{"id":18874,"date":"2015-06-02T09:02:45","date_gmt":"2015-06-02T13:02:45","guid":{"rendered":"https:\/\/foundationsoft.com\/?p=749"},"modified":"2025-04-14T16:13:52","modified_gmt":"2025-04-14T20:13:52","slug":"three-steps-to-successful-job-costing","status":"publish","type":"post","link":"https:\/\/www.foundationsoft.com\/learn\/three-steps-to-successful-job-costing\/","title":{"rendered":"Three Steps to Successful Job Costing"},"content":{"rendered":"<p><a class=\"gdlr-button medium without-border\" href=\"\/wp-content\/uploads\/articles\/three-steps-to-successful-job-costing.pdf\" target=\"_blank\"  style=\"color:#ffffff; background-color:#000000; \"  >Download PDF<\/a><\/p>\n<p>Running a <strong>construction business<\/strong> without a solid <a href=\"https:\/\/www.foundationsoft.com\/software\/job-costing\/\"><strong>job costing<\/strong><\/a> plan is like walking blindfolded around the Grand Canyon\u2014one misstep could spell disaster.<\/p>\n<p>Job costing allows contractors to truly see how they\u2019re doing on projects, both individually and overall. This insight doesn\u2019t appear magically; it requires hard work and commitment. <strong>Contractors<\/strong> with an effective plan in place can gain a significant advantage over their competitors.<\/p>\n<p>That said, you probably already know that job costing is important. What you might not know is that job costing software is so valuable that the market size for this type of software was valued at <a href=\"https:\/\/www.verifiedmarketresearch.com\/product\/job-costing-software-market\/\">$7.49 billion in 2023<\/a>. That&#8217;s how much money companies were willing to spend cumulatively.<\/p>\n<a target=\"_blank\" href=\"\/job-costing-ultimate-guide\/\" class=\"blog-cta-image\"><img decoding=\"async\" src=\"\/wp-content\/uploads\/2024\/03\/FSL-blog-post-ad-ultimate-guide.png\" alt=\"UG to Job Costing\" title=\"UG to Job Costing\"><\/a>\n<h3 class=\"whitespace-pre-wrap break-words\"><span class=\"ez-toc-section\" id=\"Key_Takeaways_from_Job_Costing_Implementation\"><\/span>Key Takeaways from Job Costing Implementation<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul class=\"-mt-1 [li&gt;&amp;]:mt-2 list-disc space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\"><a href=\"https:\/\/www.foundationsoft.com\/software\/job-costing\/\"><strong>Job costing<\/strong> <\/a>is essential for <strong>construction businesses<\/strong> to maintain financial control and improve project profitability. Without it, contractors risk making costly financial mistakes.<\/li>\n<li class=\"whitespace-normal break-words\">Successful implementation requires a three-step approach:<\/li>\n<\/ul>\n<ol>\n<li style=\"list-style-type: none;\">\n<ol class=\"-mt-1 [li&gt;&amp;]:mt-2 list-decimal space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\">Assess company benefits and set clear objectives<\/li>\n<li class=\"whitespace-normal break-words\">Develop a practical implementation strategy with team buy-in<\/li>\n<li class=\"whitespace-normal break-words\">Choose appropriate <strong>construction accounting software<\/strong> for execution<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n<ul class=\"-mt-1 [li&gt;&amp;]:mt-2 list-disc space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\">The implementation team should include key stakeholders from all levels: owners, <strong>project managers<\/strong>, estimators, foremen, and accounting staff.<\/li>\n<li class=\"whitespace-normal break-words\">Regular monitoring and weekly meetings are crucial for maintaining data quality and ensuring successful adoption.<\/li>\n<li class=\"whitespace-normal break-words\">Using specialized <strong>construction accounting software<\/strong> with job costing capabilities provides better results than general accounting packages.<\/li>\n<li class=\"whitespace-normal break-words\">Mobile data entry tools can streamline the process by capturing real-time information from the field.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Step_1_Determine_How_Job_Costing_Can_Benefit_the_Company\"><\/span><strong>Step 1: Determine How Job Costing Can Benefit the Company<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Job costing can impact contractors at many different stages. Whether contractors are looking to gain a better handle on existing businesses, expand into new projects, or just take current practices to the next level, there are numerous payoffs.<\/p>\n<p>First, take a step back to understand what job costing is and how doing it effectively can enhance business. Talk to other contractors and consult with a <strong>CPA<\/strong> firm that specializes in the construction industry. Determine what role job costing would have in your business. Would it help to see a more detailed breakdown of costs? Could your company submit more accurate bids using historical data?