Job Cost Tracking

Job Cost Tracking for commercial construction contractors

Who needs Job Cost Tracking?

You do.

That is, you do if you’re a commercial construction subcontractor, and you are determined to manage a profitable, sustainable, and worthwhile enterprise.

Successful construction contracting business owners know the part they play. They do the analytical work, and they make the decisions. Consequently,  the financial reports they receive and review regularly enhance their ability to accomplish these tasks.  For example, one of those important reports is known as Job Cost Tracking or Job Costing.


Proper project costing produces preferred profitability.


Plus, it leads to better future project estimating, contributes to enhanced management decision making, and supports timely financial reporting.

Job Cost Tracking enhances project control

To clarify, resources are limited and must be utilized as efficiently as possible.

Therefore, a few of the ways you can leverage job cost tracking are:

  • avoid risky assumptions and stay in control of profitability
  • know where projects are going right and where they’re going wrong
  • make adjustments as you go
  • be alerted to find more cost-efficient ways to handle issues
  • gain the advantage in the estimating process going forward
  • see a true reflection of gross profit

3 Components of job cost tracking


Defining and measuring your resources is the basis for creating a job costing system. For example, a few of the steps involved in setting up, maintaining, and using a job costing system are:

  • Gather the information from past and present projects
  • Categorize and store the information
  • Assure the information is accessible to those who need it
  • Input information as projects progress
  • Analyze information regularly
  • Adjust actions and expenditures as necessary


Managing the resources at hand means maintaining control of the project as it progresses. Consequently, through the proper use of the information garnered through job costing, you can:

  • Track any deviations from the original estimate
  • Find and analyze possible solutions
  • Support those who will need to make adjustments


Whether taking small steps as the job progresses or finding major process strategies that must be enhanced, job cost tracking gives you footing for company improvement. For instance, you can:

  • Determine to include those things which went right in future projects
  • Learn from mistakes which were made and change the necessary factors
  • Communicate the findings to employees and subs

Answering questions through job cost tracking

Likewise, proper job costing analysis aids you in answering critical questions such as:


  • Which jobs are running within budget?


  • Which are not?


  • Are we within our target margins?


  • Who are the most profitable and least profitable general contractors we work with?


  • Do we have operational inefficiencies?


  • Who are our most productive employees, subs, teams, or departments?


  • When is the right time to hire? Or fire?


  • Where should I invest my marketing dollars?


To sum up, producing an accurate and useful job costing report is not just an accounting exercise. A job cost tracking report is an excellent tool used by savvy construction contractors to enhance their ability to lead and manage well.

The Job Cost Tracking Tool!

The Job Costing tool our office knows, uses, and highly recommends is Knowify. Knowify is a (cloud-based) easy to use software that (among other functions) provides a system for Job Costing from start to finish.


We desire to familiarize you with business concepts, which will make it easier for you to be a better commercial construction subcontractor through our blog posts. Some are new ways of looking at things, and others are refreshers. 

Schulte and Schulte Provides Accounting, Contract Document Management, and Advisory Board Level counsel for small to medium commercial construction subcontractors.

So you can Run With the Big Dogs! Call us 866-629-7735

Counting the Cost in Construction Accounting

Counting the cost in construction accounting.

Counting the Cost in Construction Accounting

Counting the Cost in Flood Waters

There is an interesting law here in Arizona which is known by the name, “Stupid Motorist Law.” It says something to the effect of “any motorist who becomes stranded after driving around barricades to enter a flooded stretch of roadway may be charged for the cost of their rescue.” Apparently, the law can be found in Arizona Revised Statutes section 28-910. Also, just as apparently, the law isn’t regularly enforced.

So, for those of us who don’t drive around barricades when the summer rains create raging rivers where before there were only dry creek beds (or simply dips in the road) it doesn’t mean much one way or the other. For those who do, it only means they won’t be charged by the state for their stupidity. Yet, they will still likely be “taxed” because of their poor decision.

  • Towing
  • Repair
  • Beyond repair
  • Missed time at work
  • Lost opportunities

And, don’t forget all that schplainen’ they’ll have to do with rescue workers. Not to mention spouses, parents, children, friends, insurance companies, and so on.

Counting the Cost in Words

Yet, being wise to the way of words, I would replace “stupid” with the word, “ignorant.” Here’s why – being stupid means you don’t have the brain cells to get the job done. Being ignorant means you haven’t as yet learned.

See the difference?

This article will help you understand it better if you’re ignorant of how the two are different.

Counting the Cost of Ignorance

And, just like the wayward, water plunging drivers there are some who are guilty of breaking the “Accounting Ignorance Law.”

And, what that looks like is, they don’t yet understand how they can be aided in growing their construction contracting business through correct use of their financials – and it is going to cost them.

Here is the deal. Average Joe Contractor isn’t the competition they need to be concerned about. It is the up and moving commercial construction contractor who has gotten savvier and more sophisticated. It also means the General Contractors (who are also more savvy) expect their subs to bring a better level of efficiency and expertise not only in the field, but also in the office.

This has led to higher expectations which makes the cost of not knowing what you’re doing with the financials much higher these days.

