What is Percentage-of-completion (PCM)?

Percentage-of-completion Method (PCM) is a financial accounting technique commonly used in the construction industry. In projects spanning over multiple accounting periods, it helps to recognize revenues and expenses proportionally over time. The PCM method estimates and reports the stage of project completion to generate the portion of total project revenue corresponding to the work completed. This approach, in essence, means that the revenue recognition is spread over the duration of the project, rather than deferred to the project end. This helps in achieving a more accurate financial overview of a construction business at any given point.