<\/p>\n<p>Working through this discovery stage will help clarify the potential <strong>benefits of job costing<\/strong>, such as:<\/p>\n<ul>\n<li>More timely and accurate reporting<\/li>\n<li>The ability to track actual costs against detailed job budgets<\/li>\n<li>A store of historical data for more accurate future bidding<\/li>\n<li>The ability to monitor job statuses at a high level or at a detailed level<\/li>\n<li>The opportunity to be proactive by making prompt changes based on current data<\/li>\n<li>Knowledge of exactly where costs are incurred<\/li>\n<\/ul>\n<p>Once contractors identify the advantages they stand to gain, they can set goals for their job costing and make the commitment so that the work of implementation can begin.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Step_2_Define_a_Realistic_Approach_That_Fits_the_Companys_Goals\"><\/span><strong>Step 2: Define a Realistic Approach That Fits the Company\u2019s Goals<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Because <strong>job costs<\/strong> are different for every construction company, it\u2019s imperative to initiate an open dialogue among the people who will be involved in the process.<\/p>\n<p>Implementation team members should include:<\/p>\n<ul>\n<li>The owner<\/li>\n<li>Senior-level estimators<\/li>\n<li><strong>Project managers<\/strong><\/li>\n<li>Foremen<\/li>\n<li>The accounting staff.<\/li>\n<\/ul>\n<p>During the initial meeting, the team should establish what goals the company wants to achieve by job costing and define a realistic approach with the best chance of succeeding. Jumping headfirst into an elaborate structure that becomes too difficult to follow would be counterproductive.<\/p>\n<p>Instead, a company that has never done job costing should first master a basic structure and then expand on it as personnel gets more comfortable. <strong>Job-costing processes<\/strong> cannot be set up in a day, nor can the task be done without buy-in from all levels of the company.<\/p>\n<p>In addition to gathering input from the team, continue to consult outside resources, including industry professionals and online materials. One useful resource is the <strong>Construction Specifications Institute\u2019s (CSI)<\/strong> <a href=\"https:\/\/www.csiresources.org\/practice\/standards\/masterformat\" target=\"_blank\" rel=\"noopener noreferrer\">code system<\/a>.<\/p>\n<p>To initiate a productive conversation among the team when brainstorming goals for job costing, ask questions such as the following:<\/p>\n<ul>\n<li>What are some of the primary activities performed on jobs?<\/li>\n<li>What kind of detail does management want to see?<\/li>\n<li>What information does the accounting staff want to track?<\/li>\n<li>What types of reports are needed?<\/li>\n<\/ul>\n<p>Companies will also need to consider how timecards will come in from the field with the correct job-costing information.<\/p>\n<p>A final part of this stage will include planning a rollout to the employees. How will employees be educated in the new system? Who will be responsible for completing the tasks?<\/p>\n<p>The data that appears on your reports will only be as good as your data entry. To ensure that people remain committed, management should follow up by meeting weekly to assess the implementation and the quality of their data.<\/p>\n<p>Continuing these weekly meetings <em>after <\/em>implementation is in full swing will allow proactive management of each job under the new <strong>job costing structure<\/strong>.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Step_3_Execute_the_Plan_and_Deliver_Results\"><\/span><strong>Step 3: Execute the Plan and Deliver Results<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The final step involves identifying a \u201cvehicle\u201d for executing the<strong> job-costing system<\/strong>.<\/p>\n<p>Again, the best solution will not be identical between each company. This may depend on factors such as size and specialization, such as residential, highway-heavy, government, etc. Companies will also want to consider additional goals for their technology, such as whether project-management tools are a priority, whether <strong>software as a service (SaaS)<\/strong> is a desired offering, and whether integration with other software is imperative.<\/p>\n<p>In most cases, a <strong>construction-specific accounting<\/strong> application is advisable since general-purpose accounting packages may not afford the required level of <strong>job-costing detail.<\/strong><\/p>\n<p>For companies that already have <strong><a href=\"\/\">construction accounting software<\/a> <\/strong>in place but have not yet fully utilized its job-costing capabilities, now is the time to contact the software vendor to explore these options. A dedicated vendor will take the time to understand these goals and provide the training necessary to help execute the plan.