# Backlog Report

> The report that quantifies contracted work not yet performed - the revenue and margin already sold - and tells a contractor how much runway it has before the pipeline has to deliver.

- Source: https://briq.ai/acu/object/backlog-report
- Department: Reporting, Forecasting & Analytics (https://briq.ai/acu/department/reporting)
- Catalog code: RPT 202 · Level: Practitioner · Track: Finance · 10 min read
- Also known as: Work on Hand, Contract Backlog, Uncompleted Contracts Report, Booked Backlog

## Definition

A backlog report quantifies the value of contracted work that has been signed but not yet performed, measured as remaining contract value less work completed to date, and usually broken down by expected margin, timing, and project. It answers how much revenue and gross profit the company has already sold and not yet earned. Backlog is a measure of committed future work only - it excludes the pipeline of opportunities not yet under contract, which is the domain of the pipeline report, and it is not the same as revenue, which is backlog being consumed over time. A rigorous backlog report distinguishes hard backlog under executed contracts from soft backlog under letters of intent or notices to proceed that could still evaporate.

## Why it matters

Backlog is the single most-watched indicator of a contractor's near-term health, because it is the revenue that is already promised. A shrinking backlog is an early warning that the business is consuming contracts faster than it is winning them, which shows up in the income statement six to twelve months before the revenue actually falls. Executives and lenders read backlog as the runway between today and the point at which the pipeline must convert or the company shrinks.

Backlog carries margin, not just revenue, and the two must be read together. A large backlog full of low-margin work is a different risk than a smaller backlog of high-margin work, and a company that grows backlog by buying market share at thin margins can be building toward a loss even as the headline number looks strong. The backlog report exists to keep margin visible inside the volume.

Backlog is a bonding and lending metric. Sureties size a contractor's total work program partly on backlog, and a backlog that outruns the company's capacity to staff and finance it is a red flag rather than a triumph. The report's job is to show not just how much work is booked but whether the company can actually deliver it, which is why timing and capacity belong in the analysis.

Backlog composition reveals concentration risk that the total hides. A backlog that is 60 percent one client, one project type, or one market is fragile in a way the aggregate dollar figure never shows. Reading backlog by client, sector, and timing is how a contractor learns whether its future is diversified or resting on a single relationship that could end.

## Lifecycle

1. **Contract booking** — A signed contract, or in some shops a letter of intent or notice to proceed, is added to backlog at its full value. The discipline here is what counts as bookable: counting soft commitments as hard backlog inflates the number and burns credibility when they fall through.
2. **Margin tagging** — Each booking carries its expected gross margin from buyout or estimate, so backlog can be read in profit as well as revenue. A booking added without a margin is a revenue figure with no risk information.
3. **Consumption tracking** — As work is performed and revenue is recognized, backlog is drawn down. The report reconciles beginning backlog, plus new bookings, less revenue earned, less adjustments, to ending backlog - the roll-forward that makes the number auditable.
4. **Change-order adjustment** — Executed change orders add to or subtract from the backlog of the affected job. Ignoring change orders makes backlog drift from the actual contracted amount, usually understating it on jobs that have grown.
5. **Timing classification** — Backlog is bucketed by when it is expected to be performed - next quarter, next year, beyond. Timing is what turns backlog from a static balance into a revenue forecast, and it is the part most often estimated loosely.
6. **Risk classification** — Backlog is separated into hard and soft, and flagged for jobs at risk of cancellation, delay, or dispute. A backlog number that treats a stalled project the same as an active one overstates the runway.
7. **Reporting and roll-up** — Backlog is reported to ownership, lenders, and sureties, and rolled up by division, market, and client. This is where composition and concentration are read, not just the total.
8. **Reconciliation** — Ending backlog is reconciled against the WIP schedule and the contract register so the reported number ties to the books. A backlog that cannot be reconciled to signed contract values is an assertion, not a report.

## Anatomy

- **Total contract value** — The full signed value of each contract including approved changes. The starting point from which completed work is subtracted.
- **Revenue earned to date** — Work performed and recognized, usually on percent complete. Subtracted from contract value to get remaining backlog.
- **Remaining backlog** — Contract value less earned revenue - the core number. Reliable only if percent complete is honest.
- **Expected margin** — Gross profit percentage on the remaining work. Turns a revenue figure into a profit figure and exposes thin backlog.
- **Hard vs. soft classification** — Executed contracts versus letters of intent or verbal awards. Mixing them overstates committed work.
- **Expected performance timing** — When the remaining work will be executed, bucketed by period. Converts backlog into a revenue forecast.
- **Client / owner** — Who the work is for. Drives concentration analysis and credit-risk assessment.
- **Market / sector** — The type of work - commercial, industrial, public, residential. Reveals whether backlog is diversified.
- **Contract type** — Lump sum, cost-plus, GMP, unit price. Affects how much of the backlog margin is actually at risk.
- **Risk flag** — Cancellation, delay, funding, or dispute risk on a booking. Distinguishes runway that is solid from runway that is contingent.
- **Booking date** — When the contract was won. Feeds aging and burn-rate analysis of how fast backlog is being consumed and replaced.
- **Backlog roll-forward** — Beginning backlog plus bookings less revenue less adjustments equals ending backlog. The reconciliation that makes the number trustworthy.

