The Art of Job Costing

Posted by Adrianna On May - 19 - 2016 0 Comment

When it comes to price quotes, contractors and those who need their services often don’t see eye to eye. Providing a quote of how much a particular job will cost, is not a simple thing, however. Customers like the lowest bid. They don’t consider the intricacies of the work they’re requesting. A contractor eager for the job can make the mistake of providing a prospect with a low price just to get their business. Contractors bid for work, and the average contractor knows that customers like to spend as little as possible on repairs and renovations. Even if it appears that a particular job can be done at a low enough price point to get hired to perform it, the labor, time and money put into completing the project may far exceed the profit, however. Read on for tips on how to avoid giving unrealistically low estimates that hurt your company’s bottom line.

Master the Art of Estimating

Estimating is a challenge when you’re under the pressure of quoting a price higher than others competing for the same job. Fortunately, there are a number of contractor estimating software¬†options available to help streamline that process. That said, it’s important to understand that while customers can resent paying more for materials than what they cost at the local home improvement store, buying materials takes up a contractor’s time. Time is not the only hidden aspect of a job that has a price attached to it. The gas used to pick up and deliver hardware, lumber and other materials to the work site has to be factored in. Customers who need work done tend to downplay the full spectrum of what’s involved in completing what they’re asking for. A contractor who knows the art of estimating, however, doesn’t. There is an array of costs that contractors incur that have to be covered when providing a quote. These include the high costs of providing insurance for the workers performing the labor because walking on roofs and doing electrical work is dangerous. Permits are another consideration. They’re often needed. Permission from the state of New York to perform boiler work in a building, for example, runs upwards of $2,000. Winning a bid can be the start of a losing streak when you’re working on a project that’s taking much more of your time and effort than you’re going to be compensated for.

Using Software

Software comes in all shapes and sizes. Some of it is generic and can be used by anyone running a business. Quickbooks and Freshbooks offer cloud-based accounting tools that can be deployed to manage every step of a construction project from beginning to end. Both products go well beyond providing the usual balance sheet, payroll and invoicing functions. Contractors have no shortage of customers that change their minds about what work they want performed. Freshbooks and Quickbooks enable accurate tracking and tweaking of estimates. These accounting systems can be used to record exactly how many hours of labor was performed for a particular project and by whom. Freshbooks offers an app that can be downloaded to any mobile phone that can be used to snap images of receipts that you accumulate while shopping for materials. Best yet, images are integrated into the platform while you’re on the run. Quickbooks offers similar functionality. It’s also known for the ease with which it can be used. These products are designed to ensure that tradespeople and construction businesses don’t lose money and actually turn a profit.

Contractors who are successful at job costing understand that estimating is a form of consulting that provides value to a potential client. Whether they hire you or not, you’re offering them a total picture of what to expect. Estimating can involve educating prospects about the environmental and health issues related to certain work. It can go so far as to provide action plans on how to protect surrounding vegetation or wildlife from dust or chemicals that may be unleashed. It gives the potential customers that you’re talking to a chance to ask questions about the project they envision but need a more complete picture of. From the moment a contractor sits down with a prospective customer to discuss a job they’d like to have done, the contractor’s working. It’s tough to make money in such a competitive and demanding business, so as soon as you shake hands with someone who wants something renovated or built, look beyond the costs of the materials and time it will take to perform the labor. Don’t forget to track the intangible value of the services you offer.

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