How to Read Your Backlog Like a Banker: Timing, Diversification, and Gross Profit Discipline

How's your backlog right now? In Part 6 of the Construction Accounting Series, Eric sits down again with CPA Kathe Barrington to unpack what backlog really is, and what it isn't. They dig into why committed-but-unstarted jobs belong on your WIP the day you're awarded, how to use backlog to forecast labor, equipment, and cash, and why a backlog that looks great in aggregate can still leave you with a nine-month hole in the schedule. Kathe lays out the ideal backlog-to-revenue ratio, the red flag of growing backlog with compressing gross profit, how client and project-type concentration creates fragility, and who needs to be in the room for the monthly backlog review. If you want backlog to function as a real planning tool, not a vanity number. This conversation is the blueprint. What You'll Learn What backlog actually is - remaining contract, remaining cost, and remaining gross profit to complete Why letters of intent and verbal awards should NOT count as backlog Why unstarted-but-committed jobs belong on your WIP the day you're awarded (and what bank & bonding are looking for) How to translate a WIP snapshot into a month-by-month forecast of labor, equipment, and cash How far out you should be forecasting labor (hint: 6–12 months minimum) The ideal backlog-to-revenue ratio - and why 3–6 months makes Kathe nervous How backlog profiles differ between GCs and subs, and what that means for planning The aggregate-number trap: why jobs bunched up at the same finish line signal trouble When you can tighten margins as you scale - and when compressing gross profit becomes dangerous Client and project-type concentration risk - diversification as insurance How often to review backlog (monthly, with the financials) and who belongs in the room The questions that should drive the conversation beyond the numbers How to use backlog data when the market shifts - lessons from 2008 and COVID The three questions Kathe asks first when she takes on a new client's books   Connect with Kathe LinkedIn: Kathe Barrington, KB CPA Facebook: Kathe Barrington / KB CPA   The Construction Accounting Series with Kathe Barrington This is Part 6 of an ongoing series. Catch up on the full run: Part 1 — Ep. 357: WIP Reports Made Simple: The Key to Stopping Hidden Job Losses Part 2 — Ep. 359: How to Use Your WIP to Protect Cash and Grow Profitability Part 3 — Ep. 364: Why the Field and Accounting Are Both Right (Physical Progress vs. Financial Reporting) Part 4 — Ep. 368: Underbillings Bad. Overbillings Better: The Cash Flow Truth Construction Owners Can't Ignore Part 5 — Ep. 377: Why Your Jobs Look More Profitable Than They Are: Indirect Allocations and Overhead in Construction  

Your meeting transcripts are the most valuable data set your company throws away. This is ChatGPT 201, part two of our AI for construction companies series with Dylan Davis, AI consultant and coach and my collaborator on the Construction Genius GPT course. We take one task every contractor has, the meeting follow-up email, and turn it into a repeatable AI workflow you can run every week. What you'll learn: What makes an AI workflow instead of a one-off prompt How to find your best automation targets inside the bid, the build, and the bill How to teach ChatGPT your writing style with three to five sample emails How to make the AI grade its own work before you see it Why you should let the AI write the prompt, and how projects make it repeatable What to do when the output is bad (hint: it's your fault)   Get on the waitlist for the Construction Genius GPT Course: https://ericanderton.activehosted.com/f/255 Connect with Dylan Davis: https://www.linkedin.com/in/dylantdavis/ Dylan's YouTube Channel: https://www.youtube.com/@dylandavisAI  

Elon Musk builds rockets. You build buildings. Different industry. Same problems. Bad requirements, bloated processes, too many parts, slow cycle time. Eric Jorgenson is the CEO of Scribe Media and the author of The Book of Elon, a curated collection of Elon Musk's most useful ideas drawn from his tweets, interviews, and public conversations. In this episode, we walk through Elon's five-step algorithm and apply it directly to how construction companies get work, plan work, and build work.   What you'll learn: Why questioning requirements and deleting parts is 80 percent of the algorithm How the idiot index reveals where your supply chain is taking you for a ride First principles thinking vs. reasoning by analogy, with concrete construction examples Why fast is actually cheap and how it breaks the construction trilemma How to attack the bottleneck instead of running the calendar How to give people hardcore feedback without making it personal   Get The Book of Elon (free digital version): https://www.elonmuskbook.org/ Connect with Eric Jorgenson on LinkedIn: https://www.linkedin.com/in/erjorgenson/ Eric's newsletter: https://www.ejorgenson.com/newsletter Eric's podcast, Smart Friends: https://www.ejorgenson.com/podcast Free Succession Planning Guide: https://www.constructiongenius.com/free-succession-planning-guide  

AI won't fix a badly run company. But if you're already running a good one, it can save you hours every week on the work that eats your time: RFIs, change order drafts, meeting summaries, estimating. Dylan Davis is an AI consultant and coach, and my collaborator on the Construction Genius GPT course, where we teach construction professionals to use AI on real work. This is part one of our new series on AI for construction companies: AI 101, in plain English, with zero hype. What you'll learn: What AI actually is (a prediction machine) and where it fits in everyday construction work Why context, not prompting, is the last competitive lever left The What-Why-How framework for getting useful output every time Why the first answer is the start, not the finish, and how to iterate like a pro Which model to use for which task: ChatGPT, Claude, or Gemini How to keep your company data safe, and the one thing Dylan won't let AI do Three moves to make on day one of your AI journey   Get on the waitlist for the Construction Genius GPT Course: https://ericanderton.activehosted.com/f/255 Connect with Dylan Davis on LinkedIn: https://www.linkedin.com/in/dylantdavis/ Dylan's website: https://offerings.gradientlabs.co/ Dylan's YouTube Channel: https://www.youtube.com/@dylandavisAI Free Succession Planning Guide: https://www.constructiongenius.com/free-succession-planning-guide  

