What's the best way to track costs for each project?
The foundation of good project cost tracking is assigning every expense to a specific job the moment it happens. Most accounting software including QuickBooks has job costing features built in. When you enter a bill, log an expense, or record time, you tag it to the project. At the end of the job, you can run a report showing exactly what it cost versus what you charged.
Start by setting up each project as a separate customer or sub-customer in your accounting system. Some businesses create a customer for the actual client and then sub-customers for each project with that client. Others create each project as its own customer. Either works as long as you’re consistent.
Four cost categories matter for each job. Labor hours, materials, subcontractor bills, and direct expenses all need to be assigned to specific projects. Labor is usually the hardest because it requires time tracking. Your crew needs a simple way to log hours against specific jobs. This could be a timesheet app, project management software, or even paper timesheets if that’s what works. What matters is that hours get recorded accurately and assigned to the right project.
Materials are straightforward if you’re buying for a specific job. The receipt or invoice gets coded to that project. Where it gets messy is shared materials or inventory pulls. If you buy lumber for three different jobs on one trip, you need to split that purchase across all three. A Richmond bookkeeper who works with contractors sees this constantly. Some businesses keep a small inventory of common supplies and track what gets pulled for each job.
Don’t forget overhead allocation. Direct costs tell part of the story, but your office rent, insurance, vehicle costs, and your own time running the business all factor into true profitability. Many businesses allocate overhead as a percentage of direct costs. If overhead runs 20% of your direct job costs overall, add 20% to each project’s cost when analyzing profitability.
The real value shows up when you review completed projects. Good project cost tracking lets you run a profitability report after each job closes out. Did you make what you expected? If not, where did the overrun happen? Was it labor taking longer than estimated, material costs coming in higher, or scope changes you didn’t charge for?
Over time, this data transforms how you bid future work. You stop guessing and start using actual numbers from similar past projects. That contractor who always seems to win profitable jobs isn’t lucky. They know their costs cold and price accordingly.
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