What are construction cost codes?
Construction cost codes are the defined list of codes that are used for tracking, managing, reporting on the amounts, quantities, budgets, profit and other account information associated with the job.
The goal of using cost codes is to streamline data management on a companywide basis, making it reusable for all stakeholders including estimators, project managers, administration, accounting and more.
The selected construction cost codes should be used all the way from forecasting and contracting to cost management and accounting. This enables for full visibility across the project in order to visualize errors and reuse data as needed.
Benefits of using construction cost codes
Quick and easy way to identify and analyze how money is spent on the project.
Track and manage KPIs such as estimated cost, cost estimate, current costs and more.
Ideal for companywide use
Using the same codes companywide makes it easy to track and analyze costs, errors, and forecasts for all stakeholders.
Visualize profit centers
End- to end- analysis for visualizing profit centers and problematic areas.
Gives structure and access for following the costs in real-time for setting more accurate and realistic estimates.
Let management have a clear overview and of the job and keep all the stakeholders engaged.
Job broken down to smaller deliverables
Work can be broken down in terms of structure, with the project cost codes format helping to break the work into smaller deliverables (e.g. foundations and installations, support structures, facades, etc.).
Planyard recommends doing so by following the chronological order of the jobs. This can be described as structuring the costs based on activities on the site, as seen in the below example. Such a breakdown enables management to follow project profitability in phases, so that when you are already in the middle of the project, you’ll know whether or not you managed to create profit in the first phases of work such as creating a foundation, etc.
The example works breakdown structure for buildings such as office buildings, blocks, warehouses, etc.
Construction budget structure
Construction cost codes should link together the project forecast and costs management with the job tasks and structure. The cost codes should have a recognizable structure, from the overall project level to individual jobs and accounts.
On the left you can see the External Installations category broken down to account level >
Budget managed from an estimate, from job costing to project income
Additionally, it’s smart to list the budget with the cost paid by the customer to enable job profitability tracking on an article level.
To what level should you break down construction cost codes?
There is no one answer to this question. You should start by tracking the level of detail needed by various stakeholders. Following the costs in too much detail makes reporting a time-consuming task for the project managers and adds complexity to the costs analysis process.
NB! It’s important to keep in mind that there are a number of stakeholders involved in cost codes management. All the stakeholders should be involved in selecting the appropriate cost codes structure.
- Important to think about who will be using the cost code information
- Project managers are interested in getting the work done and should have control over the budget with as little time spent on reporting as possible
- Accounting is interested in following costs by each account
Managers should be able to concur with tracking errors, accountability, and profitability
- Estimators for future estimates need to be able to track the real costs of current jobs
Where to get a list of construction cost codes?
Still using Excel for budget management?
There’s a better way.
Spreadsheets are not the best way for managing job costs
- It’s too easy to make mistakes;
- You can’t see behind the numbers;
- It’s hard to standardize and ensure compliance;
- There’s no real-time overview of profitability forecasts;
- It means duplicate work for PMs and accountants.
Planyard saves time and nerves
Follow your budget in real time and take immediate action when errors occur. Job costs are organized, and fully searchable and accessible for forecasting, project management and more.