## Failure modes

- **Soft backlog counted as hard** — Letters of intent, verbal awards, and unfunded options are booked at full value alongside executed contracts. The backlog looks robust until a soft commitment evaporates, and the miss is blamed on the market rather than on counting work that was never really sold.
- **Revenue instead of margin** — Backlog is reported only in dollars of revenue, so a company celebrating record backlog cannot see that the new work is barely profitable. The volume grows and the margin thins, and nobody notices until the jobs start closing.
- **Timing treated as instantaneous** — Backlog is reported as a single balance with no view of when it will be performed. A company with a year of backlog concentrated in one quarter has a staffing and cash problem that the flat number completely hides.
- **Stalled jobs still in backlog** — A project on hold for a funding or design problem stays in backlog at full value because nobody moved it to a risk category. The runway looks longer than it is, and the reforecast when the job cancels is brutal.
- **Change orders not reflected** — Backlog is booked at original contract value and never updated for approved changes, so on jobs that have grown substantially the backlog understates committed work and the roll-forward will not reconcile to the WIP.
- **Concentration invisible in the total** — The backlog total looks healthy while most of it is one client. When that relationship ends, the runway collapses overnight, and the concentration was in the report all along, just never read.

## Metrics

- **Total backlog** — Remaining contract value across all jobs. The headline runway figure, best read against annual revenue as months of work on hand.
- **Backlog margin** — Weighted expected gross profit in the backlog. Reveals whether booked volume is actually profitable.
- **Book-to-burn ratio** — New bookings divided by revenue earned in the period. Above 1.0 backlog is growing; below, it is shrinking.
- **Months of backlog** — Backlog divided by average monthly revenue. Translates the dollar figure into runway everyone understands.
- **Hard backlog share** — Executed-contract backlog as a share of total. Measures how much of the runway is actually committed.
- **Client concentration** — Share of backlog from the largest one to three clients. The core fragility metric the total hides.
- **Near-term backlog coverage** — Share of next-period revenue plan already covered by backlog. Shows how much the pipeline still has to deliver soon.

## The AI shift

- **Conversational** — Backlog stops being a single number you defend and becomes something you interrogate. You ask how many months of runway the current backlog represents, how much of it is soft, which clients or sectors it concentrates in, and how its margin compares to the work being earned now - with the contract register and WIP cited so the answer ties to the books.
- **Generative** — The narrative that accompanies the backlog number is drafted from the roll-forward and composition: a commentary explaining what drove bookings and burn this period, where concentration is building, how backlog margin is trending, and what the timing distribution implies for staffing and cash, written for the audience - ownership, lender, or surety - that will read it.
- **Orchestrated** — Backlog stops being maintained by hand. New executed contracts are booked with their margin from buyout, change orders adjust the affected backlog automatically, consumption is drawn from recognized revenue, and the ending balance is reconciled against the WIP and contract register so the roll-forward always ties - while stalled or at-risk jobs are moved to their risk category as the signals appear.
- **Autonomous** — The routine motion runs continuously: bookings and burn tracked as contracts execute and revenue posts, the roll-forward kept reconciled, book-to-burn and months-of-runway recomputed, concentration and soft-backlog thresholds monitored, and at-risk jobs surfaced from schedule and payment signals - while humans decide what is bookable, what counts as hard, and every reclassification that changes the reported number.

## Prompts

### Conversational — Board is asking whether the company has enough work sold to hit next year's plan.

```text
Analyze our current backlog against next year's revenue plan. Tell me total backlog, how many months of runway that represents at our trailing average monthly revenue, and what share of next year's revenue plan is already covered by backlog versus what the pipeline still has to convert. Break the backlog into hard versus soft, show the weighted expected margin, and identify our top three client and top three sector concentrations as a share of total. Flag any backlog on jobs with a cancellation, funding, or dispute risk. Reconcile the total to the WIP schedule and note any gap.
```

**Expected output:** A runway analysis in months and plan-coverage, with hard/soft, margin, concentration, and risk broken out and reconciled to the books - not a single backlog dollar figure.

**Follow-ups:**

- If we exclude soft backlog and at-risk jobs, how does the runway change?
- How does this backlog's margin compare to the margin of the work we are earning now?
- Which quarter next year is thinnest on committed backlog?

### Generative — You have to write the backlog commentary for the quarterly lender package.

```text
Draft the backlog commentary for our quarterly lender package. Using the backlog roll-forward, explain the change in backlog this quarter - beginning balance, new bookings, revenue burned, and adjustments - and the resulting book-to-burn ratio. Note how the weighted backlog margin moved and why, describe any concentration building in a client or sector, and characterize the timing distribution and what it implies for the next two quarters. Distinguish hard from soft backlog explicitly. Keep it factual and measured, five to seven sentences, in the register a lender expects, and do not overstate soft commitments.
```

**Expected output:** A roll-forward-grounded commentary that explains bookings, burn, margin, concentration, and timing honestly, with hard and soft separated.

