Job Costing - Where Do I Start?

You’re a contractor that has gotten your estimating process down pretty good, you’re feeling good about it, and now you’re turning your focus to – job costing.

Job costing… You get the idea in principle, but where do you start?

In principle, job costing is just comparing your estimated hours, materials, and expenses with your actual hours, materials, and expenses.

You’re looking for areas where you spent more hours than estimated.

Or where you may have needed more materials than you estimated.

Or possibly even materials you may have completely forgotten to include in the estimate!

The goal?

To identify mistakes, learn from them, and adjust the next estimate accordingly.

To avoid repeating the same mistakes on your future estimates.

Now, job costing is a little like taking a rifle to a shooting range, settling the rifle on sand bags, lining the crosshairs up on the bullseye, and carefully squeezing off the perfect shot.

But…

you never look where you hit.

You chamber another round and shoot again.

And again.

Never checking the target after each shot.

You could be completely missing the target!

But you don’t know because you’re not looking.

You burn through an entire box of ammo, and fail to hit your goal…

The real life equivalent to that “burning through all your ammo” is like burning through all the cash in your checking account, before you stop to study as to what might be wrong.

And why is your hard work just draining your bank account balance instead of growing it?

Job costing is just like walking up to the target and looking where you hit after every shot.

“Every shot” meaning every job.

Did you hit the bullseye? Your profit goals.

I wanna job cost – how do I start?

Ok, let’s assume you’re bought in, you’re ready to go, let’s figure out this job costing thing.

What do I need to do?

• Track time to a job
• Make sure every receipt is marked with a job name or PO
• Make sure you document any materials pulled from your bulk supply at your shop (as pulling stuff from your bulk supply doesn’t generate a receipt.

You can do this the old school pen & paper way, or the advanced way with software.

Before we built SynkedUP, (which does job costing automatically), we were using a pen and paper method at Tussey Landscaping.

We had a job folder, and inside of it was our design, estimated materials list, estimated man-hours, and client info.

As the job was getting done, every day we’d write down how many man-hours we had worked, what materials we used from our bulk supply at the shop, and we’d slide any receipts or invoices from vendors into the job folder.

At the end of the job, the foreman would turn in the job folder to the office. (battered, muddy, and torn of course 😜)

In the office we’d take a spreadsheet and plug in all of our estimated man-hours, materials, and expenses from the original estimate.