After putting in all the hard work, the estimates, the sweat equity on the site, the final client sign-off, you expect to see a healthy profit. But when the dust settles, that profit often feels smaller than it should. Or, worse, it’s completely unpredictable.
Most contractors know their bid price and their direct material costs. That's the easy part. The real danger lies in everything else: the time spent running back to the supply yard, the unexpected equipment breakdown, the crew time that bleeds into another day. These little costs add up, and if you don't track them job-by-job, they turn winning bids into break-even projects.
When you don’t have accurate job costing, you are basically hoping your winning jobs cover your losing ones. You are relying on a gut feeling to set your pricing, which means you are leaving money on the table every single week.
The core idea is simple: You must track every dollar spent and every hour worked against every single job. This turns you from a general contractor into a precision profit-maker.
Your Secret Weapon: True Job Costing
Accurate job costing is the bridge between thinking you're profitable and knowing you are. It’s the process of assigning every single expense, from direct materials and labor to equipment wear and overhead allocation, to the specific project that used it.
When you master true job costing, the clarity it gives you is immense. You move beyond guessing and gain the power to:
Set Future Prices Confidently: If you know Project A had a 25% margin and Project B only had 8% (and you know exactly why), you can adjust your pricing strategy and scope of work immediately.
Catch Problems Early: When you track labor hours daily against a budget, you can see if a job is running over budget on Tuesday, not three weeks later when payroll hits. This lets you intervene and fix the issue while the project is still underway.
Fire the Bad Clients (or Jobs): You’ll know which type of work or which client demands consistently drain your resources and pull down your average profitability, allowing you to focus only on the jobs that are truly worth your time.
You don't need a complex system for this. You only need a disciplined commitment to detail. This means making sure all your field tickets, material receipts, and crew time sheets are consistently coded to the right job number in your accounting system.
This week, here’s one simple action you can take:
Pick one completed job from the last month that you thought was profitable and truly audit it. Open your general ledger and pull every receipt, bill, and payroll hour that was related to that job. Sum the actual costs and compare that to the final revenue. Chances are, your "actual" profit percentage is lower than you thought. This single exercise will show you exactly where your costs leak and give you the painful, yet necessary, data you need to adjust your next bid.