Job costing software.

Why job costing software has to work while the job is live

Many firms that price work to order do some job costing, and many do it too late. The supplier invoices trickle in over the following month, the timesheets are totalled when payroll needs them, and some weeks after the job was delivered somebody works out that it lost money, when nothing can be done except feel bad about it. Job costing software is worth having only if it closes that gap, so that the contracts manager sees first fix running over budget before second fix is resourced, and the production manager sees that a batch has used more hours at welding than the whole job was quoted for while it is still on the bench. That is as true for a fabricator or joinery shop as for a builder or an M&E contractor. A firm with only a few jobs live at once can tag invoices to a job in the accounts package, keep a spreadsheet beside it and need nothing from us. The case for more begins when labour is the largest cost and none of it reaches the accounts until payday.

What we build

The quote becomes the budget. When a job is won, the estimate from our quoting and estimating software, or from your own, carries across broken down by phase and cost type, labour, materials, subcontract, plant and hire, because a single total tells you that a job went wrong and never where. Actual costs then land against the same lines. Labour arrives from timesheets on site or from shop floor data capture in the factory, valued at a cost rate that includes employer’s costs, not the hourly pay. Materials arrive as issues from stock and as supplier invoices coded to the job. Subcontract arrives from orders and applications. The part most spreadsheets miss is committed cost, the purchase order raised but not yet invoiced, which is why a job can look healthy right up to the month the bills land, so orders raised in purchase order software count against the job as soon as they are raised. Variations change the budget and the selling price together, the gap our post on what was quoted and what was actually done describes from the engineer’s side.

Work in progress, forecasts and month end

With budget, actual and committed in one place, the useful numbers follow. Each live job shows cost to date against budget by phase, an estimate to complete that the job’s manager can adjust, and a forecast final margin against the quote. Across the business, the same data gives work in progress, the cost sitting in unfinished and unbilled jobs, a figure your accountant needs at month end and one that is miserable to build by hand. For contractors we can track applications for payment and retention held against each job, and for manufacturers the cost of scrap and rework by operation. Posting the results into Xero or Sage is ordinary integration work, so the management accounts and the job reports agree. Where you also need the enquiry, scheduling and site side of contracting, that is our construction job management software, and on the factory side costing usually sits on the works order. Finished jobs then become a record the estimators can search, quoted against actual on similar work, which is how the next price improves.

Cost and getting started

Cost follows the number of cost sources that have to be joined up, the detail of the phase structure, and whether work in progress and forecasting are in scope. Where the jobs and hours already sit in a system, adding costing is a modest project. Our bespoke software cost guide explains how we price, and we will say plainly if your accounts package can already do what you need.

If you find out which jobs made money only when the year-end accounts arrive, contact us or call 01202 237027 for a free consultation.