Job cost reporting is the system used to code and earmark project expenses to maintain or improve financial efficiency and profitability. Custom work calls for continuous supervision because once you begin a contracted job, it’s easy to concentrate on finishing the project rather than monitoring depleting resources. From the architect drawing up blueprints to the general contractor constructing a medical plaza, you need to keep track of expenses to produce the best financial results.
Job cost reporting is vital work. Here are some essential practices to consider.
Reliable cost estimates are a critical part of proper job cost reporting. Begin each project by organizing the estimates in the same cost categories that will be used to store the actual job cost information. This will allow for more accurate comparisons between the estimated and actual job expenses. You can also more efficiently govern contract activities with this information.
The best format will be determined by how many job-costing levels are included in the estimate. For example, bigger jobs may require phase, activity or even unity costing. Shorter projects might only require totals for a few things, like labor, subcontracts, and materials. If you work in the service industry, you may just need cost information on labor, materials and a few other direct cost totals.
Depending on the length of the job and the nature of the work, you will need to acquire various types of cost information. Jobs that will span several months before completion will require more in-depth reporting. Other factors that affect which details you include are the size and scope of the job, and the software and people available to process and keep a close eye on job cost information.
Cost reporting throughout the project is crucial for controlling costs. Keeping track of actual progress at present (rather than planned progress as scheduled), determines where the job is at a particular time.
Remember that, until you notice that part of the process has veered off schedule, you can’t take corrective action. For this reason, it is vital that you ensure continuous job cost reporting from the start (the estimate) to end (the finished project). You might not benefit from detailed cost reporting on shorter jobs that will be completed within a few days or weeks. With time constraints it’s harder to spot trouble and still have enough time to take corrective action.
Keep in mind that gut feelings are not a great way to monitor how costs are running, no matter how experienced you may be. Nothing compares to having your facts together on the actual costs from jobs-in-process reports. Stay on top of it to head off any significant problems.
Worth the effort
With perseverance and, ideally, a reliable software system, you can master the process of job cost reporting. As you gather better numbers, you will also arrive at better results (manifest in more profitable and less costly jobs). If you would like assistance in designing an efficient job cost system, please contact our accounting professionals at 972-931-6803 or click here and we will contact you. We can guide you in choosing and executing the best job costing software system for you.