Paint job costing is a technique for evaluating performance on individual jobs. It is also a way to maintain historical data, to use to estimate future work. The calculation of costs on a job by job basis helps to take our financial temperature. How is this crew doing? How are we doing on this type of work? If we are using a certain price per hour to estimate and we find that after job costing our rate per hour is much less then we need to find out why we aren’t making our hourly rate as planned. Is it because the estimate is wrong, or is the crew failing to meet expectations? And if things are not performing as expected then we can hopefully pinpoint the areas that need improvement.
Not often mentioned as a beneficial tool to use, the data that comes from Job Costing is a real benefit in estimating special types of work. For example, we usually have an easy time calculating estimates for a 2 coat bedroom repaint, but when we try to estimate wallpaper removal, we might find that the range of hourly performance is greater. What if we have the same type of paper, and sizing etc, but we add the height of a 20 foot tall foyer. Or as so much of our market is 200 year old homes, what do we experience in the various complications. So when we record historical job costing data, it adds to our ability to accurately estimate unusual jobs.
Most people will just do something like this in their heads just to check the pulse of our jobs, formal job costing will open your eyes the first couple of times that you do it. And saving the data will provide long term help in estimating.
Create a simple form:
1) Employee hours worked hourly rate total
2) – – –
Material costs total
If we take the contract price and divide it by the man hours on the job we get the rate per hour that we achieved on this job. Obviously if we came out pretty close to the rate that we estimated this job at, then we are happy. If this job was estimated at $55/hour and we only managed to hit $35/hour. Then we need to find out why this job exceeded the budget that we established for this job.