Most contractors know which jobs keep them busy. Very few know which jobs actually make them money. Job costing in construction is the system that changes that — giving you real-time financial visibility into every project so you know, with certainty, which work is profitable and which is not. If you’re running a construction business in Los Angeles or Southern California without job costing, you are flying blind. And flying blind in construction is expensive.
What Is Job Costing?
Job costing is the process of tracking all revenue and costs associated with a specific construction project — and comparing those actual numbers to your original estimate. It gives you a running profit/loss position for every active job in real time.
A complete job cost record for a construction project includes: original estimated cost by cost code, approved change orders, actual labor costs to date, actual material costs to date, actual subcontractor costs to date, estimated cost to complete, and projected profit or loss at completion. Every month, your bookkeeper updates these numbers so you can see exactly where each job stands financially.
Why Construction Job Costing Matters
Without job costing, you only find out a job lost money after it’s done — when it’s too late to do anything about it. With job costing, you find out during the job, when you can still make decisions: negotiate with a sub, reduce overhead allocation, or stop adding scope without getting a change order approved.
The real power of job costing is in the data it accumulates over time. After 12–24 months of proper job costing, most LA contractors discover clear patterns: certain job types, certain neighborhoods, certain client types, or certain project sizes consistently produce better margins. That intelligence changes your whole business — you bid more aggressively on high-margin work and less aggressively (or not at all) on low-margin work.
How to Set Up Job Costing in QuickBooks
QuickBooks supports job costing through its Customer/Project features. Here’s the basic setup: Create a Customer record for each project. Use Classes or Items to represent cost codes (e.g., Labor, Materials, Subcontractors, Equipment). When entering bills, checks, or credit card charges, assign each transaction to the correct Customer/Project. Run the Job Profitability Summary report monthly to see costs vs. income for each project.
QuickBooks Online Plus and Advanced have an enhanced Projects feature that simplifies job costing setup significantly. QuickBooks Desktop Contractor edition has the most powerful construction job costing features for larger companies with complex projects.
The Most Common Job Costing Mistakes Contractors Make
- Not assigning all costs to jobs — Every direct cost must be job-coded. Missing even 10% of your costs makes your job reports misleading.
- Forgetting labor burden — Your true labor cost isn’t just the hourly wage — it includes payroll taxes (7.65% employer FICA), workers’ comp, and benefits. Forgetting labor burden understates job costs by 25–40%.
- Not tracking change orders — Approved change orders must be added to job budgets immediately or your budget vs. actual comparison becomes meaningless.
- Using the wrong cost codes — Too few cost codes (just “materials” and “labor”) gives you no actionable data. A proper construction cost code structure has 10–30 categories that map to the types of work you actually do.
Get Job Costing Set Up Right — Call (818) 679-4451
Bookkeeping Champs sets up and maintains job costing for contractors throughout Los Angeles, San Fernando Valley, Ventura County, and Santa Clarita. If you’re ready to actually know which jobs make you money — call (818) 679-4451 for a free consultation. We’ll review your current QuickBooks setup and show you exactly what’s missing.
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