3 Simple Ways to Ensure Your Job Costing Won’t Cost You

Chances are you already know there’s more to job costing than just pulling together some numbers you think you can live with.  In fact, job costing done properly starts long before you provide project numbers to your client, and doesn’t end until the books are finally closed.  But even if you’re aware of the best way to cost and manage a job, are you truly living up to that ideal?  The challenge of staying on top of projects, while trying to keep up with the other day-to-day demands of running your business can make it hard to stay focused and do the right thing.

Let’s consider 3 priorities that should drive every job costing effort:

1. Begin (and End) with the Budget.  Under the time pressure of meeting project pursuit and implementation deadlines, it’s easy for the budget to become an afterthought.  However, if properly constructed initially, and consistently updated and appropriately revised along the way, your budget will evolve into a living document, and also become your best friend.

2. Honor the Code(ing).  Nothing throws a budget off track faster than incorrect coding within your accounting system.  Every dollar spent on a project should be assigned to the proper line item, and allocated properly.  This can be a little more complicated when only a portion of a set of materials bought in bulk for a single price, or only a certain amount of a team member’s time, should be allocated to a particular job.  Good, disciplined coding will keep the project budget organized.  Undisciplined or non-existent coding will typically do just the opposite.

3. Change (Order) Can Be Good.  We’re conditioned to view a change order as a necessary, and hopefully infrequent, evil.  But on a typical project, as the old saying applies, the only constant is change.  The key is not so much avoiding change orders, but instead managing them properly.  By using the right job costing process, you can take a highly proactive approach to handling change orders that involves: (a) closely monitoring expenses, to determine the effect of the change; (b) reaching an understanding with customers regarding project scope and mutual accountability; (c ) achieving that same type of understanding of scope and accountability internally, with your team; and (d) successfully tracking project profitability.  This will help ensure that you maintain the level of profitability that you are striving for.

If you’re already consistently adhering to these suggestions, and you still have plenty of time to handle project and day-to-day business obligations, we congratulate you.  However, if these details are consuming too much of your time, or if you’re avoiding them completely, please contact us to receive a no obligation job costing worksheet.

The difference between an effective job costing system and an inadequate one, or no job costing system at all, is similar to the difference between data and information.  Data consists of raw facts or numbers, while information is data organized so you can act on it.  We can help you construct, implement and maintain a job costing system that fits your budget and coverts your data into actionable information.

Garvey & Garvey LLC provides traditional accounting services in a non-traditional way.  We understand that one size never fits all, and we approach each situation with a fresh viewpoint and a commitment to understanding your business.