Job costing

Job costing is tracking actual labor, material, and overhead costs against the estimate for a specific project in real time, so you know whether it's making or losing money before it closes out.

The alternative to job costing is finding out a project's true margin after it's already finished — which is exactly what a lot of shops are still doing, whether they mean to or not. Real job costing means every hour, every material purchase, and every change order gets coded to the job and compared against what was estimated, continuously, not once at the end.

The gap usually isn't ambition, it's tooling. QuickBooks handles the accounting; it wasn't built to answer 'where does this specific job stand against budget today.' Without a system built for that question, the answer defaults to 'we'll know when it's done.'

Example

A GC's framing package is estimated at $180,000. By week six, labor and material coded to that job total $95,000 against 40% of the work complete — a red flag caught mid-project instead of a surprise at closeout.

Where this goes wrong on real jobs

Without real-time job costing, margin only gets discovered after the job — and the decisions — are already made.

“To this day, the best we can do is figure out what our margins were after a project is completely closed out, which obviously creates a lot of problems.”

— a senior estimator on r/estimators

Related terms

Cost codeA cost code is the identifier that categorizes a specific type of cost — a labor hour, a material purchase, a sub invoice — to a standard budget category so it can be tracked and compared across jobs.WIP reportA work-in-progress (WIP) report compares billed-to-date against earned revenue on every active job, surfacing over- or under-billing before it distorts a company's cash position.Over-billing / under-billingOver-billing means a contractor has invoiced more than the work actually completed justifies; under-billing means completed work sits unbilled — both distort a company's real cash and profit position.

Used in

Estimating process review for small GCsSmall GCs who bid and self-perform without a dedicated estimator, and want to know where scope is slipping through.

Next step

Where this shows up in Datumel:

Job-Costing Workbook InstallFrom $6,000 one-time

A configured job-costing workbook in your own Sheets or Airtable: cost codes, estimate-versus-actual, WIP, and over/under billing, with training to run it.

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