Aug 24, 2017
Job costing is an accounting technique generally used in situations where each job is different, performed to the customer's specifications, such as in industries like construction, fabrication, repair, and maintenance works, and in services such as auditing.
Job costing involves keeping an account of direct and indirect
costs so if your business is built on projects requiring quotes on
time and materials, then learning the art of job costing is
essential.
It’s one thing to make a careless or uninformed mistake on a
project which compromises some of your profit, but to do it more
than once is insanity.
Use the mishap as a learning experience instead. Continue to
compare what you originally estimated to your actual costs in the
end, so you can improve your accuracy and eliminate any more
expensive discrepancies. Take the time to review all your projects
and pull interim reports to see how you are doing on a regular
basis.
Generally speaking, the most common loss of revenue on a project
involves unforeseen extra time.
If you review these jobs and their progression weekly, you may find
that the unplanned extra time is due to factors under your client’s
control, not yours. If this is the case, armed with your evidence
of the discrepancy, you can sit him down and discuss extra
compensation for this.
Time is money, after all.