Job Costing

Job costing helps to track actual costs, compare them to the budgeted costs, and provide information about whether there is a variance between the two. Job costing can be used for the full spectrum of jobs, either for a multi-year project or jobs completed in less than a day. The goal is cost control. With this system, every phase of every job has its own individual budget where actual costs can be compiled.

Job costing software works like this:

• Enter the budget for a job, which means take the estimate and use it as the budget
• Pay the bills for the job, assigning the costs to the appropriate budget category
• Print reports that show how actual expenses compare to what was budgeted
• Find problems in time to correct them, obtain Change Orders, etc.
• Make a profit

The key to job costing is categorizing each phase of each job into a separate budget. A numbering system, called Cost Codes, is used to track labor, materials, equipment costs, subcontractors, and a catch-all “other” category. Complex jobs can have budgets for thousands of Cost Codes, while a simple job may have a dozen or so. Costs can be tracked in as much detail or as little detail as desired