Job costing is the accounting method that treats each construction project as its own profit center. Every timecard hour, invoice, equipment charge and subcontract payment is coded to a job and a cost code, so you can compare what you spent against what you budgeted, line by line.
Why it matters
General ledger profit tells you how the company did last month. Job costing tells you which jobs made that profit and which ones are quietly losing it. Without it, a fading job hides inside a healthy total until it’s too late to fix. Job cost data also feeds everything downstream: cost-to-complete, the WIP schedule, revenue recognition and bonding conversations.
Worked example
On Riverside Medical Center (Job #24-118), Volt Electric’s work sits under cost code 26 Electrical. Budget, committed cost and actual cost on that code are tracked side by side. When actuals plus remaining commitments run 4% above the revised budget, job costing is what surfaces it, early enough to talk to the PM before the next forecast. (Illustrative sample data.)
Common mistakes
- Coding costs to a catch-all “general” code because the right one is unclear. The job total looks right; the detail is useless.
- Booking costs late. Job cost that lags the field by 30 to 60 days is history, not management.
- Comparing actuals to the original budget instead of the revised budget that includes approved change orders.
How os.construction handles it
We’re building job cost to live on the same record as field and billing data, so an approved change order, PO or timecard hits the job budget the moment it’s approved. We’re shaping the cost code setup with founding contractors.