Accurate job costing data can help you to react in real-time to changing on-the-job expenses. Here's how to respond to ensure your business profits.
In order to make a substantial profit and successfully grow your construction firm, you must first be able to analyse each and every potential job to determine both the likely rewards and the potential risks. While job costing enables you to evaluate the cost of construction items such as materials and equipment, perhaps the most important job cost with the greatest impact on a project’s bottom line is labour productivity, which requires you to create and examine labour production reports. When performed manually this can be an extremely time-consuming and complex task, but with the help of job costing software you can collect all the data you need with just a few clicks of a button, helping you to react in real-time to changing on-the-job expenses. Take a look at our guide to what you should do with the job costing data you collect…
Review schedule and budget
Your job costing software enables you to compare estimated production rates and your actual production rate, helping you to determine just how on schedule you actually are. For example, if you estimated that your workers would be near to completion by a certain date, and a week before that date they were only half way to completion, you would then know you must investigate the reasons why. The same is true where your budget is concerned. If you find that you are halfway through a job but reports indicate that you are almost at the end of your budget, you can review related reports to determine where money might be being wasted and why.
Find out which field activity is behind and why
So you’ve discovered that you are behind schedule and now you must determine why. With the support of construction accounts software you can use the available tools to estimate the progress you should have made in each area of the job by certain dates, and compare it with the progress you have actually made. This will help you to recognise exactly which field activity is behind and encourage you to investigate why. It could be for obvious reasons, such as suppliers delivering late, or it could be that your workers are underperforming, in which case you’ll need to dig a little deeper.
Investigate whether certain workers are underperforming
Job costing software enables you to estimate the quantity of work your workers can execute each day before the job has begun, which provides you with a guide when monitoring their progress. By creating and reviewing reports throughout the job, you can evaluate each worker and their performance and see where improvements need to be made. It might be that you need to have a private meeting with a certain worker to determine why they do not seem to be making much progress, or that your entire team needs a bit of encouragement!
Determine whether materials are being wasted
If your budget is dwindling fast and it looks as though you’re going to run out of funds before the job is complete, you must act fast. With construction accounts software you will have been able to set yourself a suitable budget to limit the amount you spend on one job, ensuring profitability, so when you notice you are close to overspending without being anywhere near to completion, you must determine why before the entire job becomes a financial disaster. The data you collect should show you how much you planned to spend on certain materials and how much you have spent, so you can investigate if your workers are being wasteful with materials or are failing to use them sparingly.
Job costing accounts software provides you with immediate access to numerous production reports, which means you no longer have to guess where a job stands or how well you are doing. While the data you collect is of course useful for the job you are currently completing, it is also useful when bidding for jobs in the future. You can apply your past production reports to bids on similar jobs, making your estimates more accurate and your profits higher. You can also use your reports to highlight your company’s strengths and weaknesses to know where improvements must be made and whether you should avoid certain jobs in the future.
If you’d like to find out more about how you could benefit from Integrity Construction job costing software, get in touch with the team today.