Tracking Jobs

BY ELLEN ROHR
contributing writer

Contractors are notorious for shortchanging themselves. They often don’t charge enough per hour or put enough hours in the Job. How about you? Do you know whether your prices are right? Do you know whether you are properly bidding your Jobs?

The bottom line is the bottom line. Hurray for you … if you are making all the money you want, if you are providing a real retirement investment program for yourself and your team members and if you could take a major hit to your business (disaster, disability, divorce?) and still be in positive cash flow. If so, you can stop right here.

If not, you can fix your business and get really profitable. Money buys options — for you, your family, your team and your community. I love a selling price increase because it is the only thing that you can do, mathematically, that will increase the top line and the bottom line without creating any additional expense. I always support a selling price increase. You deserve it for the wonderful, valuable, risky work you do. However, it is a good idea to also determine whether you are putting enough hours into your Job bids and flat rate tasks.

Have you got the time?

You can find out whether you are building enough time into your service tasks and bid jobs by job costing. That said, don’t bother job costing service work. Don’t fuss about individual task performance. Look at the service department as a whole. Review the service department sales and direct costs (cost of goods sold) weekly, month to date and year to date. Compare the actual amounts to budget. Then, occasionally “audit” a flat rate task and measure the actual data for a month or two. You can add time to your tasks and see the overall impact on the department numbers.

Do job cost “big” work — renovation, installation, remodeling and new construction Jobs. The definition of a Job: More than one day. More than one set of hands. One person sells it, another team installs it. If two or more of these circumstances apply, call the sale a “Job” and trigger the job folder and job costing procedures. Job cost every Job.

Job costing

The game is won or lost by this process. If you create a selling price for labor the way I recommend, your hourly labor rate should cover overhead costs too. Job costing allows you to see whether you have at least put in enough time and materials. As a technician, you will notice that this is troubleshooting 101. Nail down a couple of variables. Job costing helps you figure out what is working and what needs to be fixed.

The essentials of job costing:

1. Compare the bid to actual labor hours. (Don’t convert to dollars. Too much “voodoo” goes into that calculation. Match hours bid to the actual hours it took to do the Job.)
2. Compare bid material cost in dollars to actual material cost in dollars.
3. Track permits and subcontractors, if you use them.
Keep track of the Job!

In the office, create two hanging folders for each Job, a blue folder and a red folder. Name the Job, using a standard naming convention. You could use something like this:

Fernwicky_1234_South_110715 (Name_Address_Year, Month, Day of signed bid/agreement)

Both of these folders go in a hanging file in the office. The red folder is the office job folder. It’s red because it should flash Warning! if it is ever outside of the office.
In the red job folder, include the following:

• The original signed bid/agreement;
• The bid pricing form. The pricing form should have the number of hours bid and a list of the materials and their estimated cost. (NOTE: I’ve got a freebie pricing form for you at; www.barebonesbiz.com/ezines/current.html)

• Permits and required job forms;
• Plans and specifications;
• Copies of customer invoices;
• Copies of customer payments;
• The POs or priced invoices for the actual materials used;
• Anything else that will help you deliver this work as promised, stay in compliance and properly account for this Job; and
• A job costing form where you can tally up actual labor hours (derived by manually pulling from the time sheets or from your Dispatch software program) and the actual materials costs (from the POs/priced invoices.)

Create a blue job folder with copies of the information found in the red job folder. This is the folder that the lead installer can take with him or her on the job.
Customize my list to work for you. You don’t have to give the installer everything the red folder contains. The idea is that the installer has the information he needs to bring the job in as promised; yet, he doesn’t have the only copies.

How did you do?

Once a week, measure your performance with your team. Meet with the salespeople and the installers. Call out the assembled actual performance numbers — hours and dollars — and have the lead installer tally up his or her jobs. Use a Job Costing form like this:

Can you automate job costing?

Sure! Your accounting software may make job costing easier and more automatic. Do check and make sure that the data is flowing the way you think it is, or hope it is. There is some advantage to manual job costing. It requires that you look at the data. Automated reports are easier to ignore and may be more complicated than you need.

Live and learn!

Celebrate jobs that come in at or below bid. Learn from the ones that don’t. You may find that the salespeople are skimping when it comes to how many hours to include. And the installers may want the sales team to pad the bids too heavily to make sure the jobs come in on time. Work together to develop efficiency, without unrealistic expectations.

If you are nailing the jobs for hours and materials, and you are still not making the money you would like to make, you have one more thing to do: Raise your prices.

My latest mini-book helps you put a rockin’ business plan together over a weekend. Check out The Weekend Biz Plan on the Buy Stuff page at www.barebonesbiz.com. Reach me at 877/629.7647 or contact@barebonesbiz.com.

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