Although job costing has recently gained traction as an essential accounting and time-tracking tool used across a variety of industries – ranging from manufacturing, transportation companies, consulting firms, and everything in between – the construction industry has enjoyed the longest “tenure” in the job costing realm, and with good reason. Construction companies deal with variations in material, labor, and overhead needs in nearly every new project. Sometimes this amounts to small differences, but more often this means major distinctions in terms of hours/types of labor required, amount of materials used, costs of overhead, and an array of other (un)predictable factors.
Although construction companies and their staffs may enjoy the dynamic nature of their work, in the end, all construction companies are seeking a peace-bestowing trifecta:
This is where job costing comes into play. Job costing is the process of accurately measuring the overall costs of each individual project to clarify actual profit margins per project, track projects in real time, make adjustments/address inefficiencies as needed, and determine which project types are consistently most profitable. Job costing is a complex process, but once honed, it empowers construction companies to bid on new contracts with full confidence in their data, their estimates, and their ability to track and manage the progress of projects in real time.
If you’re late to our series on job costing versus process costing, please check out our recent articles on “Why Accurate Job Costing Is So Important” and “Understanding the Difference Between Job Costing and Process Costing.” These articles will give you a thorough breakdown of job costing and process costing as general practices. For now, we’ll dive into how your job costing process can be majorly improved in the construction industry.
Best Practices for the Construction Industry
An ideal job costing process closely analyzes the details and nuances embedded in each individual project. By mining each project – whether already completed, in-progress, or forthcoming - for data and insights, you stand to walk away with a deeper understanding of how to use accounting and time-tracking to keep your projects consistently profitable, on budget and on time. Here are the steps we recommend:
How WorkForce PayHub Can Help
Each of the best practices we’ve covered may be independently manageable “in house,” but as projects and variables expand over time, many construction companies turn to us to help them streamline their job costing process. We offer the guidance, personnel, software, and experience to turn what feels like an accounting and time-tracking quagmire into a streamlined, comprehensible process that helps you achieve your bottom line: eliminated inefficiencies, improved profit margins, and alignment between estimates and invoices. Our Human Capital Management Solutions and Time and Labor Management Solutions address the full spectrum of needs for most construction companies: increasing productivity, providing valuable data, centralizing/digitizing payroll, and providing performance metrics that give you a clear picture of how to boost productivity and achieve your project goals.
Please contact us today to discuss how we can perform accurate and informative job costing through your payroll/HCM software setup.