What Job Costing Actually Means for Contractors (And Why It Protects Your Profit)

Running a construction business is demanding. Between managing crews, ordering materials, dealing with change orders, and keeping clients happy, it’s easy for the financial side to feel like a blur. But one thing every contractor needs in place — whether you’re a GC, painter, remodeler, or specialty trade — is accurate job costing.

Job costing isn’t about spreadsheets or complicated accounting. It’s about knowing the truth:
Which jobs are making you money, and which ones are quietly draining it?

Let’s break it down in the simplest way possible.

What Exactly Is Job Costing?

Job costing means tracking all the costs that go into each project, including:

• Labor

• Materials

• Subcontractors

• Equipment

• Change orders

• Overhead allocation

When this is done correctly, you can see:

• Your actual profit per job

• Where costs slipped

• Which clients or project types are worth keeping

• Which estimates need to be adjusted

It’s clarity, not complexity.

Why Job Costing Matters So Much

Most contractors don’t lose money in one big moment. They lose it slowly — through small overruns, misclassified labor, missed change orders, forgotten materials, and poor tracking.

Job costing protects you from all of that.

It helps you:

• Bid smarter

• Catch problems early

• Price future jobs correctly

• Understand which crews are most efficient

• Identify which job types drain resources

When you have accurate job costing, you stop guessing and start leading with confidence.

The Biggest Job Costing Mistakes I See

After working with many contractors, here are the patterns that show up again and again:

1. All labor gets dumped into one generic “labor” account

You can’t see which crews cost what or which jobs required extra hours.

2. Materials aren’t assigned to specific jobs

Everything sits in “materials expense,” making it impossible to know what job ran over.

3. Change orders don’t get tracked in real time

This is where profit disappears — fast.

4. No cost codes or inconsistent cost codes

Without structure, your reports can’t tell you anything useful.

A Simple Way to Start Job Costing Today

You don’t need a large, complicated system. Start simple and build from there. Here are the three easiest steps to begin:

1. Track labor by job

Whether you use timesheets, apps, or spreadsheets, make sure every hour is tied to the correct job.

2. Match materials to the project

Save receipts or use a system that imports transactions, but always assign purchases to the job they belong to.

3. Capture change orders immediately

Document them the moment they happen, not at the end of the job.

Small steps create clarity. Clarity protects profit.

You Don’t Have to Figure This Out Alone

If job costing feels overwhelming, you’re not the only one. Most contractors didn’t get into the trades to manage accounting systems, but a strong financial foundation is the backbone of a profitable business.

I help construction companies set up:

• Job costing

• Cost codes

• Change order tracking

• Reporting

• QuickBooks workflows that actually make sense

If you want a clean, simple job costing system that matches the way your business runs, message me and I’ll guide you through it.

You deserve clarity.
You deserve profit.
And you deserve support that makes your work feel easier.

— Lena, LNH CPA PLLC