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Financial

Job Costing

In Plain English

The process of tracking every cost on a project against the estimate to monitor profitability in real time.

Definition

Job costing is the accounting process of tracking all direct and indirect costs (labor, materials, equipment, subcontractors, overhead) against specific cost codes for a construction project to measure actual performance against the budget estimate. Real-time job cost reports allow project managers to identify overruns early and take corrective action. Accurate job costing data also improves future estimates.

Why It Matters in Bidding

Job costing is the feedback loop that connects a winning bid to actual field performance, letting estimators see which assemblies were priced accurately and which lost money. In procurement and estimating, historical job cost data by cost code is the single most valuable input for building competitive future bids, because it replaces guesswork with real unit costs and productivity rates.

Example

After closeout, the estimator pulled job cost reports showing concrete placement ran 18% over the bid, then revised the company's labor productivity database so the next foundation bid carried a realistic crew rate.

Related Terms

Cost CodeWork in Progress (WIP)Cost to CompleteEarned Value

Related Tools & Templates

Sage 300ViewpointFoundation SoftwareQuickBooks

Frequently Asked Questions

By recording actual labor hours, material quantities, and equipment costs against the same cost codes used in estimating, job costing reveals which line items were under- or over-bid. Estimators feed these real unit costs and productivity rates back into their cost database, steadily tightening future estimates and reducing reliance on rough industry averages.
A budget is the planned, estimated cost set at award, usually derived from the bid. Job costing tracks actual costs incurred during construction against that budget by cost code. The variance between the two, reported throughout the job, signals overruns early so the project manager can act before profit erodes.
It is shared. Field staff code time cards and material tickets accurately, project managers review cost-to-complete and variance reports, and accounting reconciles costs in the system. Without disciplined coding at the source, the reports are unreliable, so project managers and superintendents own data quality even though accounting produces the formal statements.

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