Construction accounting: what construction finance professionals told us about forecasting, risk and AI
Strong forecasting, effective risk management and the growing potential of AI are high on the agenda for construction finance teams. During an ICAEW construction sector webinar presented by Moore Kingston Smith, construction professionals shared their experiences through live polling and discussion, revealing where organisations are making progress and where challenges remain.
The results highlighted several recurring themes: the difficulty of identifying risks early enough to protect margins, the judgement involved in forecasting contract variations and claims, and a growing interest in how technology could improve project oversight. Together, the findings provide a useful snapshot of how construction businesses are navigating an increasingly complex operating environment.
A consistent theme throughout the webinar was that successful construction accounting depends on the quality of project forecasting.
Forecasting remains a key area of focus
One of the strongest messages from the polling was the importance of robust forecasting processes throughout the life of a project.
While many respondents felt their organisations’ estimating processes were reasonably effective, the results suggested there may still be opportunities to strengthen how emerging risks are identified and reflected in project forecasts. A notable proportion of attendees indicated that unexpected cost increases are often recognised after they arise rather than being anticipated through contingency planning or forward-looking risk assessments.
This finding prompted discussion around the relationship between estimating, forecasting and project governance. Attendees highlighted the need to revisit assumptions regularly as projects progress, particularly where commercial, operational or programme risks evolve over time.
The webinar also explored the role of collaboration between operational and finance teams. Participants noted that operational teams often have the closest understanding of project delivery risks and commercial discussions, while finance teams bring financial reporting discipline and independent challenge. The discussion suggested that organisations may benefit from structured review processes that bring both perspectives together before forecasts are finalised.
Poll responses also pointed to ongoing concerns around margin erosion during project delivery. Attendees described situations where project profitability can come under pressure as programmes develop and new risks emerge. This reinforced the view that reviewing completed projects and feeding lessons learned back into future bids and forecasts can help strengthen forecasting quality over time.
Revenue recognition continues to create challenges
Revenue recognition was another area where polling and discussion highlighted significant levels of judgement.
Attendees identified scope creep, contract variations and claims management as some of the most difficult areas to forecast accurately. In many cases, negotiations continue well after work has been completed, creating uncertainty around timing and recoverability.
The discussion highlighted the difference that can arise between commercial expectations and accounting recognition requirements. While project teams may have confidence in recovering additional amounts, financial reporting requires evidence that supports recognition under the relevant accounting framework.
Participants also discussed the influence of long-term relationships within the construction industry. Commercial decisions are not always driven solely by contractual entitlement and businesses may choose to compromise on claims or settlements to support wider commercial relationships. Webinar attendees noted that this can create additional complexity when preparing financial forecasts and assessing contract performance.
These discussions reflected a broader challenge identified during the session: balancing commercial optimism with the level of evidence required for financial reporting purposes.
AI adoption remains limited but interest is growing
The webinar also explored the potential role of technology and artificial intelligence in construction finance and project management.
Poll results suggested that the use of AI within project assessment and forecasting remains relatively limited among attendees. However, there was strong interest in understanding how AI-enabled tools could support forecasting, risk management and project oversight in the future.
Participants discussed a range of potential applications, including:
- project scheduling and monitoring;
- cost tracking and exception reporting;
- risk identification;
- forecast challenge and review processes.
Many attendees saw opportunities for technology to improve visibility over project performance and support more informed decision-making. At the same time, the discussion recognised the importance of maintaining appropriate controls around data security, confidentiality and governance.
What the poll findings tell us
The polling results revealed three clear themes:
- forecasting remains central to both project performance and financial reporting, but many organisations continue to face challenges in identifying and responding to risk early enough;
- revenue recognition continues to require significant judgement, particularly where claims, variations and other unagreed amounts are involved; and
- while AI adoption is still at an early stage for many businesses, there is considerable interest in how technology can support forecasting accuracy and project oversight.
Taken together, the findings suggest that construction businesses are focusing on improving forecasting disciplines, strengthening collaboration between operational and finance teams and exploring new technologies that may support better decision-making in the future.
How Moore Kingston Smith can help
If your construction business is looking to improve forecasting accuracy, strengthen controls around revenue recognition or gain better visibility over project performance, our construction sector specialists can help. Get in touch to discuss the challenges facing your business and how we can support more confident financial decision-making.
