A write-off is an amount of recorded value, project effort, or fees that a firm removes because it does not expect to recover them.
Definition
In a civil engineering firm, a write-off can mean labor hours removed from a bill, a fee reduction, or an accounting entry that reduces the recorded value of an asset or receivable. The term needs context because project reports and financial statements may use it differently. Some firms track hours at standard billing rates, while others record the fee amount actually removed; write-offs may be assigned to a project, client, or accounting period. A write-off can reflect work outside the agreed scope, estimating error, a client dispute, or an amount judged uncollectible. It is not automatically a cash payment, nor does it necessarily mean the underlying work had no value. Owners review the measure alongside realization, project margin, and collection records to understand where expected fees or balances were lost. AICPA-CIMA offers accounting resources.
How owners use it
- Separate write-offs of unbilled labor from reductions to invoiced receivables in management reports.
- Review write-off reasons by project and client to identify recurring estimating or scope issues.
- Compare hours removed from billing with amounts invoiced and collected, using consistent valuation rules.
- Example: A project has $18,000 in labor value and $2,000 is removed from billing; $18,000 - $2,000 = $16,000 remains billable.
