Platform
Solutions
Owners
Contractors
Engineering/EPCM
Professional Services
Resources
White Papers
Case Studies
Blog
Videos
Frequently Asked Questions
Company
AboutRead In 14 Minutes
The Hidden Headaches Of Fixed-Price Projects
On paper, fixed-price projects seem blissfully simple: one contract, one scope, one price. But anyone who’s managed one knows that all that simplicity ends when it comes to recognizing revenue, change orders, and ultimately billing the client. It can consume a lot of effort in tracking milestones, tracking progress, creating progress reports and providing the client with the applicable evidence for substantial completion and progress claims.
Achieving frictionless client invoicing involves preparing all that billing backup to send to the client in a clean and organized package. If you don’t have a system that does most of that work for you – to the point where you can create that billing package in a single click of a button – you’re likely buried in spreadsheets, manually stitching together reports and invoices. This can take days or weeks to process and send out. And then you run the risk of pushback from the client. The manual effort can also lead to errors, omissions, missed revenue, and the risk of you looking amateurish to your client.
“Fixed price” can start to feel more like “fixed headache.”
Let’s talk about why managing fixed-price project revenue and billing in spreadsheets might be killing your productivity, slowing your cash flow, and quietly sabotaging client relationships — and what you can do about it.
Revenue Recognition On Fixed Price Projects
Revenue on a fixed price project is typically recognized by one of two methods:
- Project Progress. Usually presented as a physical percentage of completion on specific client deliverables.
- Agreed upon Milestones. Usually presented as one or more predetermined deliverables being achieved – evidenced by substantial completion of the milestone.
While those two methods can have a lot of overlap, there are differences between them I’ll discuss a bit further down.
In addition to the above revenue recognition events, fixed price contracts can also have other billable events, such as:
- Advance payments. An agreed sum to cover initial out-of-pocket expenses the contractor has to incur to begin work on the project. Such as material purchases, rental equipment, etc.
- Holdback or retention. A payable amount that’s held back by the client on each invoice that’s payable once all work has been satisfactorily completed.
Revenue Recognition: Progress vs. Milestone
Progress
Submitting a payment claim that’s based on the amount of progress completed on a project requires considerable sophistication in planning, tracking and progressing the project. Progress is expressed by percentage of completion. The payment claim is essentially the total amount of the deliverable multiplied by the percent complete.
The challenge is: how do you measure progress? Sometimes it’s easy enough if there are quantifiable units that can be measured and supported by an inspection. But often it’s more nuanced and complex than that.
The contractor needs to carefully plan both how they’re going to measure progress, and additionally how they’re going to demonstrate the progress made. Without substantial proof, the client may push back requesting that you provide better support for your claim.
Without a system to plan, organize, track and calculate these values, it ends up being a chaos of spreadsheets that are often barely defensible to the client. They’re frequently little more than whimsical guesses that the contractor hopes the client doesn’t challenge.
Milestone
Recognizing revenue by milestone is certainly more concrete than by progress, as it’s typically laid out ahead of time the exact requirements for meeting the milestone. It requires a lot more upfront planning and negotiation as to determining the criteria for the milestone, along with what the milestone is worth. In addition to when the milestone will be completed; and any penalties (or incentives) for being late – or early.
Once the contractor has met the conditions for the milestone, there’s less probability that the client will challenge it as long as the contractor has supported it with the necessary evidence.
Similar to measuring progress, without a system in place to help plan, organize, track, report and document revenue recognition by milestone, this can also be a nightmare to manage in spreadsheets. It usually starts with a simple tracker sheet … and ends with six linked tabs, 40 formulas, and at least one circular reference nobody can fix.
Learn More About Cash Flow Planning
Damage To Your Cash Flow & To Your Reputation
Submitting claims that are not thorough and well organized can do more damage than the hassle of a rejected invoice – whether they’re by progress or milestone. They can also damage the reputation of the contractor.
