What Is Job Costing AND How DOES CHS Handle It?
Per Wikipedia: “Job costing is accounting which tracks the costs and revenues by job and enables standardized reporting of profitability by job.”
For construction, CHS interprets that to mean: Job Costing is the process of gathering the Revenues AND Costs for each job in a systematic way to:
Create an Estimate (job budget) for the customer
Prepare Purchase Orders or Work Orders to calculate committed costs
Estimate the expected costs of Change Orders
Post Actual Costs incurred to accounting records
Instantly gather all of the above to calculate the current estimated costs as they change and compare them to the original estimate
Monitor where Gross Profits are heading for every job, based on their Contract Type
Produce Billings (or Draw Requests) for each job.
Post Revenues Received By Job And Type Of Revenue - WITH tools to deduct job costs from the gross payment!
Track Cash Balances for each job, whether you use one bank account or several.
Produce Trial Balances, Income Statements, and Cash Flow for each job and department.
Produce a company Trial Balance groups and totals every GL Account by job.
And more…
To support job cost accounting in CHS, every accounting record includes separate fields for:
Job Codes to identify every project
Deposit Categories to identify revenues received (like Down Payments, Interim Draws, Change Orders..)
GL Account Numbers for financial statements and general ledgers
GL Numbers for job costs will often drop into a record based on the Job selected
GL Numbers for overhead costs will often drop into a record based on the vendor selected
GL Numbers for job revenues will often drop in based on a Deposit Category selected
Department (or Division) Codes
Departments will often drop into a record based on the job selected
Purchase Order or Work Order Number (ID)
Vendor Codes to identify trades, suppliers, and overhead providers
Can drop into a record based on a selected Purchase Order
Cost Codes to identify job cost centers (like roofing, framing, plumbing, etc.)
Can drop into a record based on the Vendor selected, and/or on a selected PO
Cost Types like Materials, Labor, Turnkey, Sales Tax, etc.
Can drop into a record based on the Cost Code selected
Payor IDs to identify entities that pay you money (like customers, banks, etc.)
Can drop into a record based on the job selected
This means that in CHS, you do NOT need to clutter up your accounting chart of accounts with a GL Account for every job, department, job cost , or job revenue. That’s because CHS can filter accounting records to selected GL accounts, departments, jobs, vendors, cost codes, payors, deposit categories, and more. Then CHS will order, group, and subtotal by those various fields as requested. In other words, CHS can instantly show you how much is in each GL account for each job, department, job cost, or type of revenue, vendor, payor, or a combination of those and others.
This ALSO means all of those estimated, committed, AND actual job costs can be brought together at the click of a button to instantly calculate and show today’s Estimated Costs At Completion (ECC) and Cost Variances. and show where a job’s gross profit is heading.