Job costing is one of the most significant operations associated with construction projects, as it helps to identify the entire cost of assigning the project, referring to the cost incurred for each specific activity of project development. For this reason, most contractors and construction firms aim to drive a job costing process that can deliver complete information related to the expenses made on defined tasks.

When it comes to timely job costing, it is often referred to as a well-defined job costing system that can identify total income from the job, including gross profit. However, when it comes to construction projects, contractors need to struggle with material, work and labor, possessing several challenges. As most construction projects end up with thin profit margins and irregular cash flow, it becomes even more important to work on accurate job costs.

Unfortunately, most construction firms were either slow or resisted embracing the need for software technology that can help analyze the data for spotting time issues and preventing any rework that might add to project costs. Before we start with the benefits of creating a great construction technology, here are the key elements which must be included in a good job cost report.

1. Equipment and material: The first thing that needs to be measured for precise job costing is keeping a check on the amount spent on equipment and material cost.
2. Labor or subcontractors: The next thing that must be included to have accurate job costing is accounting for the expenses made on job labor and hiring subcontractors. This can be measured effectively using timesheets and other tracking applications.
3. Overhead: Last but not least, make sure to keep an account for all the overheads, including expenses made on office equipment, interests on loan, and payment made to service providers not mentioned in the contracts.

All in all, working on job costing needs a detailed understanding of the project that can help contractors to have some unique benefits of investing in job costing solution.

Quicker Response

Timely job costing reports can help contractors compare true expenses with the estimated costs for the projects and the information can be shared with field and office teams to rectify the possible issues with the study of visible trends.

Overall, timely job cost reports make it easier for contractors to identify the possible reasons for over expenses and control them on time with quick adjustments.

Profitability

The next good reason construction contractors need to switch to a great construction accounting software that supports timely job costing is added profitability. Easier access to job cost reports allows project managers to shape their work for increased profits and grow savings.

Job Progress and Team Management

Job cost reports allow contractors to have performance improvement at the site for teams as well as projects. The access to job reports to team leaders gives them a chance to improve their performance, especially when the number of people working on an activity is progressing slower than average or what is expected.

Enhanced Estimates

Last but not least, using job cost reports allows contractors to have command over expenses, which can help make more predictable and accurate estimates for future projects. Since project managers and contractors have a better understanding of what it takes to complete a project, they can have better evaluation and estimates when bidding for projects leading to favorable results and an improved project pipeline.

Understanding The Challenges With Traditional Job Costing Practices

Job costing practices is a business essential for construction contractors as it gives them the chance to understand the actual expenses made on a job in comparison to what was budgeted. This can be done through various ways assigning job codes or phase codes to every activity ensuring the expenses should land closer to the budget. However, the only thing that makes contractors deprived of the right and expected profit margin is poor access to real-time job cost reports.

Most of the time, it happens because of disconnected software technology that does not have a centralized system to take real-time updates from the project. Moreover, traditional practices such as the use of spreadsheets and paperwork make it difficult to keep things organized. Also, uploading such information to the system and sharing it with project managers involves a good amount of time with expected chances of error work and missing data.

Overall, when all the accounting data is prepared to reach the project managers and contractors, the project progresses to the higher stages which extends the error margin to the upcoming activities.

How Modern Integrated Construction Accounting Software Can Help With Timely Job Costing

Integrated construction accounting software allows contractors to experience simplified job costing while taking access to elevated project management practices. Since most modern software solutions are based on the cloud platform, contractors can have improved speed of generating job cost reports as field teams and other staff can quickly share real-time data to the centralized system even using their mobile devices

All in all, timely job costing not only helps to understand the right position of where the project stands but functions as a source of truth for all the project teams. However, to ensure timely job costing, it is equally important to adopt modern systems that can help to have quicker data collection with seamless sharing which further enables faster building work as less time is spent on administrative processes.