It is critical that construction companies have full control over all aspects of their contract costs. To achieve this goal it is vital that the tender allowables or budget is compared against the actual costs on a monthly basis as the money is made or lost on the construction site itself; most strategic financial decisions are made on the site by the site management team.
The main areas covered by Whimbrel’s construction job costing systems are listed below. These main cost headings are then broken down into detailed ledgers for each. The report shows the profit and loss of the actual costs against the allowable cost for each ledger category.
- The control and management of site costs including:
- Preliminary and General
- Having accurate historical information at hand when pricing tenders
- Managing labour costs on site to increase productivity
- Having supporting information for payment claims
The costs, revenue and adjustments that should to be monitored closely:
- Checking the actual revenue to the certificate revenue
- Managing all under and over claims for cash flow purposes
- Understanding how escalation effects the cost report
- Ensuring that all adjustments are accounted for correctly and understood
- Management of overheads and markups
- Checking all Material on Site Adjustments
- Doing cash flow forecasts
- Specifying both the tender and retender amounts
Accounting packages are inadequate for construction job costing purposes
Most construction companies have invested in an accounting package. However, accounting packages are designed for financial accounting reports and are generally hopelessly inadequate for construction job costing purposes. They simply don’t have the functionality and flexibly required to keep track of individual costs on a site.
The need for job costing solutions to integrate with existing financial software
A well designed job costing package that can integrate directly with the company’s accounting package ensures that the site management team has all the financial information it requires. In addition, good financial systems help break down the barriers in communication that exist between the financial management team based at head office and the site management team based on site.
Benefits of custom designed job costing software
Job costing solutions need to be flexible. Unfortunately, accounting packages, which focus on financial control and audits do not have this flexibility. It is important that job costing solutions are custom designed around the specific needs and skills of the company’s personnel.
At Whimbrel we have developed a number of software job costing building blocks; these building blocks can be configured to suit your company’s job costing requirements, and your site management team’s abilities. The job costing package should also integrate with the construction company’s accounting package. Our job costing solutions can be used by developers, general contractors, main contractors and trade contractors.