Job Costing in ERP Software
Job Costing in ERP Software
Why is Job Costing Important?
If you are engaged in the business of construction/contracting or project management, then tracking the costing at job or project level is crucial. The management would be interested in knowing the profitability of projects, reducing costs at project level, allocation of budget and variance report generation.
Using Facts ERP with job costing, you can easily capture all the details at the project level. As the job costing is an internal process, it comes with greater flexibility in calculation and allocation of costs. If you are a contracting company, then job costing is a must have tool to track the profitability of jobs/projects.
Features and Benefits of Job Costing in Facts ERP:
Budgeting: You can set budgets at each activity level for the job or project. With easy import facility from Excel, all the activities can be imported for a particular project. All the costs and revenue can be allocated for each transaction which is linked to a particular activity.
Periodic variance analysis can be done by comparing the budgeted and actual figures. This will help in better tracking and control of costs.
Reduce duplication of work: All the costs you enter are allocated to jobs while doing the transactions. This will help in avoiding manual cost allocation and thus reducing the duplication of work.
Store management: Usually the materials are stored in the warehouse or sometime at the job site before utilizing them for the job. The store management enables easy transfer of material from store to job site and vice versa.
TimeSheet Management: With the easy import facility of time sheets, both the attendance and cost can be tracked and allocated to respective jobs/projects.
Subcontracting: All costs, purchase orders, payments and invoices related to subcontractors can be easily tracked and allocated to jobs/projects. Also, the budgeting can be done based on the initial quotations received from subcontractors which helps in better control of costs.
Project Status updates: Regular notification and updates can be set regarding the status of the projects. These notifications will be received by the responsible engineer or project managers on their Dashboard or by email.
WIP: Booking of revenue as per the progressive invoicing can be done using the WIP method in Facts ERP job costing module. Deducting of advance payment and reduction of retentions payment etc., can be automated without any manual calculation.
Overhead Allocation: Although it is easy to allocate the costs of material or labor for a particular job or project. It is quite challenging to allocate the overhead costs as these are not directly related to any particular job.
However, using a pre-defined basis of allocation, the overheads can be easily allocated to jobs. There are majorly three types of basis of overhead allocation for contracting companies as follows:
- Number of labour hours allocated
- Material Consumption
- Value of project
- Predefined percentages
Profitability analysis: All the revenue and costs are allocated to jobs at each transaction level. Also with the complete allocation of overheads, the actual profitability for each profit can be tracked easily.
Performance Tracking: You can track the performance of manpower easily with job costing. This can be done by comparing the actual cost versus the budgeted cost of manpower. This can be used as a metric for evaluating the performance of respective project managers.
For a free demo of Facts ERP with Job Costing, please get in touch on 052 640 3949.