Job Costing for General Contractors: The Six Columns That Matter

Ask ten contractors how a job is doing and nine will tell you how much they've spent. That's cost-to-date, and it's the least useful number on the page. The number that actually protects margin is cost-to-complete: what you now expect the job to cost when it's finished. Get that right and you see trouble weeks early. Get it wrong – or never compute it – and the job's true position is a surprise you meet at closeout.

The six columns

A real job-cost report shows six columns for every cost code, and each one tells you something the others don't:

• •Budget – what you planned to spend, from the awarded estimate.
• •Committed – what you're already on the hook for: signed subcontracts and purchase orders.
• •Actual – what's actually hit the books so far.
• •Projected – the most you now expect this code to cost (a stated rule, not a guess: the maximum of budget, committed, and actual).
• •Variance – projected minus budget. Negative means this code is trending over.
• •Final – locked at closeout, feeding your historical cost data for the next estimate.

Why 'committed' is the early-warning column

Actual costs are history – by the time a code is over on actuals, the money is spent. Committed costs are the future arriving early. The day you sign a subcontract for more than you budgeted, the variance should move, even though not a dollar has been paid. A job-cost system that only tracks actuals is telling you about the fire after it's spread.

Cost-to-date tells you what happened. Cost-to-complete tells you what's about to.

One spine, from field to books

The reason job costing breaks down at most firms isn't the math – it's the handoffs. The field logs costs one place, the office re-keys them somewhere else, and accounting reconciles a third system at month-end. Every handoff is a place a number drifts. The fix is a single cost-code spine that the estimate, the field, and the ledger all post against, so the six columns are always current and always tie out. That's the design principle behind SCPM Project's budget grid: one number, drillable to the postings behind it.