How to job cost a custom home
A step-by-step method any builder can follow, whether you use us or not.
Short answer: To job cost a custom home: (1) use one cost code list across your estimate, project software and books, (2) load the house budget by cost code, (3) code every bill, card charge and labor hour to the house and cost code, (4) add approved change orders to both the budget and the contract price, (5) reconcile the accounts each month, and (6) compare budget to actual by cost code and act on the large variances.
Step 1: Pick one cost code list
Use the same codes in your estimate, Buildertrend or JobTread, and QuickBooks. Keep it short enough that your team will use it. See our guide to cost codes.
Step 2: Load the budget by cost code
Your estimate becomes the budget for the house. Include allowances as their own lines so overages are visible.
Step 3: Code every cost to a house
Every bill, receipt, card charge and labor hour gets a house and a cost code. Costs that truly cover several houses (a shared dumpster, for example) need a simple allocation rule you apply the same way every month.
Step 4: Track change orders
When a change order is approved, add it to the budget and to the contract price on the same day. Track whether it has been billed. Unbilled change orders are one of the easiest places to lose margin.
Step 5: Close the month
Reconcile bank, card and loan accounts so the totals are complete. Job cost is only as good as the books under it.
Step 6: Review variance and act
Look at budget vs actual by cost code for each house. For each large variance, ask: is it a timing difference, a coding mistake, an unbilled change, or a real overrun? Update the projected margin.
Illustrative example
On a sample job cost report (made-up numbers), windows came in $5,900 over budget and foundation $3,200 over, while framing was $3,600 under. A $12,500 change order was billed. The projected margin moved from 18.0% to 17.1%. The point is not the numbers. It is seeing the movement while the house is still under construction.
Common questions
How often should I review job cost?
At least monthly, after the books are closed. Weekly checks on large houses can help too.
Should labor be job costed?
Yes, if your crew works on houses. Include the full cost of labor, not just wages. Your CPA can help set the rate.
Where do overhead costs go?
Office rent and admin usually stay as overhead, not on a house. How you allocate for tax is a question for your CPA.
Related
By John Mos, Founder. Updated . We do not give tax or legal advice. Please ask your CPA or attorney.
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