In this part, we’ll take you through the importance of job cost tracking and, especially, how to do it properly with Sage 100 Contractor.
Take Complete Control of Your Business With Sage 100 Contractor
Sage 100 contractor provides small to mid-sized contractors with access to critical, end-to-end business and project information. In other words, Sage 100 Contractor helps you take complete control of every aspect of the construction cycle including accounting, estimating, project scheduling and management, job costing, and service management. This plays an important role in the construction industry where tracking job costing properly is a decisive element contributing to better profitability, project estimating, management decisions, and timely financial reporting.
Whether you are a general contractor, services or specialty contractor, or a home builder, job costing on some level is essential for making effective business decisions. You need to be able to analyze direct costs for your project effectively assess your profitability, the accuracy of your estimating process, and the financial trajectory of your business as a whole.
Cost Codes in Sage 100 Contractor
Costs codes are an important part of the job costing system in Sage 100 Contractor. We use cost codes to separate costs into different categories and compare budgeted costs to the actual costs for a job. Cost codes are details of all job expenses and are made based on different types of your projects. Sage 100 Contractor organizes job costs in the order of detail by job, phases, cost codes, cost types and cost codes are company-specific, not job-specific.
The use of Cost Codes begins with the Takeoffs, flows through to the Schedule of Values for billing, the Project Management modules including Budgets, Subcontracts, Purchase Orders, and Change Orders, and continues through the Accounts Payable and Payroll modules, where the job cost entries finally go to “Cost of Goods Sold” account on General Ledger.
Because Sage 100 Contractor divisions to subtotal costs for cost-based reports, many contractors create divisions based on the formalized division list from the Construction Specification Institute (CSI).
Here is an example of a section of streamlined CSI Cost Code list in Sage 100 Contractor:
Cash Flow Based on Cost Codes
Importing your Cost Code list early in your software implementation process is essential, and may require input from all members of your team. Setting up a system to properly check your costs makes it easy to export cash flow reporting. With 100 Sage Contractor, you will be able to run a detailed cash flow report, showing your billing, costs, and cash flow per cost code:
By looking at your cash flow column on the right, you can know where you must increase your billing on your next requisition, and where you may need to keep an eye out for your costs.
Committed Costs Report
In addition, a detailed Committed Cost report, such as the one above, may be essential for you to manage your buyouts and subcontracts throughout the course of your project. Here we can see there are costs on HVAC, but no budget amount (look at the negative value in the Remaining Budget column on the right). We can also see the project is on track for Concrete, Foundation Formwork, Reinforcement, and Masonry (notice the zeros in the Remaining Budget column, indicating the project has been budgeted and perfectly bought out on those lines, and the project is on target with job costing).
These are easy-to-grasp guidance that you can easily start to implement your company’s cost codes, understand your profitability on a division-by-division basis, and make important decisions early during your project.
Are you ready to get help, or are you still not sure if you need help to run your construction business? Contact Construction Cost Accounting to have a free 15-minute consultation!