Simplify Job Costing with BQE CORE

Updated December, 2024

In the architecture and engineering industries, each project has unique challenges, requirements, and costs. Understanding and implementing job costing can be a useful tool for firms striving to maintain profitability and operational efficiency. Job costing allows you to track the specific expenses (like materials, labor, and overhead) for each individual project, offering a clear picture of where your resources are going and if a project is profitable.

For architecture and engineering firms juggling multiple projects, job costing not only ensures accurate billing but also provides valuable insights into project performance, helping you make informed decisions and improve future planning. 

Job costing defined:

Job costing is an accounting process commonly used in the AEC industry for assigning specific types of costs that are incurred on specific jobs, projects or other deliverables. This is done in lieu of other accounting approaches in which costs of specific types are often lumped together or assigned in different ways that may not accurately reflect the actual use or consumption of a resource or an input in a particular job or project.

The benefit of job costing is that it makes profitability much easier to manage and improve. Instead of looking at the company as a whole and trying to balance revenue and expenses in large buckets, you instead break down your expenses and apply them to specific projects. Then you work on making each project profitable.

With job costing, cost assignments are simple yet accurate even when the jobs you've completed are very different from one another. Job costing also allows for data that is more relevant to the operations of the business to be maintained in lieu of more standard cost entries that may or may not apply to a specific job, product, project or line of business.

How to job cost:

As described above, job costing involves making separate accounting entries for different activities and processes, including:

• Materials: the accumulated cost of components used in a project or product. For AEC firms this is the cost of goods sold, or your reimbursable expenses. 

• Labor: job-specific time spent are assigned to the jobs that used them and multiplied by their hourly cost to determine the cost to the project. This should include all time spent on a project whether you bill a client for that time or not. 

• Overhead: costs that are pooled and assigned to specific jobs. These would be expenses such as insurance, software, and other overhead expenses that aren't direct cost of goods sold. 

Having many jobs running concurrently often results in the incorrect assignment of costs, and it can be very tricky to get job costing right if you don't have a system for it. Consider fixed overheads such as rent or insurance premiums. How should such costs be allocated across jobs and projects that vary from month to month?

Meeting financial targets and maintaining accounting consistency under such circumstances can prove to be not only challenging but very time-consuming as well. However, job costing simplifies things for you because the very nature of job costing makes cost assignments very auditable - it creates discrete verticals of information that precisely record how much of different inputs specific jobs consumed. Decision-makers, accountants and project managers can use easily accessible information provided by BQE CORE to see whether or not a specific cost really warrants being added to a specific job.

In BQE CORE, each project page features a burn-up chart that clearly shows cost incurred for the project to date. This cost is calculated using hours, hourly cost rate for each employee, overhead rate, and reimbursable expenses (cost of goods sold), so you have a clear picture of the cost of delivering the project. 

Firm management software is a vital tool to run profitable businesses. Arming yourself, your project managers, and your firm's leadership team with accurate data allows you to make better decisions. It also allows you to quickly course correct if you see costs spiraling out of control or increasing beyond the billable fee of a specific project. 

Streamlining Job Costing with BQE CORE

Static record-keeping processes have the benefit of being simple, straightforward and efficient - but only as long as what they allow you to enter and track is all that you need to record and track. Monitoring a large number of variables across different projects, clients, and products can be very difficult. It's much simpler when you have sofware like BQE CORE, which centralizes your time and expenses, project management, billing, and accounting, into one platform that visualizes your data in real-time.

BQE CORE offers instant job costing, so you can assess profitability without any extra effort. Here are some more detailed capabilities and features you should know about when it comes to BQE CORE and job costing:

• Customizable, real-time dashboards that display your business's KPIs as well as project, financial, and resource statuses provide you with direct, actionable insights

• A specialized project performance screen to keep you abreast of project profitability, earned value, utilization, margins, and other essential information

• Numerous reports--including profit and loss by project, project time and expenses, allocated vs. earned revenue with forecast, estimate comparison, and budget comparison--that can be memorized, marked as favorites, and scheduled to be sent to stakeholders automatically

• Project templates that can be created from your previous projects in order to efficiently estimate costs

• Phases, sub-phases, and tasks to properly assign work and track all costs at the most effective levels

• Job costing at the invoice level

• Rapid, intuitive time and expense entry, including time cards, timers, automated time tracking, and expense recording in multiple currencies

• Flexible invoicing options, including progress, automatic, and batch billing for multiple contract types, including percent complete, fixed, phased, and much more

• Customizable notifications that alert you about the status of your work

• Comprehensive mobile apps to check KPIs, create and send invoices, run reports, and enter time and expenses

With these job costing capacities, analyzing and widening your project margins is easier than ever. Firm management software makes tracking this data simple and accurate. 

Get started with Job Costing at your A&E Firm

Incorporating job costing into your architecture and engineering firm’s workflow is more than just a financial strategy. It’s a pathway to sustainable growth and efficiency. By tracking specific project costs in real time, from labor and materials to overhead, you gain a clearer understanding of profitability and operational performance. This insight allows you to make informed decisions, improve project outcomes, and better allocate resources.

Tools like BQE CORE take job costing to the next level, offering real-time data visualization, automated processes, and comprehensive project reporting. With these capabilities, you can not only streamline your operations but also focus on what matters most: delivering exceptional projects to your clients while ensuring your firm’s profitability.

Ultimately, effective job costing isn’t just about crunching numbers—it’s about empowering your team with the information they need to succeed. By adopting the right systems and practices, your firm can remain competitive, adaptable, and poised for long-term success in a demanding industry

Request a demo of BQE CORE today, to learn more about how it can help your firm run more smoothly, be more profitable, and open up your time to focus on the work that you love.