Texas construction CPA, Houston Subcontractor CPA, accounting, tax prep

Track Your Job Costs and Earn More!

Job costing is an accounting method widely used by construction contractors to track the cost of each job, determine the project profit margins, and make necessary adjustments to the budget. In this blog, we'll discuss job costing and why you should use it for your business.

What is job costing in construction?

Simply put, it's a method used to track the cost of each job or project, including labor, materials, subcontractors, equipment cost, soft costs, and overheads. By keeping track of the detailed breakdown of every project, you can track expenses in real-time and easily project profitability for future bids.

 Why does job costing matter in construction accounting?

In construction, every job is unique and the cost of each job can vary greatly, making it important for contractors to keep track of their expenses to ensure they profit from each project.

Many small contractors, unfortunately, miss the importance of job costing and only find out if they lose money on a job after the project is completed and all bills are paid. By then, it is too late to make any change to minimize the loss. To make matters worse, without the incorrect information, they may continue to bid for new projects at lower prices. Managing a construction business without accurate financial information is like driving with a blindfold on - not a good idea!

By using job costing, you can identify areas where they are overspending and make necessary adjustments to their budget. Additionally, job costing helps you bid accurately on future projects, as you clearly understand the costs associated with similar projects.

In summary, accurate job costing help your business:

  • Keep track of the cost of each project.
  • Increase crew effeciency
  • Determine profit margins
  • Identify areas where your crew are overspending
  • Accurately bid on future projects

Track your job costs and maintain updated job reports

 Here are some steps to help you to maintain a job cost report for your business.

1. Use a Reliable Accounting System: Choose an accounting system that is designed specifically for small construction businesses and provides the features you need to track job costs. Many cloud-based accounting systems are specifically designed for small businesses and offer features such as time tracking, job costing, and invoicing.

2. Track Time Accurately: Accurate time tracking is critical to accurately tracking job costs. Consider using a time tracking tool to keep track of the time your employees spend on each job.

3. Track Material Costs: Keep detailed records of all material purchases, including the cost of each item and the date it was purchased. This information can be used to calculate the total cost of materials for each job and to identify any areas where you may be overspending.

4. Track Equipment Costs: Keep detailed records of all equipment purchases and maintenance costs, including the cost of each item, the date it was purchased, and any repairs or maintenance that have been performed.

5. Track Overhead Costs: Keep a record of all overhead costs, including rent, utilities, insurance, and other expenses that are not directly tied to a specific job.

6. Create a Job Cost Report: Use the information you have gathered to create a job cost report that provides a detailed breakdown of all costs associated with each job. This report should include information on labor costs, material costs, overhead costs, and equipment costs.

7. Monitor and Analyze Job Costs: Regularly review and analyze your job cost reports to identify areas where you may be overspending and areas where you can improve. This information can be used to make informed decisions about future projects and to improve your overall business operations.

How Arnold CPA can help

As Arnold CPA, we provide expert support in tracking and analyzing job costs. We can help you set up a reliable accounting system, ensure that your financial records are accurate and up-to-date, and provide valuable insights and recommendations based on our analysis of your job cost reports. Our team of experienced professionals has a deep understanding of the construction industry and the unique challenges that small construction businesses face. By working with us, you can benefit from our expertise and experience, and make informed decisions that will help your business achieve its goals and remain profitable over the long term.


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Houston CPA tax , acounting
Arnold CPA is a full-service
accounting firm in Houston, Texas.
License no. C10791
Email: info@arnold-cpa.com
Phone: 281-947-2082