How to compute backlog in months and compare it with ABC's 8.5-month August reading

Mon, 28 Sep 2026 11:39:00 -0400

Backlog is the dollar value of work a contractor has signed and not yet performed. Expressed in months, it tells an owner or CFO how long the company could keep its crews and overhead busy at last year’s pace without winning another job. Associated Builders and Contractors (ABC) publishes a national version every month, and it read 8.5 months in August 2026, up 0.5 months from July and unchanged from August 2025.

Your own figure comes from the same records that feed the work-in-progress schedule. The columns are covered in the WIP schedule walkthrough from September 26.

The formula ABC uses

ABC’s methodology note defines backlog as the amount of work, measured in dollars, that companies are contracted to perform and have not yet completed. Each surveyed member firm reports its revenue for the previous year and its current backlog. ABC’s chief economist converts each firm’s dollars to months with this formula:

Take the current month’s backlog in dollars.
Divide by the prior fiscal year’s revenue.
Multiply by 12.

A firm with $6 million of backlog and $12 million of revenue last year has 6 months. ABC says the longer the backlog, the more comfortable contractors can be about the near term, and that backlog tends to fall during economic stress because firms keep delivering work while signing fewer new contracts.

What counts as backlog

Count every signed contract at its current value, including approved change orders, and subtract the revenue already earned on it. Signed work that has not started counts at full value. Leave out verbal awards and jobs where you are low bidder without a contract, because ABC’s definition covers work a company is already contracted to perform.

Measure backlog on the revenue side. An article by American Global published on IRMI, a risk and insurance publisher, describes a backlog figure some sureties take from the WIP as total estimated cost minus cost to date. That cost-based number runs lower than the revenue-based one by the profit still to be earned, so pick one basis and label it on every report.

A worked example

The table below is an example with round numbers. It shows a contractor with five signed jobs and $60 million of revenue in its last fiscal year.

Example backlog at one month end, five signed jobs (illustrative figures)
Job	Status	Revised contract	Revenue earned to date	Backlog	Est. margin	Gross profit in backlog
Job A	In progress	$12,000,000	$9,000,000	$3,000,000	10.0%	$300,000
Job B	In progress	$20,000,000	$5,000,000	$15,000,000	8.0%	$1,200,000
Job C	In progress	$8,000,000	$2,000,000	$6,000,000	12.0%	$720,000
Job D	Signed not started	$18,000,000	$0	$18,000,000	9.0%	$1,620,000
Job E	In progress	$4,000,000	$3,000,000	$1,000,000	10.0%	$100,000
Total		$62,000,000	$19,000,000	$43,000,000	9.2%	$3,940,000

Backlog is $43 million. Divided by $60 million and multiplied by 12, that is 8.6 months, close to ABC’s national August reading of 8.5.

Job D carries $18 million of that total and has not started. If it runs 24 months, it adds $750,000 of revenue a month, well below the $5 million a month the company averaged last year. The months figure assumes backlog burns at last year’s average pace, so a large job that has not started can raise the months figure while revenue over the next six months stays low.

Which revenue to divide by

ABC divides by the prior fiscal year’s revenue, and that choice matters for a company that is growing. Suppose revenue over the trailing twelve months reached $72 million. The same $43 million of backlog is then 7.2 months.

Use prior fiscal year revenue when you compare with ABC, since that matches its survey. Use trailing twelve-month revenue in internal reporting, because it tracks the company’s current pace of work, and put both on the report when they differ by more than a month.

Profit in the backlog

Old Republic Surety writes that underwriters check whether there is profit left in the backlog, and compare the profit remaining with expected overhead.

In the example, the five jobs carry $3.94 million of estimated gross profit still to be earned, a weighted margin of 9.2%. If company overhead runs $400,000 a month, that profit covers about 9.9 months of overhead. The table multiplies each job’s remaining revenue by its estimated margin, which assumes profit is earned evenly over the job; for a job with margin fade, use the current estimate, since the bid margin will overstate it.

IRMI’s article adds that most sureties set capacity partly from a ratio of working capital to backlog. A larger backlog with the same working capital uses more of that capacity.

Reading your number next to ABC’s

ABC’s survey covers member firms in nonresidential construction, split into commercial and institutional, heavy industrial, and infrastructure work. It breaks the national figure out by segment, region and firm size, and the size split is the fairest comparison for most readers.

ABC Construction Backlog Indicator in months, by segment, region and annual revenue
Group	August 2026	July 2026	August 2025	1-month change	12-month change
All contractors	8.5	8.0	8.5	0.5	0.0
Commercial and institutional	8.5	8.0	8.3	0.5	0.2
Heavy industrial	8.3	9.2	11.0	-0.9	-2.7
Infrastructure	10.0	8.8	11.2	1.2	-1.2
Middle States	7.8	7.1	8.3	0.7	-0.5
Northeast	7.8	7.3	8.0	0.5	-0.2
South	9.8	10.1	10.0	-0.3	-0.2
West	8.3	6.9	6.6	1.4	1.7
Revenue under $30 million	7.5	7.0	7.1	0.5	0.4
Revenue $30 million to $50 million	8.9	7.0	9.7	1.9	-0.8
Revenue $50 million to $100 million	10.1	9.3	10.1	0.8	0.0
Revenue over $100 million	11.9	12.1	13.5	-0.2	-1.6

Source: abc.org

Backlog rises with firm size in ABC’s data, from 7.5 months for firms under $30 million in revenue to 11.9 months for firms over $100 million. The example contractor falls in the $50 million to $100 million group, which read 10.1 months in August, so its 8.6 months sits 1.5 months below firms its size. Among the size groups, only the largest firms saw backlog fall from July, and ABC says year-over-year gains were concentrated among firms under $30 million.

ABC also reports backlog by whether a firm has data center work. Its chief economist, Anirban Basu, said firms with data center work averaged 9.9 months in August and firms without it averaged 8.3. He also said roughly 1 in 6 ABC members is under contract on a data center, the highest share on record.

Compare the direction of your figure with ABC’s as well as its level. If ABC’s reading for your segment and size group rises for three months while yours falls, your win rate or bid volume is the first place to look.

Caveats

ABC’s release notes that the indicator measures the previous month’s work under contract, based on the latest financials each firm has. The survey for August ran from August 20 to September 4, and ABC released it September 15. The pages opened for this post do not give the number of responding firms, and ABC does not describe the monthly figure as seasonally adjusted, so part of a half-month move can come from which firms answered that month. ABC says it encourages members to report consistently so that months stay comparable.

How to track this on your jobs

Keep a monthly snapshot with job number, status, revised contract, revenue earned to date, estimated margin and segment. In Excel or Power BI, sum contract minus earned revenue across signed jobs, divide by prior fiscal year revenue, and multiply by 12. Add the same calculation with trailing twelve-month revenue and a gross profit in backlog column.

Start with this month’s WIP schedule. Add any signed contracts that have not started, compute the months figure, and set it next to the ABC reading for your revenue group in the table above.

Backlog | Construction Metrics