The RHACOVA financial methodology

Cost is what delivering the work takes out of your company. Price is what the customer agrees to pay. Profit is price minus cost, and it is always a result — never an input. Any tool that lets you type a profit and back into a cost is hiding a decision from you.

Margin is profit divided by price. Markup is profit divided by cost. RHACOVA never uses the words interchangeably and never displays one while labelling it the other. Prices are set from a target margin; markup is reported alongside as the equivalent figure on cost.

Labor cost is the wage plus employer burden, divided by the hours that can actually be billed. Paid hours and productive hours are tracked separately, because dividing by paid hours is the most common way a labor rate ends up below the real cost.

Overhead is never folded into a material or labor figure. It is either recovered per productive hour or as a percentage of direct cost, the basis is recorded, and the allocation appears as its own line. Recovery brings a job to break-even; profit is added after that.

Every cost belongs to a named class: material, loaded labor, equipment, subcontractors, disposal, permits and fees, mobilization and delivery, other direct costs. Consistent classes are what make estimate-to-actual comparison meaningful later.

All money and percentage arithmetic uses exact decimal values with an explicit currency and explicit rounding — never floating-point. Rounding happens at defined points rather than wherever the display happens to fall, so two paths to the same figure agree to the cent.

When a figure cannot be derived from what is known — final profit on an open job, markup at zero cost, a variance percentage against a zero baseline — RHACOVA states that it is unknown and why. It does not substitute an estimate for a fact or print a zero in place of a missing number.

A finalized proposal price and a job baseline are frozen. Change orders adjust the current contract and the projection; they never edit the original baseline. History that has been used to make a decision stays readable exactly as it was when the decision was made.

Each result carries the formula, the normalized inputs and the engine version that produced it. "Why this number?" is available on the public calculators and inside the product, because a number you cannot defend to a customer is not usable.

No industry benchmarks, survey averages or statistics we cannot stand behind, and no invented sources. Where a claim would need outside evidence we do not have, we either explain it from first principles or state plainly that it is unsupported.