A client asked recently for some advice on Jobcost coding. Should they just have a 1:1 relationship between Contract Items and JobCost Phases? What are best practices for setting up the Phase Master list? While there’s no single right answer for all contractors, here are some guidelines based on our more than 25 years of construction consulting experience:
The strategy for building useful and meaningful Jobcost phase codes is one of the most important decisions a company faces when setting up its ERP software. The time it takes to perform specific construction activities is the basis of accurate historical data. This is a critical aspect of a contractor’s intellectual property, which when captured accurately in the field, is the primary basis for accurate estimates for future projects. An important decision when setting up the Jobcost Phase Master is determining the appropriate level of detail. The goal is to find what I call the “Goldilocks factor”:
- not too hard- too many Phase codes for the field personnel to be able to code accurately, forcing them to lie to you because it’s too complicated.
- not too soft- too few phase codes to establish useful ongoing project management data and accurate future estimates
- just right- cost codes that provide meaningful information to manage the project and which the field can code accurately
Likewise it’s the responsibility of the office to provide the tools to make it as easy as possible for the field to capture this useful data. (Well-designed daily reports, time capture including units on tablets or smart phones).
We don’t recommend cost coding projects to a project’s specific (& often unique) pay items, which in most cases doesn’t match your internal method of cost tracking. Contract Items often are applicable only to the project and of no use to track & compare different projects’ historical costs. Plus over the long haul your Phase Master is cluttered with codes that only served one job.
To summarize:
Total Contract = the sum of several Contract Items each of which contains multiple Phase Codes.
One exception to this general rule is unit cost public works for a governmental agency. In this case we recommend Contract Items and Phase Codes in a 1:1 relationship. You can download a recommended set of Jobcost Codes for a self-performing GC here.
Feel free to email [email protected] or call us at 360-891-5811 for a free consultation about effectively Jobcost coding your projects.