The spreadsheet approach to billing leads to delayed billing cycles, the potential of missed revenue, and a painful end-of-month scramble. Your team’s time is spent reconciling spreadsheets instead of getting ahead of the project and keeping crews productive. It also slows your ability to invoice — meaning more days between entitlement for compensation (i.e., completed work) and client billing. That often translates into more days stuck in accounts receivable limbo.
Hidden Costs Include:
- Cash flow strain from delayed billing
- Accounts receivable carrying costs
- Lost time spent wrangling spreadsheets and manually building reports
- Less time spent enabling work fronts, securing materials, ensuring safe access, etc. (i.e., rework and downtime)
- Damaged client relationships from inconsistent billing
- Inability to forecast cash flow
From Chaos to Clarity: A Unified System
Moving forward from spreadsheets and into a project management system that takes care of all the details, organizes your billings and produces single-click reports, can save a tremendous amount of time, money and resources. And allow you to impress your clients with crisp, accurate billings that are timely and orderly.
Imagine having a project management system that not only takes care of all the project planning, project controls, change orders, forecasting, resources, etc. – but also manages your client contract management, revenue recognition and billing. A system that understands the difference between Lump Sum contracts and Time & Materials contracts and even Unit Price contracts. And even a hybrid of all of them. A system that allows you to see exactly where the project stands — scope delivered, revenue earned, cost incurred, profitability — and what’s ready to bill. No guesswork. No spreadsheet archaeology.
That’s the power of moving to a unified platform like 4castplus, with proven revenue and billing workflows built on earned value management principles and refined over 15 years of industry best practices.
With tools designed specifically for fixed-price projects, you can:
- Automatically recognize project revenue and cost of sales based on actual progress
- Generate billing packages in minutes, not days
- Minimize errors and disputes through transparent, traceable workflows
- Dramatically reduce Days Sales Outstanding and speed up cash collection
And here’s the kicker: it’s not just your billing team that benefits.
Project managers gain real-time visibility into earned value. Finance teams get timely and accurate revenue forecasts. And your clients? They receive clear, timely invoices they’re happy to sign off on — because, let’s be honest, they’ve got internal hurdles too.
Real Results, No Spreadsheet Required
When your project controls, billing, and revenue recognition all live in the same ecosystem, things just flow better. Cash flow improves. Client conversations shift from “Why is this invoice wrong?” to “What’s next on the project?”
And most importantly — your project controls team can get back to actually doing project controls.
Final Thoughts
Simplifying fixed-price project billing isn’t just about saving time — it’s about empowering your teams, tightening operations, and building trust with your clients.
Platforms like 4castplus bring the entire ‘work-complete-to-invoice-creation’ process into one unified system. That means you can:
- Create billing invoices directly within the platform
- Enforce revenue recognition controls for auditability and compliance
- Automatically generate billing backup from integrated timesheets and vendor invoices — including client-facing comments
- Leverage customizable approval workflows to improve visibility and eliminate bottlenecks
- Track project margin in real time and spot issues before they escalate
- And gain full visibility into revenue and cost of sales at the work package level, helping you manage the details without losing sight of the big picture
The result? Smoother billing cycles, fewer surprises, stronger cash flow, and a lot less time buried in spreadsheets.
So, if your current process feels more like alchemy than accounting, it might be time to explore how 4castplus can help you recognize revenue without the guesswork — and keep every fixed-price, T&M, Unit Price or Cost Plus project on track, on budget, and in control.
Let the spreadsheet rest. You’ve got projects to run.
Learn More
Want to learn more about how 4castplus can help you take control of project costs? Whether you’re facing budget overruns, delayed change orders, or disconnected systems, 4castplus delivers real-time visibility, accurate forecasting, and streamlined cost management—all in one platform. Discover how you can simplify processes, eliminate manual errors, and ensure every project stays on track, on budget, and ready to scale.
