Avoid Stink Bombs in Job Costing

“This thing is like an onion. The more layers you peel, the more it stinks.” Seinfeld’s George Costanza may have been talking silly conspiracies, but he might as well have been talking about job costing too. Because nearly every construction company knows that the more layers of cost you have factored into your projects, the more likely they will come up smelling like roses in the end.

Job costing done right leads to better management decisions and better profitability. Done wrong it not only stinks, but it can be deadly to the business.

Here are questions every contractor should ask themselves about their job costing process:

  • Does our accounting system accurately and effectively record all transactions associated to jobs?
  • Has overhead been charged to jobs?
  • Have we precisely accounted for all our costs?
  • Have we compared our estimate to actual job results? If we lost money on the last job, have we determined why? What could we do better?

Job costing takes foresight, skill and discipline. Submitted bids must reflect the true costs of the job and ensure there’s profit at the end for contractors to enjoy.

Here are the  5 areas we help our clients focus on to make sure there’s no stink bombs in their bids:

  • Prepare thorough financial disclosure reports they need to get the required bonds that help them win those bids.
  • Review every cost exposure, from permit acquisition, insurance requirements, equipment rentals, port-a-potty services, and more.
  • Recognize and adjust bids for the fluctuation of costs of materials and services in various geographical regions.
  • Ensure employee and subcontractor rates are accurately reflected in bids.
  • Supply the accounting tools and principles that reduce the time to complete bid estimates.

Avrio keeps our clients from feeling like they’re in a comedy episode by making sure they get things right in their job costing process. If you want to avoid having stinky profits that can eventually kill off your business, contact  Avrio Solutions today for more fruitful outcomes.