A starter job costing setup

It is common for a busy shop to have healthy revenue and no clear read on which jobs pay. When that happens, the fix is usually smaller than people expect. A handful of categories and one weekly comparison will tell you most of what you need for the first year.

The five categories

Job costing in our software uses five categories. You set a budget per category on a job, then log actual costs against the same list.

Labor. Hours times a burdened rate. Burdened means wage plus payroll taxes, insurance, and workers comp. Using the raw wage will understate cost on every job you bid, so it is worth getting this rate right once. Hours logged through time tracking are available to cost against the job.

Materials. Every receipt tied to a job before it ends up in a glove box. Purchase orders and material records land here.

Subcontractors. Invoice amount, tied to the job and to the scope it covered.

Permits. Small, easy to forget, and awkward to explain later when the margin comes up short.

Other. Dumpsters, equipment rental, parking, disposal. Individually small, and they add up in a way that surprises people.

The weekly comparison

Once a week, for each open job, read the five categories against the budget you set. The job costing screen shows budget, actual, and the variance between them, so you are looking for which category is running hot. Deeper reports can wait until you have a few months of this.

Two numbers worth naming

Gross margin per job. Contract value minus logged costs, divided by contract value. The profitability report groups this so you can see it by job rather than only in total.

Labor variance. Budgeted labor against logged labor. On residential work this often runs over during demo and punch rather than the visible middle of the job, though your own pattern may differ.

What to do with what you find

When a job type keeps missing, there are three reasonable moves. Price it higher, scope it tighter, or stop selling it. Any of the three can be the right answer. The harder position is not knowing which one applies.

A caution about averages

A single rough job can hide inside a monthly average. Look at jobs individually for the first year, since patterns usually appear sooner that way.