Numerous construction companies are struggling to keep their project costs under control. No matter how big or small these projects are, problems always occur, and such issues are not about construction but rather about how project managers manage their job costs—one of the biggest concerns for construction companies.
You can know all about construction processes and do your job well but still end up with major financial losses on your projects. As projects get larger, expenses and control over them become more difficult to manage. Reliable job costing software helps avoid additional costs and track which job processes are the most profitable. That is great information to have handy for future projects.
Job costing activities
Job costing tracks the true cost of labor, materials, and overhead for any given job. Material costs sum up the total cost of these details and determine the cost to the project where these details are used. Labor costs concern subcontractors, who charge according to their contract and usually by progress payment. Overhead costs sum up all expenses of the specific construction site and project.
Review your job costs by breaking the process down
The estimator will usually put all calculations into a spreadsheet before the start of the project, and the project manager can upload all estimated units, tasks and processes into project management software. Later, this provides an easy and efficient way to track and manage actual costs against the project’s budget to analyze how work tasks are progressing. Job costs are typically cut down into smaller units and codes and tracked to the specific project.
Job cost and profit
A job costing management tool provides good awareness about the project tasks where money is being spent, which can be compared against the estimated costs. This collected information is helpful when it comes time to analyze project billings. With that information, project managers can calculate different project stages and levels of productiveness while mitigating project expenses.
Asking the right questions
To get the most out of job cost management, it is essential to think about the following:
1. Does this data help to improve project manager processes? What can be done to reduce costs and operate more smoothly?
2. Would job costing information be helpful for the whole project management?
3. Should some project processes be changed to run more efficiently?
4. Which parts of the project processes are the most expensive? How can these processes be improved?
5. Is the project running according to budget?
Conclusion
It is recommended that construction companies use project job costing software such as Planyard to help projects run more accurately and add quality. Your project can be at risk if finances are not being managed efficiently. Set your job cost management in place and run your project on profit.