How old is the data behind the decisions on your projects right now? For many builders, the job cost report is weeks behind the work, so a job that's losing money looks fine until it's too late to fix. In the short video above, we describe that gap and argue that the fix is to connect three things you already have rather than buy a big new system: timesheets, the accounts and purchase orders. This article walks through each of those connections in practical terms.
In the video
- For most construction companies, the data used to make project decisions is about three weeks old.
- Work gets done on a Monday, and the costs don't show up in the reports until the end of the month, if you're lucky.
- We describe three weeks as the average gap between money spent on site and you knowing about it (our own figure, shown on screen).
- That means a job that's bleeding money doesn't get noticed until it's too late.
- The fix is connecting what you've already got (timesheets, your accounting system and purchase orders) so the data flows automatically, rather than a massive new system.
- When those systems talk to each other, three weeks becomes one day.
What's happening here
Follow what happens to one Monday on a job.
Labour. The crew works eight hours on the job. The hours go on a timesheet, paper or app, which is approved at the end of the week. Payroll processes it, often fortnightly. Someone then allocates the cost to the job, or exports it to the job spreadsheet. The Monday hours can reach the job report two or three weeks later.
Materials. The supervisor rings an order through to the supplier on Monday. The materials arrive Wednesday. The supplier's invoice comes at the end of the month, and it's entered and coded to a job when accounts get to it. Until then, the job report doesn't know those materials exist.
Subcontractors. The subbie starts Monday under a subcontract. Their claim arrives at month-end. Between those dates, the job shows none of their cost.
So by the time the month-end report is run, Monday's costs might be there. If anything was late or coded to the wrong job, they turn up the month after. Decisions on that job (whether to push the crew, raise a variation or talk to the client) are being made on a picture that's weeks out of date. The numbers worth watching week to week, so a gap like this shows up early, are in the construction KPIs builders should track.
Why it happens
Each cost is recorded somewhere when it happens. The hours are on a timesheet and the order was placed with the supplier. The information stops before it's needed: it waits for a weekly approval, a payroll run, a month-end invoice or someone with time to type it into the job report. Where it does get typed in again, that's double entry (the same information entered into a second system), and each re-keying adds a delay and a chance to put it on the wrong job.
The video's point is that you can close most of the gap with the systems you already have, by connecting the three feeds so each cost reaches the job when it happens.
The three connections
Timesheets to the job
Hours should be recorded against a job number (and ideally a cost code) at the time, on a phone. Once approved, which can be daily rather than weekly, they flow to the job cost report at a standard cost rate, while still going to payroll on the normal cycle. The job sees the labour cost the next day, even though the pay run is still a week away. The same job numbers need to be used in the timesheet app, the job system and the accounts, or nothing lines up.
Purchase orders to the job
Every order raised against a job, including the phone order, becomes a committed cost: money you've agreed to spend but haven't been billed for yet. The job report counts it the day the order is raised. When the supplier's invoice arrives, it's matched to the order, so it's coded to the right job automatically and any price difference is flagged. Subcontracts work the same way: the agreed value is committed from day one.
The accounts to the job
The accounting system remains the record of what's been billed and paid. It feeds actual costs back to the job report on a daily sync rather than a month-end export, and the job report shows actual and committed side by side. Accounts staff stop re-keying bills into a job spreadsheet because the job report reads from the accounts directly.
None of this requires replacing your accounting system or job software. It's usually a matter of agreeing job and cost codes, switching on features you already pay for, and building the links between systems that don't connect out of the box.
What it looks like when it's fixed
On Tuesday morning, the PM opens the job report. Yesterday's labour is there against the right cost codes. The steel order phoned through on Monday shows as committed. The subcontract is committed for its full value, with claims to date shown against it. The report shows the job is running over on labour for the current stage, so the PM talks to the supervisor that day while the crew is still on that stage.
That's the video's three weeks becoming one day. You won't catch every overrun, but you'll see most of them while you can still do something about it. Our guide to seeing job profit sooner covers the wider picture, including subcontractor claims and variations.
Questions to ask in your business
- How many days after the work does labour cost reach the job report?
- Are purchase orders raised for every job purchase, including phone orders?
- Does your job report show committed costs, or only bills that have been entered?
- Are job numbers and cost codes the same in timesheets, purchasing and the accounts?
- Who re-types costs from one system into another, and how often?
- If you connected only one of the three feeds, which would close the biggest gap?
Frequently asked questions
What does it mean to connect timesheets to job costing?
Hours are recorded against a job when the work is done, and once approved they flow automatically to the job cost report at a standard rate, without waiting for payroll or being typed in again. Payroll still runs on its normal cycle from the same timesheets.
Why do purchase orders matter for job costing?
A purchase order turns a cost into a commitment the day it's agreed, so the job report shows it weeks before the invoice. It also means the invoice can be matched to the order and coded to the right job automatically.
How current does job cost data need to be?
For most builders, a day or two old is current enough to act on. A cost that reaches the job within a day of being incurred lets the PM respond while the work is still happening.
Do we need a new system to close the gap?
Usually not. Most builders already have a timesheet tool, purchasing in some form and an accounting system. The gap is usually in the connections between them and in agreeing job and cost codes. Fixing that is normally quicker and cheaper than a new system.
Close the gap
If your job cost reports arrive weeks after the work, we can help you find which feed is slowest and connect it to the systems you already have. Book a free initial chat to talk it through.