ForConstructionPros.com

He remembered how much harder it was to track costs back when his company was doing jobs that ran between one and two days. Today, his typical project runs several weeks. His team tracks all costs per job, he knows each job’s profitability, and his estimators excel at cost prediction. John had discovered a truth about job costing - the smaller the average job, the harder it is to track costs in a meaningful way.

John took a slow drink of coffee and decided to try and help Terry out. “What is keeping you from knowing your project costs?”

Terry explained. “When we run a job cost report from our accounting system it shows the labor charges assigned to the job and the materials that were delivered to the job. The report doesn’t include material taken from inventory such as nails, wood, plastic sheets, and gravel. The report doesn’t include the cost of our equipment, such as our Bobcat, nor labor burden, nor overhead.”

Terry’s answer told John everything he needed to know about Terry’s approach to job costing. It was filled with holes. John proceeded with his questioning.

“How do you estimate jobs?”

“I predict the labor time and material costs then add in overhead. I double check the cost per square foot or cubic yard against our averages to make sure I didn’t blow a calc. Dad had so much experience he could look at a job and just know. I can’t do that.”