3 Ways To Improve Job Costing Accuracy

Accurate job costing is essential in order to calculate profit margins, estimate project costs, put together profitable bids, and avoid cost overruns in the construction industry. Below are 3 quick tips to help you improve your job costing and give you the data you need to better manage your projects.

Tip # 1 – Get Employee Buy-In

Accurate job costing is dependent on getting accurate data from the field. Without buy-in from your field crew and office staff you will never get all the information you need for accurate job cost reports. Many times, we see managers and owners try to force buy-in from their team but don’t spend the time to educate and fully train everyone on the system. In those cases, even when a crew member wants to provide you with the information you need, you end up getting inaccurate data and information. In addition, you end up frustrating even your best workers because they spend unnecessary time on a job costing system they don’t understand.

Tip #2 – Integrate Technology Into Your Job Costing System

As the adage goes – ‘Garbage in, garbage out’. Nowhere in the construction industry is this more accurate than with job costing. Inaccurate labor and purchasing data from the field automatically leads to inaccurate reports. As such, as you try to improve your job costing, a good place to start is to analyze and improve your systems for obtaining reliable field data.

A major improvement to your job costing can be made by eliminating paper time cards. As this is our specialty at busybusy™, we see every day how much easier and more accurate job costs reports become when companies implement a simple mobile time tracking system. Not only will you decrease administrative time and costs that come with paper time cards (collecting the cards each week, manually inputting them into your account system, etc.), but you will now have accurate labor data at your fingertips.

Given that labor is generally the largest cost for construction companies, accurately tracking clock-in and clock-out time will be one large step closer to better cost reports. It is also especially helpful if that time tracking software is tied directly into your accounting software.

Tip #3 – Reanalyze Overhead Costs

Overhead allocation is the practice of associating a portion of your overhead costs to the projects and jobs you complete. Overhead allocation isn’t always an exact science – there is an art to knowing how to allocate what percentage of your overhead to specific jobs. Whichever method you prefer to use (direct labor costs, direct materials cost, or a blended method), make sure you reanalyze your allocation rates annually to ensure they are still representative of your current company overhead costs.


By implementing the above tips you can improve the accuracy of your job costing reports. With better reports you will be able to better forecast job costs, make more accurate bids, and improve profitability over time.