Physical progress: what it is and how to calculate it (with a worked example)
The progress statement you submit to the client is for invoicing. Physical progress is for you: it tells you how much work you've really done and whether, for that work, you're spending what you planned. It's the first indicator to look at to see whether a project is going well. (In Italy this is known as "SAL fisico", as opposed to the certified "SAL contabile".)
Certified progress and physical progress are not the same thing
Certified progress is the document, prepared by the works supervisor, that certifies the value of completed work so a payment certificate can be issued. It depends on the contract, the work items recognised and the verification timeline: it can lag weeks behind what's actually happening on site.
Physical progress is an internal measure: the percentage of the work actually completed, assessed by the contractor on quantities installed and phases finished. It isn't for invoicing — it's for controlling costs while the work is in progress.
Rule of thumb: certified progress looks at certified revenue; physical progress looks at work done. To know whether you're making money, you need the second.
How to measure the physical progress percentage
- Break the project into work packages (excavation, foundations, structure, MEP, finishes…) and give each its weight on the total, usually its budget value.
- Assess the progress of each package: quantities installed versus the total, or milestones reached (0% – 50% – 100%).
- Calculate the weighted average: the sum of weights × progress gives the project percentage.
| Work package | Weight (€) | Progress | Earned value (€) |
|---|---|---|---|
| Excavation and foundations | 15,000 | 100% | 15,000 |
| Structure | 35,000 | 10% | 3,500 |
| MEP systems | 25,000 | 6% | 1,500 |
| Finishes | 25,000 | 0% | 0 |
| Project total | 100,000 | 20% | 20,000 |
In this example physical progress is 20% and the production value earned is €20,000.
From physical progress to phase margin
Once you know the percentage, cost control becomes a comparison of three numbers:
- Production value = project total × physical progress → 100,000 × 20% = €20,000
- Attributable costs = budgeted costs × physical progress. If the cost budget is €40,000 (planned margin 60%), the share is 40,000 × 20% = €8,000
- Theoretical phase margin = production − attributable costs = 20,000 − 8,000 = €12,000
So far this is theory: it tells you what you should have spent for the work done. The next step is to compare the attributable costs (€8,000) with what you've actually spent. If actuals show €40,000, you have a serious problem — exactly the kind of variance that cost-to-cost makes explicit.
Watch out for materials on site
Actual costs also include materials already bought and delivered to site but not yet installed. They're a cost incurred, but they aren't production: if you count them as phase cost, the phase margin looks worse than it is; if you ignore them, you forget a real outflow. The solution is to keep them in a separate line (in the V-Site cost control example: "Materials on site: €32,000") and move them into phase cost as they're installed.
How often to update physical progress
At least every two weeks, or at every significant milestone. Updating it only at month-end, together with the accounts, means spotting variances weeks late. If the site manager updates percentages from the app and costs arrive automatically from attendance, materials and vehicles, the recalculation is immediate.
Frequently asked questions
What's the difference between certified and physical progress?
Certified progress certifies work to the client for invoicing; physical progress measures internally how much work is complete, for management control.
How is the physical progress percentage measured?
By breaking the project into work packages weighted on the budget and taking the weighted average of each one's progress.
What are materials on site?
Materials delivered to site and not yet installed: a cost incurred, but not production. Keep them in a separate line.
Physical progress and phase margin calculated for you
In V-Site you enter the progress percentage: production, attributable costs, phase margin and materials on site update automatically, site by site.