Daniel McCaulley, P.E., is the founder of Ultimus Engineering, a faith-based engineering firm in Texas delivering MEP, aquatics, and structural engineering across 22 states. On this episode, Daniel shares what he learned from his first failed hire, how he transitioned from corporate engineering to running his own firm, and why the human side of client service matters more than ever. Key Takeaways: Remote work is a privilege, not a right. Small firms need people who understand that every hour is visible. Daniel moonlighted for two years and saved a year of living expenses before going full time. Preparation beats hope. Spending more time on engineering upfront saves money and headaches during construction. But you need the communication skills to sell that to clients. Picking up the phone, turning around quotes in 24 hours, and being accessible are the simplest ways to separate yourself from the competition. AI is a tool, not a personality replacement. If your emails sound like a robot and you sound like a human, you'll lose trust faster than you think.   Connect with Daniel McCaulley: Website: https://ultimus.engineering LinkedIn: https://www.linkedin.com/in/danielmccaulley/ Email: [email protected] Phone: 214-384-7762  

Jon Dario is an author, speaker, and retail leadership expert who has held leadership roles with some of the top companies in the retail and financial services industries including Macy's, Gap, and Bank of America. He is currently CEO of a real estate company in the metro NY area. Jon is the creator of AIM, a system that turns managers into execution machines and enables them to deliver radically reliable results. His fifth book, AIM, is available for purchase. In this episode, Jon walks through the Pyramid of Standards, a framework for defining what matters most in your business and making sure your team executes on it every day. He built it in the Gap outlet division after watching managers prioritize the wrong things while customers walked out the door.   Key takeaways: The Pyramid of Standards creates a hierarchy of what matters most—foundation first, supplemental later. Observation beats assumption. Walk your jobsites and see the business through the customer's eyes before setting standards. Follow-up frequency is the difference between standards that stick and standards that slip. Be predictable and relentless. Great leaders adopt a white belt mentality—they stay learners and unlock answers in their team instead of dictating them. Consistency and habits drive long-term success, not heroics in the bottom of the ninth.   Connect with Jon Dario: Website: https://jondario.com/ LinkedIn: https://www.linkedin.com/in/jondario/ AIM Book: https://www.amazon.com/Aim-Managers-Radically-Reliable-Results/dp/1966786778/

Melissa Drew is the Founder and President of InSite BUILD, a construction management firm based on Maryland's Eastern Shore that specializes in complex state-procured projects. After 20 years with national contractors including Holder Construction and Gilbane, she started her own firm to bring big-project experience to a smaller, more relationship-driven model. In this episode, she shares how she manages complex projects, builds trust with contractors and owners, and leads a growing startup in a tight-knit market. Key Takeaways: Two extra weeks of planning at the start of a multi-year project can prevent months of rework Superintendents need permission to slow down. That permission has to come from leadership Trust is built in small moments, not just when the big problems hit Hiring for a startup construction firm means finding people who love the work, not just the structure When your team is full of introverts, pressure makes them go quiet. A leader's job is to keep the conversation going Connect with Melissa Drew: LinkedIn | insite-build.com

Every project team says they're going to communicate well. Then the project starts, and it falls apart. Why? Nobody stops to unpack what communication actually means for the people in the room. Kyle Majchrowski, author of Powerful Conversations and founder of Next Intent, has spent 20+ years on the owner side of construction and has facilitated hundreds of these conversations. He walks through the structured process that takes just 45 minutes and changes the way teams operate. Key takeaways: Trust means different things to different people. Kyle defines it as "the belief that others have your back when you're not in the room." The four cornerstones of trust (care, competence, sincerity, reliability) explain most of the tension you'll see on a project team. One question at kickoff can shift everything: "Do you naturally trust people, or do you expect them to earn it?" CliftonStrengths and Enneagram are worth your time. DISC oversimplifies. Great leaders move between team member, guide, and authority, sometimes within the same meeting.   Connect with Kyle Majchrowski: Next Intent: https://www.nexintent.com Website: https://kylemajchrowski.com LinkedIn: https://www.linkedin.com/in/kylemajchrowski

A $1 mistake in pre-con becomes $10 on the jobsite and $100 after occupancy. That's the 1-10-100 rule — and it's why upstream coordination failures are the most expensive mistakes in construction. Scott Reynolds, co-founder and CEO of UpCodes, joins Eric to break down where compliance mistakes actually start, why the design-to-field handoff is still broken, and how AI-powered code compliance is helping teams catch problems before they pour concrete. Topics covered: the 1-10-100 rule of construction mistakes, AI guardrails for building code accuracy, QA/QC automation in pre-construction, the architect-to-GC handoff problem, code compliance on the jobsite, and what will be table stakes in five years.   Connect with Scott and UpCodes: https://up.codes Connect with Eric: https://www.constructiongenius.com Get the Construction Genius Book: https://www.amazon.com/dp/B0DDJF3PTF  

Your body language on the jobsite isn't just showing how you feel. It's shaping how you feel, how your team performs, and whether your project partners want to work with you again. In this solo episode, Eric breaks down the research behind body language and leadership — from the NFL to the Olympics to the construction jobsite. You'll learn the body-mind loop that deepens or reverses your emotional state under pressure, why the higher your status the more damage your negative body language inflicts, and the Big Three habits that protect your composure when it matters most.   Key Takeaways: Your posture participates in creating your internal state — not just reflecting it When leaders visibly deflate, it ripples through every person who sees it Body language is a trainable skill, not a personality trait Book a 10-minute coaching call with Eric: https://10minutes.youcanbook.me