And its not just the competition or the GCs.

Counting the Cost in Construction Accounting

It’s the complexity of software, SaaS, apps, construction bookkeeping nuances, and so on.

One of the huge benefits of QuickBooks and integrated apps is how much information you can obtain from having all the correct input in all the correct places. Its job costing, bidding, accounts receivable management (with or without AIA style billings,) estimating, invoicing, timesheet data, reconciliation of balance sheets, WIP reports and supporting documentation, making appropriate bill payments, certificate of insurance management, project close-out documents management, and on and on.

What that leaves us with is that understanding (and using) all the great benefits you can get from QuickBooks and the supporting apps is more complex these days, and even more so now that you’re ready to Run With the Big Dogs.

So, my advice?

Don’t drive around the barricades!

And don’t leave your construction business accounting needs to wishful thinking or chance. It will cost you.

You can get in touch with us here or give us a call Toll Free: 866-629-7735.

3 Things Contractors and Sub-Contractors Should Be Doing in Their QuickBooks Software

2016-06-27 18.27.53As a QuickBooks ProAdvisor and a bookkeeper who has worked with QuickBooks software in the construction industry for the last nearly 20 years, I am always surprised when I speak with people in the construction industry who use QuickBooks for their business, but don’t use it for job costing. Whether you subscribe to QuickBooks Online or have purchased a QuickBooks desktop version, there are many features inherent to the program that can be very useful for even the smallest of subs or handymen. Even more surprising are the larger scale contracting companies who aren’t using the robust features available to them in the QuickBooks program that they own.

Here are just three of the things that EVERY contractor who uses QuickBooks ought to be doing in their QuickBooks program:


  1. Estimating
    Anyone who has ever created a bid for a job knows that it can be a very intimidating process – everything from stressing over whether or not you have the right projected costs, to anticipating material delivery times, to making sure you are properly accounting for overhead can contribute to an overwhelming process. Here is where it is good to let QuickBooks ease some of the burden. Just a few things that you can do with QuickBooks to take some of the mindless work of estimating off of your plate include:

    • Create more than one estimate for a job to look at more than one possible scenario.
    • Create a copy of an old estimate to save time on a new one.
    • Memorize estimates if you frequently perform the same type of job. (Note: In QuickBooks Online transactions are called ‘recurring’ rather than memorized.)

    When creating estimates in QuickBooks, the item list is your friend. If you haven’t already done so, you should create an item list before estimating any jobs. There is more than one way (depending on your particular specialty) to set up the item list – either as a straight inventory and services based list or as a phase accounting method list where each phase of the job is assigned an item number for proper tracking. Don’t forget that you also need to make some items double-sided. Anything that you purchase from someone else (including subcontracted labor) needs to be two-sided to work within QuickBooks properly. (Another note: In QuickBooks Online the Item List is renamed the Products & Services list, but it is still the place to start.) One more thing about estimating: in both QuickBooks desktop versions and in QuickBooks Online you can customize how your forms look for ease of customer understanding – which goes a long way in determining whether or not they will eventually accept your bid.


  1. Using Class Accounting
    In QuickBooks Online Plus and in the desktop versions of QuickBooks you have the ability to turn on class tracking features that can make your job of understanding exactly where and how your business is making and/or losing money that much easier. For a general contractor this might come in handy keeping track of the difference between the homebuilding side of the business and the remodel side of the same company. Perhaps you want to see how well the residential part of your sub-contracting business compares to the commercial portion. Or, in a location such as the Phoenix valley, it may behoove you to sort your class tracking into geographical areas, either by city or by regions. Whatever classes will be most helpful to you and your bookkeeping professional in better understanding profit and loss is what you should use.


  1. Doing Proper Job Costing
    Correct and useful job costing for contractors begins with the proper item list, followed by precise entry of job estimates and appropriate class tracking setup. It is also important to note here that job costing should include direct and indirect costs as well as labor burden. Any expense your business tracks can be assigned or allocated to jobs. You can job cost in both QuickBooks desktop versions and QuickBooks Online versions, but the terminology in the programs is different. In desktop versions, you will see that you can create new Customers and new Jobs. In QuickBooks Online, you’ll be doing something very similar when you create new Customers and new Sub-Customers. A sub-customer in QuickBooks Online functions very similarly to a Job in QuickBooks desktop, but there are some differences. It is worth knowing the differences when determining which version of the software would suit best for your business. Even so, you can do job costing and even a comparison of estimates to actuals using either program.At the end of the day, job costing can make or break a business. By keeping track of which jobs made or lost money and by how much is the first step in determining strengths and weaknesses within the company and/or understanding how outside factors are affecting the bottom line. Like any other financial tracking tool, job costing reports should be used regularly to help management understand the overall health of the company. Another thing to keep in mind is that, by properly tracking job costing regularly during the course of a job, management can see if perhaps a change order is necessary to offset any cost overruns.


Everything comes full circle. That daunting task of estimating mentioned at the beginning of this article can actually be made simpler once a proper job costing feedback loop has been integrated into the company’s systems. Suddenly you can see in black and white how estimating errors are coming into play and correct those errors on future estimates.