Reading a job cost report: five numbers to check weekly
Every Monday a 14-page job cost report lands in your inbox, and it is tempting to read only the total on the last page. This week it says the community centre is $31,000 under budget. Behind that total, one labour code is already well over and the steel subcontract has barely been invoiced.
A job cost report records the cost booked to each code; it is not a forecast. It also runs behind the site: subcontractor invoices arrive weeks after the work, and labour often posts only when payroll runs, unless costs are accrued. The total at the bottom nets good codes against bad ones. Five numbers, checked for each major code every week, show where the money is going while problems are still small.
The five numbers
- Current budget: the original budget plus approved changes. Check that each approved change reached the right code, and that no code shows cost without a budget.
- Cost this period: set it against what happened on site this week. A spike, or a zero, with no site activity to match points to a miscode, a late invoice or a posting error.
- Committed but not invoiced: the open balance of subcontracts and purchase orders. A code with little spent and a large commitment is not under budget. If your report has no commitments column, take the balances from your subcontract and purchase order records.
- Labour hours to date against budget hours: read hours, not dollars, because wage rates, overtime premiums and benefits blur the dollar figure. If the report shows only dollars, take the hours from the timesheets.
- Share of budget spent against share of work complete: spent comes from the report, complete from the field. Ignore any percent complete the report calculates from cost.
- Mark every line that needs an answer, go through them with the superintendent, and send corrections to accounting the same day.
Common mistakes
- Reading only the total at the bottom.
- Treating budget that is neither spent nor committed as savings.
- Taking percent complete from the cost report.
- Letting miscodes stand because the total is right.
Checklist
Five numbers for each major code, every week
- Current budget, with every approved change posted
- Cost this period, set against the week on site
- Committed but not yet invoiced
- Labour hours to date against budget hours
- Share spent against share complete from the field
- Questions and corrections sent the same day
Check your understanding
A code shows 20% of its budget spent and 50% of its work complete. Is it under budget?
