You know what the business made last year. Ask which jobs made it and the answer gets vague.
Most construction firms can produce a set of accounts and a turnover figure, and cannot tell you that the two big refurbishments carried the year while a run of smaller jobs quietly lost money underneath them. The losses do not show up on their own. They get absorbed by the profitable work and disappear into an annual figure that looks acceptable.
Then you price the next job the same way you priced the last one, because you have nothing telling you the last one was wrong.
That is what this fixes.
What is actually missing
It is rarely the case that nobody is recording costs. The costs are all in there. They are just not attached to anything.
Costs land in the wrong place. A materials invoice covering four jobs gets posted as materials. Correct for the accounts, useless for telling you which of the four jobs it belonged to.
Own labour never gets costed. Subcontractor invoices are easy because they arrive as invoices. The three men on your own payroll who spent a fortnight on a job usually never touch that job’s cost.
Work in progress ignored. A job that is most of the way through and not yet invoiced reads as a loss. A job invoiced ahead of the work reads as a windfall. Neither is true, and both wreck the monthly numbers.
Variations not tracked against cost. The extra work got done. Whether it got priced, and whether what you charged covered what it cost, is a separate question that often goes unanswered.
Nothing compared back to the quote. The estimate said one margin. The job delivered another. Without the two side by side, the estimating never improves.
What is included
- A costing structure set up in your accounting software, so every cost carries a job reference at the point it is entered
- Labour allocated to jobs, including your own employed staff rather than subcontractors alone
- Materials, plant hire and subcontractor costs coded as they come in, not reconstructed months later
- Work in progress handled properly, so part finished jobs and jobs invoiced in advance both report honestly
- Margin reported per job and by type of work, monthly
- Quoted margin against actual margin on every completed job, with the gap explained rather than noted
- The findings fed into how you price, so the next quote reflects what the last job cost
How it works
- First call. We look at how costs are coded now and what you can and cannot see.
- We set up job tracking in your accounting software and agree how jobs get referenced, including on supplier invoices and timesheets.
- We cost two or three recent completed jobs properly, so you can see the difference against what you assumed they made.
- We agree what gets reported monthly and to whom.
- Each month you get margin by job, with anything drifting away from quote flagged while the job is still running.
- On completion, quoted against actual, and what that means for how you price the next one.
Who this is for
UK construction limited companies turning over between £500,000 and £5 million running several jobs at once, particularly where the jobs vary in size or type. Firms that price by the job rather than by the hour get the most out of it.
It is not for you if you run one long contract at a time, because a single job and the company accounts are close enough to the same thing. It also will not work if nobody on site will put a job reference on anything. We can build the structure, and someone has to code the invoices.
Common questions
How much extra admin does this create?
Less than people expect. It is a job reference on invoices and hours as they are entered, rather than a new system. The reconstruction work afterwards is what eats time.
We use Xero. Will it do this?
Yes, set up properly. Most of the firms we take on already have the tools switched on and unused.
How do you handle overheads?
We report margin before overhead recovery first, then apply an overhead rate on top. Mixing the two from the start hides which jobs are genuinely weak.
How long before it tells us anything useful?
Once the first few jobs complete under the new coding. Costing historic jobs at the start brings that forward.
What if it shows we have been underpricing?
It often does, usually on the work people assume is their bread and butter. That is the finding worth having, because it is the one you can act on.
Book a call. Bring two finished jobs, one you thought went well and one you thought did not, and we will cost them both properly and tell you which actually did.
Common questions
Why can I not see which jobs made money?
Usually because costs are coded by supplier rather than by job, so the numbers tell you what you spent and not what you spent it on. Labour is the other half of it. Subcontractor and own labour costs have to land against the job before the margin means anything.
Will this work with the way I already quote?
Yes. We build the cost structure around how you price rather than asking you to change how you price. If you quote by square metre, by contract or by phase, the reporting follows that so the numbers compare like for like against the quote.