<\/p>\n<p>Additionally, they may offer supplementary tools, such as mobile entry, that will capture <strong>costs<\/strong> and other data from the field and send it back to the office, making it easier for on-site workers to submit accurate and up-to-date data.<\/p>\n<a target=\"_blank\" href=\"\/learn\/#schedule-a-live-demo\" class=\"blog-cta-image\"><img decoding=\"async\" src=\"\/wp-content\/uploads\/2024\/03\/FSL-blog-post-ad-see-how.png\" alt=\"Get a Demo\" title=\"Get a Demo\"><\/a>\n<p>Implementing a <strong>job-costing structur<\/strong>e is a big decision that requires hard work and persistence. But putting the right processes in order the right way is one of the most valuable decisions any construction business owner can make to ensure the company\u2019s financial health today and into the future.<\/p>\n<p>*<em>A version of this article first appeared in <\/em>Construction Business Owner.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Running a construction business without a solid job costing plan is like walking blindfolded around the Grand Canyon\u2014one misstep could spell disaster. Job costing allows contractors to truly see how they\u2019re doing on projects, both individually and overall. This insight doesn\u2019t appear magically; it requires hard work and commitment. Contractors with an effective plan in place can gain a significant advantage over their competitors.<\/p>\n","protected":false},"author":17,"featured_media":1478,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_searchwp_excluded":"","inline_featured_image":false,"footnotes":""},"categories":[9],"tags":[14],"class_list":["post-18874","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articles","tag-job-costing"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Three Steps for Successful Job Costing for Contractors<\/title>\n<meta name=\"description\" content=\"Learn the three essential steps to implement job costing in your construction business. Discover how to track costs, improve bidding accuracy, and boost profitability\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.foundationsoft.com\/learn\/three-steps-to-successful-job-costing\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Three Steps for Successful Job Costing\" \/>\n<meta property=\"og:description\" content=\"You know job costing can help you understand your construction business&#039;s profitability, but these tips will help you make even more of it!\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.foundationsoft.com\/learn\/three-steps-to-successful-job-costing\/\" \/>\n<meta property=\"og:site_name\" content=\"Foundation Software\" \/>\n<meta property=\"article:published_time\" content=\"2015-06-02T13:02:45+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-04-14T20:13:52+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.foundationsoft.com\/wp-content\/uploads\/2015\/06\/article-372015.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"750\" \/>\n\t<meta property=\"og:image:height\" content=\"330\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Frank Osborn\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Three Steps for Successful Job Costing\" \/>\n<meta name=\"twitter:description\" content=\"You know job costing can help you understand your construction business&#039;s profitability, but these tips will help you make even more of it!\" \/>\n<meta name=\"twitter:image\" content=\"https:\/\/www.foundationsoft.com\/wp-content\/uploads\/2015\/06\/article-372015.jpg\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Frank Osborn\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"6 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.foundationsoft.com\/learn\/three-steps-to-successful-job-costing\/\",\"url\":\"https:\/\/www.foundationsoft.com\/learn\/three-steps-to-successful-job-costing\/\",\"name\":\"Three Steps for Successful Job Costing for Contractors\",\"isPartOf\":{\"@id\":\"https:\/\/www.foundationsoft.com\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.foundationsoft.com\/learn\/three-steps-to-successful-job-costing\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.foundationsoft.com\/learn\/three-steps-to-successful-job-costing\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.foundationsoft.com\/wp-content\/uploads\/2015\/06\/article-372015.jpg\",\"datePublished\":\"2015-06-02T13:02:45+00:00\",\"dateModified\":\"2025-04-14T20:13:52+00:00\",\"author\":{\"@id\":\"https:\/\/www.foundationsoft.com\/#\/schema\/person\/f4d81e1915582d565569c791665f80da\"},\"description\":\"Learn the three essential steps to implement job costing in your construction business. 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