Managing variances
Construction job costing software enables builders to track ongoing project costs and the physical progress of the job. The software needs to allow managers to view the bid price side-by-side with the actual costs so they can manage any variances and perform progress billings. This makes it easier for builders to control variances by showing a clear comparison between the bid and the actual costs.
To keep tight control of job costing, it is important builders can customize fields in the software to enable construction managers to maintain the profitability of each project stage and each line item. Additionally, it is important to be able to track sub-contractor costs along with one’s own labour, inventory, and expenses on any given number of projects. Construction costs will always vary throughout the process, the goal is to manage those variances to ensure against lost profits.
Incorporating construction job costing software that allows one to follow the actual expenses versus the budget is key to a robust software management system. Depending on the software a builder is using, they should be sure it allows them to view the estimated costs remaining, forecasts at completion, cost variances, and other key job markers such as:
• cost at completion;
• gross margin;
• margin per cent;
• percentage complete;
• earned revenue;
• cost to date;
• margin recognized;
• total deposits and amount billed;
• total amount received for the job to date;
• current accounts receivable balance; and
• remaining balance to be billed.
