In order to accurately track profit and loss on your jobs and projects, proper job costing is key. Job costing is the process of tracking the materials, labour, subcontractors, equipment and overhead costs involved in completing a project or service. Job costing processes may look different from company to company depending on customer requirements and industry standards. However, carefully and accurately monitoring job costs is important no matter what kind of field service business you run.
One of the most efficient ways to properly track job costs is by using a single, cloud-based software system. Field service management software can improve the accuracy of job costing by providing live updates of profitability throughout different stages of work, keeping financials organised in a manner that is easy to understand and connecting to other parts of the job management process.
When using a single software system, here are nine helpful job costing tips to keep in mind:
1. Create a system to categorise your costs.
How do you keep your different costs organised? Does everyone on your team know which costs are billable and which are non-billable? With a software system like simPRO, you can create Cost Centres to organise your expenses and then easily assign them to a quote or job. By giving your Cost Centres logical names, you can ensure your staff is on the same page and using the same system to categorise costs. This will help ensure billing accuracy as well.
2. Track change orders.
When your customer requests additional work outside of the original job scope, do you keep track of the additional labour or materials costs? Even if the requested add-ons seem minor, these changes can add up and throw your project off budget. By recording each change order and keeping them housed in a single system, it is easy to add the additional costs to be invoiced along with the original estimate totals.
3. Run consistent reports.
Do you know where your costs stand in real time? Use software that allows you to schedule regular reports on your work in progress and cost to complete. This way, when you are job costing, you can easily see amounts that have been billed up to a certain point, net margins on a job, overall costs expected, remaining forecasts and other important cost information at any given time.
4. Empower field staff to track labour hours in real time.
Are your field staff accurately recording their time spent on a job site? By using a software system that connects with a mobile app for recording information in the field, you can update hours worked in real time to compare scheduled time versus actual time for accurate job costing. When labour hours are updated in real time, it is easier for you to review and update labour costs for your jobs without needing to carry information across different apps or paper timecards.
5. Streamline and improve your estimating.
Build out your estimating library with accurate catalogues and pricing from your suppliers, and then create prebuilds and take off templates to create a base schedule of rates (per point pricing). With fit time multipliers and labour-type efficiencies, you can fine tune and systemise your estimates. Then, track original estimated costs, revised estimates and actual costs on jobs to refine your pricing. To further streamline estimating, issue and update pricing from supplier quotes based on the specific project to adjust your margins or price on the job.
6. Avoid double data entry.
As you are costing jobs, do you constantly need to transfer information from one program to another? This not only wastes time, but it can also result in data entry errors. Use a single software system to connect your estimates to your job costing and invoicing processes and eliminate double data entry.
7. Monitor progress invoices.
Improve your cash flow and help keep projects on budget by issuing invoices at set stages within project progress. However, it is important to closely track these progress invoices and relevant payments to make sure you are costing the project accurately.
8. Track subcontractor work orders and costs.
Software can help organise initial estimates from subcontractors, issue work orders and track the invoices against those work orders. You can even manage your RCTI process if you have subcontractors that work for you consistently.
9. Keep track of every cost.
For truly accurate job costing, it is important to track every cost involved in a project. Plant rental, maintenance and charge outs can all contribute heavily to the end result of the job. Additionally, contingencies, disbursements and allowances should also be included.
If you don’t have consistent processes for job costing, it may take some time to get your staff on board. However, your efforts will greatly pay off. Using a single software system can also make a huge difference in implementing each one of these tips.
Visit the simPRO website to learn more about software features for job costing, estimating, billing and other areas of the field service workflow.