Job Costing Procedures
Document Type: Procedure
Version: 1.0
Last Updated: February 2026
Distribute To: Project Managers, Accounting, Field Supervisors
Purpose
Establish procedures for accurate job costing to track project profitability in real-time and support financial decision-making.
Why Job Costing Matters
Accurate Job Costing Enables:
- Real-time profitability visibility
- Early problem detection
- Accurate billing
- Informed change order pricing
- Better future estimates
- WIP accuracy
- Cash flow management
Without Job Costing:
- Profitability unknown until project ends
- Problems discovered too late
- Inaccurate billing
- Poor estimating feedback
- WIP unreliable
Cost Code Structure
Standard Cost Code Hierarchy:
Project
├── Phase/Area (optional)
│ └── Cost Code
│ └── Cost Type (Labor, Material, Sub, Equip, Other)
Sample Cost Code Structure:
| Division | Code Range | Description |
|---|---|---|
| 01 | 01-XXX | General Conditions |
| 03 | 03-XXX | Concrete |
| 05 | 05-XXX | Metals |
| 06 | 06-XXX | Wood & Plastics |
| 07 | 07-XXX | Thermal & Moisture |
| 08 | 08-XXX | Doors & Windows |
| 09 | 09-XXX | Finishes |
| 22 | 22-XXX | Plumbing |
| 23 | 23-XXX | HVAC |
| 26 | 26-XXX | Electrical |
Cost Types:
| Type | Code | Description |
|---|---|---|
| Labor | L | Direct labor hours and cost |
| Material | M | Materials purchased |
| Subcontract | S | Subcontractor costs |
| Equipment | E | Equipment rental/owned |
| Other | O | Permits, fees, misc |
Cost Collection
Labor Costs:
Source: Time tracking system
Required Data:
- Employee
- Hours
- Project
- Cost code
- Classification (for burden calculation)
Calculation:
Labor Cost = Hours × Burdened Labor Rate
Burdened Rate = Base Wage + Taxes + Insurance + Benefits
BLDR Time Integration:
- Captures time by project/cost code
- GPS verification
- Automatic burden calculation
- Daily/weekly reports
Material Costs:
Source: Purchase orders, invoices
Required Data:
- Vendor
- Amount
- Project
- Cost code
- Description
Process:
- PO created with job/cost code
- Material received
- Invoice processed
- Cost posted to job
Subcontractor Costs:
Source: Subcontractor invoices/pay apps
Required Data:
- Subcontractor
- Amount
- Project
- Cost code (typically one per sub)
Process:
- Sub pay app received
- Work verified
- Amount approved
- Posted to job
Equipment Costs:
Source: Equipment logs, rental invoices
Owned Equipment:
Daily Rate = (Depreciation + Maintenance + Insurance) ÷ Working Days
Rented Equipment:
- Actual rental cost
- Plus fuel if applicable
Budget vs. Actual Reporting
Job Cost Report:
================================================================
JOB COST REPORT
================================================================
Project: ___________________ As of: ________________________
================================================================
| Cost Code | Description | Budget | Actual | Committed | Variance |
|-----------|-------------|--------|--------|-----------|----------|
| 03-100-L | Concrete Labor | | | | |
| 03-100-M | Concrete Material | | | | |
| 03-100-S | Concrete Sub | | | | |
| ... | | | | | |
| TOTAL | | | | | |
================================================================
SUMMARY:
Budget: $____________________
Actual to Date: $____________________
Committed (not yet billed):$____________________
Projected Final: $____________________
Variance: $____________________
================================================================
Key Metrics:
| Metric | Formula | Purpose |
|---|---|---|
| % Budget Spent | Actual ÷ Budget | Track burn rate |
| Projected Final | Actual + Remaining Budget | Forecast completion |
| Variance | Budget - Projected | Over/under budget |
| % Complete | Actual ÷ Projected Final | WIP input |
Committed Costs
What Are Committed Costs?
Costs obligated but not yet billed:
- Open purchase orders
- Subcontract remaining value
- Equipment on rent
- Pending invoices
Why Track Committed:
Available Budget = Budget - Actual - Committed
Without committed costs, budget appears available when it's not.
Cost Code Analysis
When Cost Code Over Budget:
-
Identify cause:
- Quantity variance (more work than estimated)
- Rate variance (higher cost than estimated)
- Scope change (should be CO)
-
Take action:
- Adjust future work
- Process change order
- Update EAC
-
Document:
- Reason for variance
- Corrective action
- Impact on overall project
Cost Variance Report:
================================================================
COST VARIANCE ANALYSIS
================================================================
Project: ___________________ Period: ______________________
================================================================
SIGNIFICANT VARIANCES (over 5%):
Cost Code: _________________ Description: __________________
Budget: $________________ Actual: $_____________________
Variance: $______________ Variance %: _________________
Cause:
☐ Quantity (more/less work than estimated)
☐ Rate (higher/lower cost than estimated)
☐ Scope change (document CO status)
☐ Estimating error
☐ Productivity (better/worse than planned)
☐ Other: ________________________________________________
Explanation:
___________________________________________________________
Impact on Project:
___________________________________________________________
Corrective Action:
___________________________________________________________
================================================================
Daily Cost Tracking
Field Input:
Daily (from BLDR Pro):
- Labor hours by cost code
- Equipment used
- Materials received
- Work completed (quantities)
Office Input:
Daily/Weekly:
- Invoices posted
- Subcontractor costs posted
- Cost allocations
Reconciliation:
Weekly:
- Time records → Payroll → Job cost
- Invoices → AP → Job cost
- Cost code review
Job Cost Meetings
Weekly PM Review:
Agenda:
- Review cost report
- Discuss variances
- Update projections
- Identify issues
- Plan corrective actions
Monthly Management Review:
For Each Project:
- Overall budget status
- Significant variances
- Projected final cost/margin
- Issues and risks
- Recovery plans
Integration with Other Systems
Time Tracking → Job Cost:
BLDR Time → Payroll → Job Cost System
↘ ↗
Direct Integration (preferred)
Purchasing → Job Cost:
BLDR Pro (PO) → Receiving → AP → Job Cost
↘ ↗
3-Way Match
Billing → Job Cost:
% Complete (from cost) → Pay Application → Revenue Recognition
Software Integration
BLDR Pro:
- Daily reports with cost codes
- Material tracking
- Work quantity tracking
- Photo documentation
BLDR Time:
- Time by project/cost code
- Automatic burden calculation
- GPS verification
- Real-time labor cost
Related Documents
- WIP Reporting
- Pay Application Process
- Purchase Order Process
- Estimating Standards
Template provided by support.construction. Job costing is the foundation of construction financial management.