variations
- Retentions, debtors and creditor schedules
- Plant register, finance and owner duties
We confirm the documents needed once the purpose and scope are clear. For the common starting documents, see our valuation preparation guide.
General business valuation guidance. Service suitability, specialist input and fee are assessed for the individual matter.