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  • Writer's pictureYvonne Root

A Dozen Reasons Construction Contractors Use Job Costing

Updated: Jun 23, 2020

You’ve already figured out that when you own a construction contracting or service business your world is colorful. Some of the myriad of “things” on your mind are job sites, retainage, percentage completed, purchase orders, prevailing-wage rates, payroll, change orders, subcontracts, AIA billings, and equipment usage.

But did you know about the contractor’s friend called Job Costing? Did you know job costing is really designed to make all the above “things” take their rightful place in maintaining the overall health of your construction firm?

Look at job costing as a way to Measure and Monitor, to Weigh and Watch, to Quantify and Qualify.

Getting it all out in the open

The information gathered through job costing is invaluable to you as you grow your construction contracting or service business. And here are a dozen reasons:

  1. Job costing will help you identify the most and least profitable areas of your construction company.

  1. Job costing is one of the best ways to develop an accurate budget for your construction firm.

  1. You can use the information concerning labor and materials costs to aid in determining overhead costs.

  1. You’re able to carefully analyze job costing reports for completed jobs as well as jobs-in-progress.

  1. Job costing allows you to put into action a billing system that is tied to actual and committed costs.

  1. With job costing you can learn which types of jobs are your bread-and-butter jobs.

  1. Using job costing will allow you to see the division of labor and labor burden.

  1. Job costing allows you to analyze where you’re spending so you’ll know more about what works and what doesn’t.

  1. Through job costing you’ll obtain information that will allow you to be more precise concerning billing.

  1. Job costing shows you what margins you’ve been sacrificing on past estimates.

  1. Through job costing you can factor in overhead expenses in order to get a better understanding of individual job profitability or loss.

  1. A mature job costing system gives you the ability to categorize every single expense your construction contracting business incurs.

Don’t work in the dark

Without job costing information you’re working in the dark.

Using job costing reports is an important way to improve your business as well as a way to improve the way you do business.

The Schulte and Schulte team is excellent at helping construction contractors make heads or tails of job costing set-up and use. Want to know more? Give us a call 480-442-4032 or Toll Free: 866-629-7735

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