Construction Business Financial Model

 Planning out the financials of a construction business is important. You want to have a good mental model for how the cash will flow through the business and what kind of profits you may have based on some given assumptions. This financial model will help you test pricing, estimate construction costs (labor / materials / equipment), and do so at scale.

$75.00 USD

After purchase, the Excel sheet will be immediately available to download. This template is also included in the industry-specific financial models bundle. Last Version Update: 10/26/2022

The focus of this model is to do a good job at forecasting cash flow at scale. That means an arbitrarily large/small number of jobs started per month and defining key financial attributes of each job. To do this, you will be able to configure up to three job types.

Job Type Configuration (Each Job Type has a Section):

  • New Jobs Started per Month (can be defined monthly over the course of 10 years)
  • % of Job Completed per Month on Average (define %'s on a monthly scale)
  • Average Value per Job (contracted amount paid)
  • Amount of Cash Collected Over Job life cycle (define %'s on a monthly scale)
  • Average Materials Cost per Job
  • When Cash is Paid for Materials within job life cycle (define %'s on a monthly scale)
  • Average Equipment Rental Cost
  • When Cash is Paid for Rentals within job life cycle (define %'s on a monthly scale)
  • Define up to 10 worker slots, worker count per slot, weighted avg. hourly rate, avg. hours worked per job, payroll taxes/benefits %
    • For the worker slot section there is a sanity check that shows on average how many hours per day each worker is working based on the % completion of a job each month relative to the total hours a worker will work on a single job. This is to make sure the assumptions being entered are not out of line.
Output Reports:
  • Monthly and Annual 10 Year Pro Forma Financial Statements - Includes Income Statement, Balance Sheet, and Cash Flow Statement. One dynamic that comes up often in a construction business is the reconciliation of revenues (earned vs. when cash is collected). To reconcile those differences, a receivables / unrecognized revenue accrual account is shown on the balance sheet. If it is negative, that means you have collected cash on work not yet performed and if it is positive that means you have done work that has not yet been paid for (receivable).
  • Annual 10 Year Executive Summary - Shows key financial line items / cash flow / returns
  • DCF Analysis - Shows NPV and IRR for the project as a whole and for investors / owners if the equity required is raised from outside investors. If not, that section can be zeroed out on the cap table.
  • Visualizations - Displays key financial outcomes based on the assumptions. This makes the numbers more digestible and it is easier to see how changing the assumptions will effect overall expectations of cash flow / pay back / job counts.
  • Monthly and Annual Pro Forma Detail - This is where you see how all the assumptions come together into order to drive EBITDA and cash flow. The gross profit earned is displayed for each job type and in aggregate.
In order to be able to calculate the economics of many jobs happening over time and at the same time, a matrix of 1,200 rows was used for each job type. On those matrix tabs, you will see how everything aggregates together and how each individual monthly cohort is performing / changing as the assumptions change.

Other Items:
  • Global Control - Define launch year, end month (up to 10 years), and exit multiple (per EBITDA trailing 12-months from exit month), as well as view global sanity checks.
  • Cap Table - Define who is contributing what in order to come to the minimum equity required as well as how distributions flow
  • CapEx - Define any purchases of capital assets. This will often be construction equipment if you choose to buy instead of rent. Depreciation is driven from this tab.
  • Debt - If any of the startup costs will be funded via a conventional bank loan, you can define the amount and terms accordingly.
  • Startup Costs - To account for any other spend that happens before the business launches, you can enter initial costs here. This would be excluding any capital assets or costs that are accounted for elsewhere that are already entered.

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