By Sal Alfano. If you only have one part of bookkeeping done right, it better be your progress job costs," says Mike Weiss of Weiss & Co. in Carmel, Ind. That's because collecting and analyzing job cost data not only tells you whether or not you met your budget on a completed project, it helps make future estimates more accurate.
Because variances in labor costs are a major source of slippage, tracking payroll is key to accurate job costs. A well-designed time sheet is a good first step, but getting employees to buy in to the process can be difficult. As Craig Durosko's production manager told him, "This is paperwork. There's a reason we're out here in the field." Durosko, who with partner Bob Gallagher runs Sun Design Remodeling Specialists of Burke, Va., solves the problem using Microsoft Project to create a schedule for his lead carpenters. "Every line item starts out with a cost code," Durosko says. "We break it down hourly because we found that if a lead carpenter can't check 10 things off the list every day, he won't use it."
Still, field employees regularly misallocate work hours to the wrong cost code. Mike Weiss says this happens most often when the lead carpenter forgets a step in the process. "For instance, if he didn't notify the electrician in time," explains Weiss, "he'll do the work himself to avoid getting charged for a service call. But he'll forget and charge supervision instead of electrical."
Ideally, remodelers analyze job cost reports early enough to make adjustments to ongoing jobs, but the fact is most analysis takes place long after the job is over. It's still worth the effort to collect cost data because it helps you avoid future slippage by adjusting ongoing jobs and better managing subcontractors and purchasing processes.