The Three P’s of Job Costing
In a recent survey, 75% of contractors indicated job costing is a top concern for their business. Are you one of them? Successful job costing can mean the difference between a profitable business and one that struggles to stay alive. Companies that don’t look at the hard facts and “guesstimate” cannot compete with contractors that have effective job costing systems in place. So how do you implement a job costing system or improve your current one? Follow the three P’s: Plan, Practice, and Probe.
Planning – Start by evaluating your current system and determining your goals. Next, do research to find out what works best. Don’t hesitate to ask questions. Find out what other companies are doing and get input from your staff. Explaining to your employees what you’re trying to accomplish helps to get everyone on board and may lead to other ideas specific to your company. Job costing requires a team effort.
Practicing – Start small. Once you’ve determined how your new or adjusted job costing system will be structured, don’t just apply it to all of your open or upcoming projects. Pick a manageable project that you can compare to a prior one. This will allow you to gauge the effectiveness of your current job costing system.
Probing – Analyze the results. How well does the new system work? Did you accomplish your goals? What worked? What didn’t? Can you apply this system to all of your jobs?
Repeat – Tweak the areas that need improvements. Leave things alone that worked well. Now apply the system to more jobs. Then to all the jobs. Learn the nuances of different types of jobs and develop variations your job costing system. The possibilities are endless. Continue to repeat this process and your company will continue to evolve and grow.