**Follow-ups:**

- Add a short paragraph on the two largest at-risk jobs and how we are managing them.
- Produce a two-sentence version for the executive summary at the top of the package.
- Rewrite the margin discussion assuming the lender asks why backlog margin fell.

### Orchestrated — A large contract just executed and you need backlog updated everywhere consistently.

```text
A new contract for 6.2 million dollars just executed. Book it to backlog and trace the downstream: tag it with its buyout margin, classify it as hard backlog, distribute its value across the expected performance periods from the schedule, check the client concentration it creates against our threshold, and reconcile the new backlog total against the contract register and WIP schedule. Flag whether this booking pushes any client or sector past our concentration limit, and confirm the roll-forward still ties. Cite the specific records for each step and flag anything uncertain.
```

**Expected output:** A booked, margin-tagged, time-distributed addition to backlog reconciled to the register and WIP, with concentration checked and records cited.

**Follow-ups:**

- How much staffing and cash does the timing of this booking imply, and when?
- If this client is now above our concentration threshold, draft the note for the board.
- Show the updated book-to-burn and months-of-runway after this booking.

### Autonomous — Standing policy for keeping backlog current and honest between reporting periods.

```text
Maintain the backlog report continuously under these rules. On contract execution: book the value with its buyout margin, classify it hard, and distribute it across performance periods from the schedule. As work is performed: draw down backlog from recognized revenue and keep the roll-forward reconciled to the WIP and contract register. Adjust backlog for approved change orders automatically. Continuously monitor book-to-burn, months of runway, backlog margin, soft-backlog share, and client and sector concentration against our thresholds, and surface any job showing cancellation, funding, delay, or dispute signals. Never reclassify soft backlog as hard, never move a job to or out of a risk category, and never change what counts as bookable without my approval.
```

**Expected output:** A continuously reconciled backlog with a short exception and reclassification queue, where every judgment about what is bookable or hard stays with a person.

**Follow-ups:**

- Show me every threshold breach and every job you flagged as at-risk this period.
- Which soft-to-hard reclassifications are you recommending, and on what evidence?
- Draft the roll-forward reconciliation and flag any gap to the WIP.

## Maturity ladder

- **Level 0 — Level 0 - Guessed** — Backlog is a number someone estimates for a lender when asked. It does not reconcile to signed contracts and changes depending on who is asked.
- **Level 1 — Level 1 - Tracked** — A backlog register exists and reconciles to contract values, with a roll-forward each period. Margin, timing, and concentration are added by hand if at all.
- **Level 2 — Level 2 - Composed** — Backlog is read in margin as well as revenue, split into hard and soft, distributed across performance periods, and analyzed by client and sector concentration.
- **Level 3 — Level 3 - Assisted** — Bookings, burn, and change orders update backlog automatically, the roll-forward reconciles to WIP, and concentration and at-risk jobs are flagged for review.
- **Level 4 — Level 4 - Operated** — Backlog stays continuously current and reconciled inside guardrails - tracking, distribution, and threshold monitoring - while humans own what is bookable, what is hard, and every risk reclassification.

## FAQ

### What is the difference between backlog and pipeline?

Backlog is contracted work not yet performed - revenue that is already sold under an executed agreement. Pipeline is the set of opportunities being pursued that are not yet under contract, weighted by probability of winning. Backlog is money you have committed to earn; pipeline is money you are trying to win. A healthy company reads them together, because backlog tells you your near-term runway and pipeline tells you whether that runway will be replenished before it runs out.

### Is more backlog always better?

No. Backlog only helps if it carries acceptable margin and the company can actually staff and finance it. A backlog full of thin-margin work that was bought to win market share can be building toward a loss, and a backlog that exceeds the company's capacity to perform is a delivery and bonding risk, not a triumph. The quality questions - margin, timing, concentration, and hard versus soft - matter more than the raw total.

### How much backlog should a contractor carry?

It is usually expressed in months of runway - backlog divided by average monthly revenue - and the right level depends on project size, market volatility, and how long the sales cycle is. A firm doing long, large projects needs more months of runway than one doing short, fast turns, because it takes longer to replace a booking. The more useful discipline is watching the trend and the book-to-burn ratio: backlog steadily shrinking while book-to-burn sits below 1.0 is a warning regardless of the absolute months on hand.

## Related objects

- [Pipeline Report](https://briq.ai/acu/object/pipeline-report)
- [Work in Progress (WIP) Schedule](https://briq.ai/acu/object/wip-schedule)
- [Cash Flow Forecast](https://briq.ai/acu/object/cash-flow-forecast)
- [Bonding Capacity Report](https://briq.ai/acu/object/bonding-capacity-report)
- [Revenue Recognition (ASC 606)](https://briq.ai/acu/object/revenue-recognition)
- [Budget vs. Actual Report](https://briq.ai/acu/object/budget-vs-actual)