General Inquiries

Construction revenue vs. construction sales

  • 1.  Construction revenue vs. construction sales

    Posted 02-05-2019 18:08
    I am trying to find some specific language in the Accounting code that differentiates the difference of Construction sales vs. Construction revenue.

    My Take"
    Construction Revenue - The revenue earned/recognized during the year on a contract. Work Completed.

    Construction Sales - The actual value of the contract.

    Thanks in advance

    ------------------------------
    Christopher Niemiec CCIFP
    Chief Financial Officer
    The Efficiency Network, Inc.
    Pittsburgh PA
    (724) 255-2930
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  • 2.  RE: Construction revenue vs. construction sales

    Posted 02-07-2019 09:04

    I would be interested to better learn the "why" of your question. I think that would be particularly helpful.

    In my experience, the two terms are often used interchangeably and that's not necessarily wrong. Sales and revenue are usually of an historic context, so in construction I'm not sure how you would differentiate the two. I would look at it like this: revenue is the top line(s) on an income statement, and sales generally comprise a significant portion of revenue. Therefore, it stands to reason that sales generally = revenue, but not all revenue = sales. This is assuming that such sales are core to the business and are not peripheral, which would not be reported in the top section of the income statement.

    To visualize:

    Sales - jobs
    Sales - fabrication
    Sales - services
    Royalties

        Total revenue

    Sales are part of the composition of revenue. As far as your take, construction sales would ultimately end up as revenue no matter how you look at it. In a given period, you would recognize job sales for the portion of the contract for which work was completed and that would end up as the revenue reported.



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    Casey Gedgoudas, CPA
    Assistant Controller
    Dunn Building Company, LLC
    Birmingham AL
    (205) 510-0296
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  • 3.  RE: Construction revenue vs. construction sales

    Posted 02-12-2019 16:46

    In both construction organizations I have worked in we used the following to differentiate:

     

    ·         Construction Revenue is that which is recognized on your income statement from your WIP schedule calculations and other service, fabrication or other period revenue for the organization.

    ·         Sales represent contract awards at full contract value and are used for internal reporting within the organization as a means to measure goal attainment and as it relates to the building of backlog.

     

    Bill

     

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