Why do Dallas construction companies need job costing?
A small construction company can have a good year on paper and still not know which jobs paid for it. The profit and loss statement shows the company as a whole. It does not show that the kitchen remodel in north Dallas made money while the commercial build-out across town lost most of it again. Job costing is how the books answer that question, one job at a time.
For a contractor working jobs across Dallas and the suburbs around it, that answer matters every time you bid. If you do not know what your last three jobs of a certain type really cost, the next bid is a guess. Tru-Ledger Bookkeeping keeps books for small businesses in Dallas, with a focus on north and central Dallas, and construction is one of the industries it works in today.
What costs should each job carry in the books?
Every direct cost should land on the job that caused it. In practice that means four buckets, and keeping them separate is what lets you see where a job went over rather than only that it did.
| Cost bucket | What goes in it | Where it usually goes wrong |
|---|---|---|
| Materials | Lumber, fixtures, concrete and supplies bought for that job | Supply house runs paid on one card and never split between jobs |
| Labor | Wages and employer payroll costs for the hours your crew spent on that job | Payroll recorded as one lump sum with no hours by job |
| Subcontractors | Bills from electricians, plumbers, drywall and other subs | Sub invoices entered without the job name on them |
| Equipment | Rentals and equipment costs used on that job | Rentals booked to general overhead instead of the job |
The fix for most of those problems happens at the moment of entry. A supplier bill, a card charge or a sub's invoice should get its job name when it goes into the books, not months later when someone is trying to rebuild the job from memory. A pile of supply house receipts with no job written on them is where job costing usually falls apart.
How should change orders be recorded?
A change order is new work on an existing job, so it belongs to that job rather than to a new one. Add the approved change order to the original job's contract value, bill it the same way you bill the rest of the job, and tag the extra materials, labor and sub costs it causes to that job. That way the job report shows the original scope and the changes together, and you can see whether the change orders made money or simply covered work that should have been in the first bid.
Keep the signed change order with the job's paperwork. When a customer disputes a final invoice, a change order that was approved, priced and recorded at the time is far easier to stand behind than one that only exists in a text message.
Not sure what your last job really cost?
Book a free phone consultation to talk through how your jobs are set up in the books today.
What about retainage and unpaid invoices?
On many construction contracts the customer holds back part of each payment until the work is finished and accepted. That held-back amount is still money the customer owes you. If the books treat it as a discount, or simply forget it, the job looks less profitable than it was and the money can slip through the cracks at closeout.
Track retainage as a receivable on the job, separate from the rest of what the customer owes, so you can see at a glance how much is held back on each project and chase it when the work is signed off. Keeping receivables and payables current is the same habit applied to every invoice, with or without retainage.
How do job reports tie to the monthly close?
A job report is only as good as the books under it. If the bank and card accounts have not been reconciled for the month, there may be missing bills, duplicate charges or costs still sitting in an uncategorized account, and every job report built on top of that is off by an amount nobody can see.
- Enter and tag every supplier bill, sub invoice and card charge for the month to its job.
- Record payroll for the month with crew hours split by job.
- Reconcile every bank and credit card account to its statement.
- Review uncategorized and general expense lines for costs that belong to a job.
- Run the job profitability report and compare each job against what you bid.
Done in that order, the monthly close catches the missing bill before it distorts a job, and the job report you look at after the close is one you can actually make decisions with.
Should you keep job-costed books yourself?
Plenty of contractors start out keeping their own books at night after a day on site. That works until the number of open jobs grows and the evenings run out. If supplier bills are piling up untagged, payroll hours are not split by job, or you cannot say which jobs made money last quarter, the setup needs attention before the next busy season.
Steve Martinez, based in Garland, keeps books in QuickBooks Online for small construction and retail businesses, and job costing and inventory tracking sit alongside the monthly bookkeeping. If your books are already behind, catching up before year end can come first.
Want job reports you can bid from?
Call (469) 929-3623 or book a free phone consultation to talk through job costing for your company.
