The Federal Highway Administration has confirmed the cost of heavy highway projects has risen 53.8% over the last year according to latest data. In their 2023 year in review, the Bureau of Transportation Statistics stated, “Highway construction costs increased in the last 9 of 10 quarters through the first quarter of 2023 (latest available).
These rising construction costs present a significant challenge for heavy highway contractors who must now find impactful ways to prevent overspending.
One of the most effective ways to fight the increase in construction costs is to job cost. Job costing is an accounting method that involves tracking and allocating costs to specific projects.
Click the following link to see how Foundation Software can help you with your job costing: https://www.foundationsoft.com/software/job-costing/
By using a job cost accounting software, like FOUNDATION®, you can get real-time monitoring of expenses to avoid cost overruns. Below, we listed out the five ways heavy highway contractors can leverage job costing to mitigate the impact of rising costs.
Job costing helps you build an accurate budget by meticulously breaking down project costs
A job costing system helps you gain visibility into how costs are allocated across projects
Accurate reports with customizable allows you to build more comprehensive budgets
Job costing facilitates effective resource allocation by tracking the expenses
FOUNDATION allows you to determine profit margins, progress statistics, productivity evaluations and cash flow summaries
With job costing, you can build an accurate budget by meticulously breaking down project costs. There is a category for every type of expense (direct, indirect and overhead all included), there are categories in every project phase and each project is its own entity.
FOUNDATION’s Job Costing Module allows you to track and allocate all expenses because you can set as many cost codes and classes as necessary. This helps to identify specific cost drivers, enabling you to make informed decisions during the budgeting process.
One of the biggest advantages of job costing is its ability to provide real-time insights into project costs. As you implement a job costing system, you gain visibility into how costs are allocated across the project.
FOUNDATION has a built-in budget program that makes it simple to monitor spending in real-time with alerts and purchase histories.
This real-time monitoring enables proactive cost control as expenses increase or decrease in various areas. This allows you to identify which areas of a project have costs that are exceeding budgets and take corrective measures promptly.
Generating accurate reports with customizable, detailed insights allows for contractors to build more comprehensive budgets. Reports include:
project cash flows
overhead allocation
over/under billing
WIP (Bonding) reports
These reports give you an instantaneous view of how much money is flowing in and out of the project.
By taking the data available in the Job Cost Module, FOUNDATION generates precise reports with just the click of a button. This helps contractors maintain financial accuracy and project control with real-time monitoring to identify potential budget overruns or inefficiencies promptly.
Job costing facilitates effective resource allocation by tracking the expenses surrounding labor, machinery, equipment, materials and more. You can see exactly how much is being spent on each resource and how often.
This data can then influence how you run the rest of your project: for example, if certain materials are consistently driving up costs, you can explore alternative options or try to negotiate better deals with suppliers.
FOUNDATION simplifies this process by classifying every expense so you can drill down into costs and make resource adjustments quickly. Once you have decided to switch materials or equipment, FOUNDATION makes it easy to track change orders while adjusting the budget and timeline.
Job costing provides valuable feedback so you can compare estimated costs with actual costs. This allows you to identify areas for improvement in future projects.
With the ability to categorize and record every expense, FOUNDATION allows you to run a post-project analysis by determining profit margins, progress statistics, productivity evaluations and cash flow summaries. You can use the historical data to better manage other projects.
Utilizing job costing can help heavy highway contractors navigate budgeting challenges with precision and foresight. By using FOUNDATION’s Job Cost Module, you can monitor project expenses in real-time while automatically tracking every dollar spent. These drill downs can help identify any spending discrepancies before they become costly problems.
See how FOUNDATION can help heavy highway contractors by calling (800) 246-0800