Project Costings: What Can You Learn From Past Projects?
Do you actively review your past projects to make sure that you hit your target margin, used materials that you expected, bought what you planned, and spent as long as you anticipated on each job?
Let’s be honest, if you’re running on spreadsheets, or simply using an accounting system for job costing, you probably don’t have the time, or the data to make it viable. Unfortunately, if you don’t, then you are likely unaware of the true cost to your business. In some cases. you are likely making a loss when you should be making a profit.
It is essential to review past projects, and with the benefit of a thorough analysis of your costs, determine your level of profitability, so that this information can be used for future decision making.
In regard to time and inventory management, if you are accurately recording labour costs and stock usage in a central place you can compare your forecasts to actual costs and determine the true profitability.
Errors in repeatable cost management processes could be unmissed and impacting your bottom line, not to mention issues in invoicing your clients.
Have you included everything?
Consider these common categories when doing your cost review analysis:
- Labour – do you track your actual hours by project?
- Equipment and materials
- Procurement costs
A WorkGuru manufacturing client in Queensland was actually underestimating their labour costs on car carrier fabrication to the tune of $3,000 per unit. With the benefit of a thorough review, tighter analysis and cost control they were able to accurately price the units to cover their real costs.
Powerful and Easy to Use Business Management Tools
WorkGuru’s powerful business management tools can keep track of expenditure for each project and manage project management, stock control, quotes, invoices and your CRM.
You can issue invoices for partly completed projects to ensure regular cash flow as each stage is completed. Project costs often evolve over time, so using a platform like WorkGuru to keep your project costs under review makes sound financial sense.
Better project financial data will give you more control over the project and your costs and help with accurate billing. As an added benefit, the more you can accurately forecast then the more you should be able to take advantage of any discounts for bulk purchasing of items, and save.