Why are my job cost estimates always wrong?
The most common reason job cost estimates are consistently off is surprisingly simple. You’re not learning from completed projects. Without detailed tracking of actual costs on finished jobs, every new estimate relies on memory, gut feeling, or numbers from years ago. Your framing labor estimate might be wrong by 15% on every project, but you’ll never know that unless you track actual framing hours and compare them to what you originally bid.
Poor tracking makes good estimates look bad. If your crew worked 40 hours on a job but only 30 got coded to it because someone forgot to log time or materials got assigned to the wrong project, your estimate appears off when really your tracking failed. Many contractors blame their estimating when the real problem is they have no accurate record of what jobs actually cost.
Scope creep kills estimates without anyone noticing. The homeowner asks for an extra outlet. The GC wants the trim done differently. You accommodate because writing a change order for small stuff feels like overkill. Individually these changes are minor. Over a whole job they add up to thousands in unbilled labor and materials. Your original estimate was fine. You gave away the margin by not documenting scope changes.
Construction job costing addresses this by tracking every cost against the original budget and flagging variances while there’s still time to react. When a project closes out, you compare what you estimated to what you actually spent. Look for patterns. If drywall labor runs over on every job, adjust your formula. If certain subs always hit you with extras, build a buffer into those line items.
Material waste and callbacks rarely get estimated properly either. You bid for the lumber you need, not the lumber that gets damaged, cut wrong, or walks off the site. You don’t budget for the callback to fix punch list items. These costs are real but invisible in most estimates.
Labor productivity assumptions tend to be optimistic. You estimate based on your best crew working efficiently. Reality includes newer employees who work slower, weather delays, inspection waits, and time wasted on non-productive tasks. Without tracking labor hours by phase, productivity assumptions stay wrong forever.
The fix is building a feedback loop between completed jobs and future estimates. Every finished project becomes data that makes the next bid more accurate. Without that loop, you repeat the same estimating mistakes because you never realize they’re mistakes.
For contractors in Utah County and the Wasatch Front, working with bookkeeping services in American Fork that understand construction accounting can help you set up tracking systems that produce useful cost data. The goal isn’t just knowing what a job cost. It’s understanding why it cost that much and using that information to bid smarter next time.
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More Questions
Is there a bookkeeper near me in Provo that works with contractors?
TRUEquity Bookkeeping serves contractors in Provo and throughout Utah County. Based in American Fork, we specialize in construction accounting and job costing for contractors across the Wasatch Front.
Read answerHow do I manage seasonal cash flow in HVAC?
Maintenance agreements create predictable monthly revenue that smooths out seasonal swings. Combine that with building cash reserves during peak seasons, knowing your breakeven number, and having a credit line as backup.
Read answerHow do I track job profitability in real time?
Capture costs within a day or two of when they happen and review budget versus actual weekly. The key is disciplined data entry for labor hours, material purchases, and subcontractor commitments, not fancy software.
Read answerWhat is the best job costing software for small contractors?
For most small contractors, QuickBooks handles job costing well when configured correctly. The software matters less than proper setup and consistent use. Construction-specific platforms make sense when you need integrated project management.
Read answerHow do I track costs for each construction project?
Assign every expense to a specific job at the time it happens using cost codes that match how you estimate. Track labor, materials, and subcontractor costs separately by phase, then compare budget to actual weekly.
Read answerHow do I track materials and supplies by job?
Tag every material purchase to a specific job at the time of purchase. Write the job name on receipts, set up job references with suppliers, and enter expenses in your accounting software with job assignments. This gives you accurate job costs instead of guesswork.
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