Job costing is the practice of tracking every cost on a construction project, labor, materials, equipment, subcontracts, and overhead, against the specific Cost Code it belongs to, rather than lumping it into one project total. It lets a contractor compare what was estimated for each part of the job against what has actually been spent, as the work happens rather than after the fact. The usual output is a cost report, organised cost code by cost code, showing budget, committed cost, cost to date, and projected cost to complete.
A Worked Example
A mid-sized renovation job is tracked across four cost codes:
| Cost code | Estimate | Actual to date | Variance |
|---|---|---|---|
| 03 - Concrete | $12,000 | $11,200 | -$800 (under) |
| 06 - Framing | $28,000 | $33,500 | +$5,500 (over) |
| 16 - Electrical | $15,000 | $14,800 | -$200 (under) |
| 22 - Plumbing | $9,000 | $12,100 | +$3,100 (over) |
Framing and plumbing are running over budget by a combined $8,600, while concrete and electrical are under. Without job costing at the cost code level, those two overruns would be buried inside a single project total that still looked close to budget overall, and the Project Manager would have no way to tell which trade needed attention.
Job Costing on the Cost Report
Job costing data is what populates the cost report, cost code by cost code, and it rolls up into the project's Cost Value Reconciliation (CVR). A cost code running over budget early in a project is a signal to check quantities, change orders, and productivity on that trade before the gap grows further.
Related Terms
Job costing connects to Cost Breakdown Structure (CBS) (CBS), Cost Code, Earned Value Management (EVM) (EVM), Variance Analysis, and Construction Accounting Software.
FAQ
How does job costing differ from regular bookkeeping?
General accounting totals income and expense for the whole company. Job costing allocates each cost to the individual project, and the cost code within it, that caused the cost.
How does job costing differ from estimating?
Estimating predicts cost before a job starts. Job costing tracks actual cost as the work happens, using the same cost codes as the estimate so the two can be compared side by side.
How Planyard Handles Job Costing
Planyard's job costing software follows the same cost code structure as the estimate, pulling in invoices, Subcontractor valuations, and labor costs so that estimate-versus-actual numbers update as the project runs; for how project managers use these numbers day to day, see job costing for project managers.