Job costing, particularly in the construction industry, is as much an art as it is a science. It's a careful balance between making sure your firm and employees are paid fairly and having a shrewd eye for remaining competitive in the marketplace. If you aren't getting the project bids your company deserves, you may need to look at implementing best practices for job costing.
1. Don't forget to factor in the small costs.
You want to account for all costs associated with a project, even if you are only giving the client a general estimate and not an itemized breakdown of the job costing process. The little costs add up quickly, and it's easy to end up with a project that is vastly over budget because you failed to consider these costs initially. You either eat the costs or end up with an unhappy client, and neither of these are ideal situations for long-term success. Keeping tabs on the actual project costs gives you an accurate financial base that will allow you to come up with a fair price for both you and your client.
2. Lean on software-based job costing systems.
Some companies insist on doing things by hand, but that is inefficient and runs the risk of pricing too high or too low due to a lack of project data. With a software-based system, you have your entire job history at your fingertips so you can break down historical costs, decide whether these costs need to be adjusted for seasonal factors, and provide partially automated quote generation. There's no real reason to do job costing by hand these days, with a variety of software solutions on hand to assist with this time-consuming part of the job. You have more important things to spend your time on.
3. Be agile with cost adjustments.
Even the best-planned projects don't always go as they should. Don't be afraid to take an agile approach to job costing, checking in at specific milestones and any complications in order to stay on top of major changes in how much the job costs. Taking a hands-on approach to job costing helps you avoid being massively underpaid for a project that encounters complications throughout each project stage, or dealing with feature creep as the client wants more work done that wasn't originally agreed upon.
