Knowing the ‘When’ of Job Costs
by Pam Schulz, Sage Certified Consultant
Knowing WHEN to expect the elements of Job Costs to be on a report is a key financial strategy. Using the Committed Cost Report – Landscape Form (report 6-1-2-31) below as a guide, the most common elements of many Job Cost reports are explained.
One of the best Job Cost Reports in Sage 100 Contractor is the Committed Cost Report. What makes this report better than others? With many Job Cost reports, the information is limited to POSTED Job Costs. This means that the state of the job can change drastically depending on what invoices come in the mail and happen to be posted, rather than information that is updated based on what has actually been spent or committed.
Posted costs versus committed costs
What is the difference between posted costs and committed costs? By the end of the job they will be one and the same, but during the job, it is all about the timing:
- Posted Costs are costs that are already “posted” in Sage 100 Contractor through Payable Invoices, Inventory Allocation, or any other Job Costed accounting entry.
- Committed Costs are costs that almost certainly will be spent and are “Committed” through Purchase Orders, Subcontracts and Accrued Labor. No accounting entry has taken place yet; the costs are not posted. Being aware of committed costs provides information that is up-to-date.
There are three columns in the report above that provide the committed costs information:
- Committed Contracts
- Purchase Orders
- Accrued Labor
These, added to the Cost to Date (the posted job costs) are then compared with the Job Budget to have a current view of the actual remaining costs, after all commitments are satisfied.
In the report above, the Committed Costs are:
- Committed Contracts — the remaining amount of the Subcontract. As amounts are billed against the Subcontract, they “move” into the Cost to Date column. So in this column you see what you are still committed to pay as soon as you commit the money.
- Purchase Orders — like the Subcontract amounts above, this represents the remaining amount of the Subcontract.
- Accrued Labor — if you complete time daily in the “Daily Payroll Screen (5-5-1),” the accrued labor can be added to the up-to-date information available. When the report is run, a popup allows for an estimated “Labor Burden” to be entered, so a close approximation of the Labor spent can be available every day.
Each of the Committed Cost information sources are useful modules for a host of other reasons.
Purchase Orders and Subcontracts provide valuable control features in addition to the Committed Cost information above.
Daily time entry means less rush on payroll day. And the field time entry options have made this even easier.
There is one more column that has a “WHEN” to be addressed:
In Sage, the Job Budget columns in reports are generally derived from the following:
- Original Budget (screen 6-2) + APPROVED Change Order Budgets (screen 6-4-1; Budget details)
Note that only approved Change Orders are included. Also, the period in which a Change Order is approved will affect when it appears in some of the job cost reports. (Example 6-8-1: Bonding report, since it is period sensitive.)
So, how does all of this tie into the when of all of the Job Cost report, not just the “Committed Cost” report?
In general, the following apply:
- Budgets — Original Budget + Approved Changes. Some reports are period sensitive regarding the Approval Period for the Change Order.
- Cost to date — these are costs that have been posted (through an accounting entry)
- Committed costs — Open POs and Subcontracts + Accrued Labor.
The ‘when’ benefits
To get the best reports, use the following steps. By the way, you will discover shortly that each of these actions have more benefits than just better reports:
- Enter Job Budgets (screen 6-2)
- Use Change Orders (screen 6-4-1)
- Implement Purchase Orders (screen 6-6-1) and/or Subcontracts (screen 6-7-1)
- Enter Daily Payroll (screen 5-5-1) — use a field time entry system to save even more time.
The benefits of more up-to-date information, added to the additional control and timesaving of each of these actions are immense. Each one only takes a short time to learn; your time will be repaid very quickly.
Without all the Job Cost elements above, you are risking flying blindly. Get the greatest visibility by knowing the “WHEN” of the information you are viewing.