What is job costing and why does it matter?
Job costing means tracking what each job costs against what the customer agreed to pay, so you know whether a job made money instead of hoping it did. Accounting textbooks such as OpenStax Principles of Managerial Accounting describe the same idea: materials, labour and overhead are assigned to each job and tracked separately.
- It answers a per-job question. Your bank balance shows how the business is doing. Job costing shows which jobs earned their keep and which quietly lost money.
- It improves your next quote. Real costs from finished jobs show what similar work should be priced at.
- It shows patterns a monthly total hides. Two jobs of the same size can end very differently, and a combined figure hides which one dragged the other down.
Why is finding out after the job closes too late?
A typical scene: a job is signed off on Friday and the final invoice goes out. The following week someone adds up supplier bills, extra site days and materials bought on a personal card, and the result is a surprise.
- In week two, you can still act. If labour is running ahead of plan or a material price moved after the quote, you can reprice the remaining work, agree a change or reassign the crew.
- After handover, nothing is recoverable. The same loss now costs margin, not a conversation.
- A closing report is a record, not a control. Job profitability is mostly decided in the middle of a job, so the number you need is the one you can read while work is still open.
What should you track on every job?
Keep one short list that every job shares, so jobs can be compared with each other. Good project cost tracking means entering the same few things when they happen.
- Labour: your own hours plus subcontract work, grouped by trade.
- Materials: everything bought for the job, with the supplier invoice attached so the figure can be checked later.
- Changes: extra work the customer asks for, and work you absorb without charging. Public-sector guidance on change orders advises you to negotiate and approve changes before authorising work to begin, and the same habit protects a private job.
- Money received: deposits and stage payments, matched to the right job.
| Cost line | What goes in | Where it usually slips |
|---|---|---|
| Labour | Own hours, subcontract work | Time logged days later, or never |
| Materials | Purchases and vendor invoices | Receipts left in a van |
| Changes | Extra work asked or absorbed | Agreed verbally, never recorded |
| Money received | Deposits, stage payments | Matched to the wrong job |
How do you read job costing while a job is live?
Start with two numbers: what has been collected and what has been spent. Those give you profit so far and the margin, and a weekly look at them is the simplest answer to how to track project costs without a heavy process.
- Collected: total payments received on the job so far.
- Spent: total costs entered against the job so far.
- Profit: collected minus spent.
- Margin: profit divided by collected, which is your project profit margin to date.
- Compare to your lines: set a target and a warning level before the job starts. Above target needs nothing, near the warning level needs a conversation this week, and below it needs a decision.
- Read it next to progress: a high margin on a mostly unfinished job is not yet a result.
How does SK Works show profit and margin per job?
SK Works keeps the work and the money on one job card, described on the product page as two tracks: steps on the work track, payment milestones on the money track. Its own page documents the following behaviour.
- Truthful progress. Each step carries a share of the work and progress is the sum of finished shares, so finishing snagging before carpentry shows 50%, not 75%.
- Profit and margin per job. Shown against your own thresholds in green, amber or red. The demo example uses a target of 30 and a warning level of 15.
- Costs by category. Materials, vendor invoices and labour by trade, with an invoice photo attached to each cost line.
- Append-only ledgers. Payments and costs cannot be edited or deleted. A correction is a dated reversal that points to the original and records a reason.
- Margin stays with the owner. It is hidden on list screens shared with site staff and shown on the owner's detail view, and the customer progress portal never shows costs.
You can try this on your own jobs in the SK Works demo.
What does a weekly job cost check look like?
Pick one fixed time each week and go through every open job in the same order. A short regular check beats a long quarterly review, because a loss spotted in week two costs a conversation.
- Enter what is missing. Add costs and invoices since last week, including any extra work done on site. The work order management guide for on-site jobs covers how that work gets issued in the first place.
- Check margin against your line. If a number looks wrong, trace it to the entry behind it rather than to someone's memory.
- Check progress against the plan. Margin and progress only mean something together.
- Mark each job: fine, watch or act.
- Give every act job an owner and a date before you close the screen.
FAQ
What is the simplest way to start job costing?
How is job costing different from overall bookkeeping?
How do I handle extra work the customer asks for mid-job?
Can SK Works show profit and margin per job?
See profit and margin on your own jobs while they run.
30 minutes, no slides. We load two of your recent jobs first.