Job Costing 101 for Construction Business Owners
By Julie Myers · 7 min read
Job costing is the backbone of a profitable construction business. Without it, you're bidding on gut instinct, and you won't know if a job made money until long after it's finished — if you ever find out at all. Here's what job costing is and how to do it right in QuickBooks.
What Is Job Costing?
Job costing tracks all the costs — labor, materials, subcontractors, equipment, overhead — associated with a specific project or job. When a job is complete, you compare actual costs to your estimate to see if you made the margin you expected.
The Three Cost Categories to Track
Direct Labor
The hours your crew spends on a specific job. Time needs to be allocated by job, not just by employee, so you can see true labor cost per project.
Materials & Subcontractors
Every purchase order and subcontractor invoice needs to be coded to the correct job in QuickBooks. This is where most construction companies fall short — POs get miscoded or go unmatched.
Overhead Allocation
Some overhead — equipment depreciation, insurance, general office costs — should be allocated across jobs. A simple percentage-based method works for most small to mid-size contractors.
Setting It Up in QuickBooks
In QuickBooks, use Customers/Jobs to set up each project. When entering bills, checks, or time, always assign them to the correct job. Run the Job Profitability Detail report to see actual vs. estimated costs on any job at any time.
Need Job Costing Set Up?
I set up and manage job costing in QuickBooks for construction and excavation companies. If you're not tracking job profitability, you're flying blind on every bid.
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