Top 10 Tips to Know for Construction Job Costing

Top 10 Tips to Know for Construction Job Costing

When starting a construction job, it is vital to understand how much work needs to be completed, and what the cost of that work will be.

The benefits of construction job costing are that it allows you to estimate the realistic costs of a given project and helps you track those costs.

Interested in learning more? Read below for the top ten tips on how to do successful construction job costing.

1. Define Your Goals for Construction Job Costing

No good project has ever been launched without clearly defined goals. Set your intended budget, timeline, and outcomes before doing anything else.

Having a clearly defined target will make the entire project run more smoothly.

2. Use a Master Checklist

Time is money. And one of the best ways to make sure your valuable time is well spent is to create a master checklist for your project. This helps things stay organized and on track.

A good master checklist will also provide a place to gather all potential costs. Here is a helpful worksheet that can help estimate costs and build a budget.

3. Research Equipment and Materials Pricing

The pricing for both materials and equipment can fluctuate between projects. Be sure to review the costs for both, even if you recently used similar items.

Prices can be impacted by seasonal demand, delivery challenges, and fluctuations in supply and demand.

4. Calculate Indirect and Overhead Costs

It is easy to overlook costs that are not directly related to the project, but they can affect the bottom line all the same.

A few examples of indirect and overhead costs include utilities, fuel, office space, administrative and staff salaries, shipping, and marketing.

5. Review Reports and Project Regularly

Regularly reviewing cost reports can help keep your project on track. Reviews can identify any problem areas early on and allow for quick adjustments.

6. Understand Labor Costs

Labor can be the most expensive part of a project. When calculating and pricing out labor, do not just use the hourly wage. Total labor costs include that plus taxes and benefits.

Calculate the estimated time your crew will need by looking at past similar jobs to see how many hours of labor were needed.

7. Monitor Your Billing

Since percent-complete (or progress) billing is common in construction projects, it is especially necessary to track bill payments in real-time.

This can provide a snapshot of your progress and help you make adjustments if expenses start to get too high. 

8. Use Job Costing Software

Job costing can be done with a simple spreadsheet. But there is also construction job costing software created specifically for the task, and it is worth the cost to invest in it.

Mistakes in job costing can be very expensive, so it is worth investing in software that is flexible, provides full integration with other software, and has a variety of templates.

Getting a job report for construction job costing can also be an extremely helpful tool.

9. Define Project Risks

A good job costing takes into consideration what can go wrong during a construction project. Consider things like equipment and materials shortages, missed deadlines, and unexpected extra labor.

While it is impossible to predict the future, one good way to define risks is to look at similar previous projects and see if there were problems that occurred there.

10. Compare Subcontractor Quotes

Choose the best subcontractors for each specific job by comparing the materials and labor quoted. Do not accept a cost-plus bid from a subcontractor. Rather, work with one that will give an estimate.

Save Time and Money

A little preparation and research to create a construction job costing can save time and money for your project. Consistency and pre-planning are keys to making sure your job costing is accurate.

To learn more about home improvement, DIY, and real estate projects, be sure to check out the other articles on our website.