Job Costing is a tool you should have in your toolbox

John Walters

John Walters

Most businesses that charge their customers on a time and materials basis are probably already familiar with job costing.

For those of you that are unsure what job costing is all about, it’s a method of calculating the cost an individual job.  It could be the cost of replacing a window, resurfacing a drive, landscaping a garden, and the list goes on and on.  It’s a tool used in many industries.

So it’s probably safe to move forward, and assume that you know about job costing, and probably use it in some form or another in your estimation/quotation process, but how many of you use job costing to record the actual cost of the job, and then compare the results to your original estimate.

This step can provide you with valuable insights into your business:

  1. By making the comparison you can confirm the accuracy, or not as the case may be, of your estimation process.  If the actual results are very different to what you originally estimated; you need to understand the reason for the difference.
  2. By comparing the actual results of similar jobs over time you will build up a knowledge bank, which will improve your ability to quote similar jobs in the future with a greater level of confidence. In short you reduce the likelihood that you will be caught out by nasty surprises that have an awful habit of eating away at your profits.

My advice is simple, if you are not using job costing, or stopping short of making this actual to estimate comparison then you need to take steps to correct this situation as soon as possible.

If you need help to design and implement an appropriate job costing system for your business you should contact us. We have the experience, we care, and we are there to help you.