Who needs Job Cost Tracking?
You do.
That is, you do if you’re a commercial construction subcontractor, and you are determined to manage a profitable, sustainable, and worthwhile enterprise.
Successful construction contracting business owners know the part they play. They do the analytical work, and they make the decisions. Consequently, the financial reports they receive and review regularly enhance their ability to accomplish these tasks. For example, one of those important reports is known as Job Cost Tracking or Job Costing.
Proper project costing produces preferred profitability.
Plus, it leads to better future project estimating, contributes to enhanced management decision making, and supports timely financial reporting.
Job Cost Tracking enhances project control
To clarify, resources are limited and must be utilized as efficiently as possible.
Therefore, a few of the ways you can leverage job cost tracking are:
avoid risky assumptions and stay in control of profitability
know where projects are going right and where they’re going wrong
make adjustments as you go
be alerted to find more cost-efficient ways to handle issues
gain the advantage in the estimating process going forward
see a true reflection of gross profit
3 Components of job cost tracking
Measure
Defining and measuring your resources is the basis for creating a job costing system. For example, a few of the steps involved in setting up, maintaining, and using a job costing system are:
Gather the information from past and present projects
Categorize and store the information
Assure the information is accessible to those who need it
Input information as projects progress
Analyze information regularly
Adjust actions and expenditures as necessary
Control
Managing the resources at hand means maintaining control of the project as it progresses. Consequently, through the proper use of the information garnered through job costing, you can:
Track any deviations from the original estimate
Find and analyze possible solutions
Support those who will need to make adjustments
Improve
Whether taking small steps as the job progresses or finding major process strategies that must be enhanced, job cost tracking gives you footing for company improvement. For instance, you can:
Determine to include those things which went right in future projects
Learn from mistakes which were made and change the necessary factors
Communicate the findings to employees and subs
Answering questions through job cost tracking
Likewise, proper job costing analysis aids you in answering critical questions such as:
Which jobs are running within budget?
Which are not?
Are we within our target margins?
Who are the most profitable and least profitable general contractors we work with?
Do we have operational inefficiencies?
Who are our most productive employees, subs, teams, or departments?
When is the right time to hire? Or fire?
Where should I invest my marketing dollars?
To sum up, producing an accurate and useful job costing report is not just an accounting exercise. A job cost tracking report is an excellent tool used by savvy construction contractors to enhance their ability to lead and manage well.
The Job Cost Tracking Tool!
The Job Costing tool our office knows, uses, and highly recommends is Knowify. Knowify is a (cloud-based) easy to use software that (among other functions) provides a system for Job Costing from start to finish.
We desire to familiarize you with business concepts, which will make it easier for you to be a better commercial construction subcontractor through our blog posts. Some are new ways of looking at things, and others are refreshers.
Schulte and Schulte Provides Accounting, Contract Document Management, and Advisory Board Level counsel for small to medium commercial construction subcontractors.
So you can Run With the Big Dogs! Call us 866-629-7735