Contractors With Job Costing Library
Have A Competitive Advantage
Every contractor has a Job Costing Library, some keep it in their head, some keep it on paper with names like completed jobs, bids, estimates. Other contractor's keep it in their QuickBooks for contractors software records. Still other contractors rely on places like RS Means for comprehensive databases of construction costs. These are similar to the "Flat Rate Books" used by car repair shops for decades.
A tiny fraction of contractors understand the true value of a customized cost library and invest the time, energy and resources to build and maintain one. Having done several I can tell you it is a painful, arduous task, in fact I will tell you a story to make it crystal clear.
The Treasure Box That Saved Four Contractor's Lives!
In the mid 1800's an archeologist left New York City on a journey into the heart of the African jungle in search of a lost civilization. He intended to find and bring back treasures that would make him a very rich man.
He recruited four physically fit and very intelligent contractors, one each from The Four Types Of Contractors to assist him with the promise they would be paid a substantial reward when they returned the treasure box to his office in New York City.
All went well for the first two weeks and as luck would have it the stumbled upon the lost civilization resting undisturbed under a soft blanket of floral and vines.
During the next two weeks the archeologist and the contractors worked feverishly to find the treasure without success.
Late one afternoon the archeologist was bitten by a poisonous snake and before long he began to get dizzy. He knew he had less than twenty four hours to live so he made the decision to spend his remaining time putting a plan in place to save the lives of the contractors he had brought on the journey.
That night while the contractors slept he filled the Treasure Box and sealed it with a large heavy padlock. When the contractors awoke the next morning he described in great detail how he had found not what he came for but something much more valuable, more valuable in fact than gold and jewels.
Everyone was very excited until he told how why he would not make it out of the jungle alive. This news caused a great deal of sadness because everyone knew the archeologist was the one person who was able to keep peace and harmony when tempers flared and made sure everyone stayed focused and kept on track.
The archeologist struck a bargain with the contractors that if they would work together and deliver the Treasure Box to his office in New York City they would be rewarded handsomely. He gave them a letter written in Latin to be delivered to his partner along with the Treasure Box with instructions regarding the contents of the Treasure Box.
The archeologist made it clear the Treasure Box had to remain sealed until it was delivered or else they would receive nothing.
Now getting four contractors to agree on anything is a miracle in itself let alone work together. They were fortunate the Treasure Box was so heavy it required all four of them to work together to move it.
For three long terrible weeks they fought their way through the jungle finally arriving at the archeologist office in New York City and presented it to his partner with the Treasure Box and the letter.
The partner read the letter and smiled knowingly before opening the Treasure Box. It was filled with rocks. The contractors were very angry and upset. When they calmed down the partner translated the archeologist's letter for them and it said:
"By Making You Work Together I Saved Your Lives Which Is Worth More Than Gold Or Jewels"
Your Treasure Box is your construction company's job costing library
Building it is like taking that long hard journey out of the jungle which is why so few contractors ever do it even though the results are more valuable than a Treasure Box full of gold and jewels; because a job costing library can turn a regular construction company into a perpetual money machine.
"If You Know The Answers The Questions Will Not Bother You" - Randalism
Knowing in advance which jobs have the highest probability of success and profit before getting involved moves your construction company from an unpredictable roller coaster to a peaceful merry-go-round.
The key to a useful bid is having accurate job costs. Your estimator needs to access to the past job histories to accurately calculate the construction costs.
Contractors with annual sales volume under $5,000,000 are not likely to have a $100,000+ a year professional estimator on staff so do not expect them to be 100% accurate.
The key is to get the final job costs as close as possible to the project estimate and budget. The only differences between your bid and the finished project should be overhead and profit.
Job Costing Process Minimum Requirements:
Time cards that have spaces for job name and cost codes - Free Timecard Templates
Have your bookkeeper provide labor burden rate - Labor Burden Explained
Heavy equipment job allocation rates
Job costing and job profitability reports
Job Costing Library Minimum Requirements:
Construction bookkeeping services system with QuickBooks setup to properly allocate transactions into direct construction costs, indirect construction costs, overhead and other costs.
Job costing reporting system based on one of these four foundations: account based, item based, schedule of values based or work-in-progress based (W.I.P.) It will depend on your particular construction company and what markets you serve.
Professional construction bookkeepers and accountants to maintain the construction bookkeeping system and I don't mean the secretary who does everything including the bookkeeping.
The people responsible for purchasing labor, material, other costs and subcontractors to code every receipt with the correct job name and cost code.
The Fast Easy Way
Outsource The Hard Part And Keep The Easy Part
We have #1, #2 and #3 in place already and all you have to do is #4 and we have processes to train you and your staff.
You are a contractor; you deserve to be wealthy because you bring value to other people's lives!
Now let us bring value to your life!
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About The Author:
Randal DeHart, PMP, QPA is the co-founder of Business Consulting And Accounting in Lynnwood Washington. He is the leading expert in outsourced construction bookkeeping and accounting services for small construction companies across the USA. He is experienced as a Contractor, Project Management Professional, Construction Accountant, Intuit ProAdvisor, QuickBooks For Contractors Expert and Xero Accounting Specialist and Bill.Com Certified Guru. This combination of experience and skill sets provides a unique perspective which allows him to see the world through the eyes of a contractor, Project Manager, Accountant and construction accountant. This quadruple understanding is what sets him apart from other Intuit ProAdvisors and Xero accountants to the benefit of all of the construction contractors he serves across the USA. Visit http://www.fasteasyaccounting.com/randal-dehart/ to learn more.
Our Co-Founder Randal DeHart - Is a Certified PMP (Project Management Professional) with several years of construction project management experience. His expertise is construction accounting systems engineering and process development. His exhaustive study of several leading experts including the work of Dr. W. Edward Deming, Michael Gerber, Walter A. Shewhart, James Lewis and dozens of others was the foundation upon which our Construction Bookkeeping System is based and continues to evolve and improve. Follow Randal on Google+