Job Costing
Tracking all costs associated with a specific construction project, job, or contract.
Definition
Job costing is the accounting method used in construction to allocate direct costs (materials, labor, subcontractors) and indirect costs (overhead) to individual projects or jobs. Each cost is assigned a job number, phase, and cost code to track profitability and budget performance at the project level.
Why It Matters
Accurate job costing determines whether projects are profitable. Miscoded invoices can mask cost overruns on one project while inflating costs on another, making job-level financial analysis unreliable.
Examples
Subcontractor invoice coding
A plumbing subcontractor invoice for $25,000 is coded to Job 2024-103, Phase 3 (Rough-In), Cost Code 22-100 (Plumbing).
Overhead allocation
Monthly equipment rental of $5,000 is split across three active jobs based on usage days.
How Nexus AP Helps
Nexus AP uses AI to auto-code invoices to the correct job, phase, and cost code, achieving 99% accuracy based on vendor, description, and project patterns.
Start Free TrialFrequently Asked Questions
What is the difference between job costing and process costing?
Job costing tracks costs per project or job. Process costing averages costs across continuous production. Construction uses job costing; manufacturing often uses process costing.
Why is accurate job coding important?
It determines project profitability, informs bidding on future jobs, identifies cost overruns early, and satisfies owner and auditor reporting requirements.
Category
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