SectionThe Job Costing Problem
Ask any engineering business owner about their margins and you'll get one of two answers:
- •A confident number that's probably wrong
- •An honest "I don't really know"
Both are dangerous. Here's why job costing is so hard—and what you can do about it.
The Three Job Costing Lies
Lie #1: "We know our hourly rate"
Most businesses calculate their hourly rate based on wages plus a markup. But they forget about:
- •Non-productive time (meetings, admin, waiting for materials)
- •Overheads (rent, utilities, insurance, equipment)
- •The cost of rework and mistakes
Your true hourly cost is almost certainly higher than you think.
Lie #2: "We track our time accurately"
Even businesses with time tracking systems often have inaccurate data. Why?
- •Time is logged at the end of the day (or week) from memory
- •People round to the nearest hour
- •"Small" tasks don't get logged
If your time data is wrong, your job costs are wrong.
Lie #3: "We'll know the profit when the job is done"
By then, it's too late. You've already spent the money. You can't un-buy materials or un-pay wages.
The Solution: Real-Time Job Costing
The businesses that win are the ones that know their costs during the job, not after. This means:
- •Live time tracking - Capture time as it happens, not from memory
- •Material costs logged immediately - Every purchase linked to a job
- •Daily cost reviews - Compare actual vs. quoted daily, not monthly
- •Margin alerts - Get warned when a job is going over budget
The Payoff
Businesses that implement real-time job costing typically see:
- •15-25% improvement in margins
- •Fewer "surprise" loss-making jobs
- •Better quoting accuracy over time
- •Clearer visibility into which customers and job types are most profitable
SectionTake Action
Ready to fix your job costing? Start with our Engineering Business Control Audit—a free self-assessment that identifies exactly where you're losing money.
Or book a discovery call to discuss how we can help you implement systems that work.