Why is job costing so important?


If you speak to most construction companies, building contractors and manufacturing companies you’ll find that job costing is among their top business concerns. That’s not surprising. Successful job costing can mean the difference between a profitable business and one that struggles to stay alive.

It’s not enough to know only whether your business is profitable overall, just as it’s not enough to know your boat is above water. Small leaks over time will hurt your bottom line. Especially if you don’t know where they are and how much water you’re taking on. To keep your business running optimally, you need a solid job costing system with thorough reporting.

Objectives of job costing:

  • Tracking the progress of tasks as it happens as opposed to after they are finished – by then it will be too late.
  • Improving on the estimation process by discovering where estimated costs frequently vary from actual costs
  • Controlling purchasing, materials use and labour costs by uncovering trends in spending
  • Determining which areas of the business are most or least profitable.

The ability to pinpoint the specific areas where money is made or lost is the key to success for any business. If you’re not currently doing this, you’re losing money.

Your task as business owner or project manager is to implement the right job costing system – and you’ll see how your profits increase.