Job Costing

Job Costing tracks all costs against a job to measure profitability. Compare budget to actuals, monitor margins, and make informed decisions about pricing and resourcing.

Understanding job costs

Every job accumulates costs from:

• Time: Staff hours × cost rates
• Expenses: Direct purchases and outlays
• Materials: Inventory or supplies (if tracked)

These are compared against the budget (estimated or quoted amount) to calculate profit.

Cost components

Time costs

Calculated automatically:

Time Cost = Hours × Staff Cost Rate

Example:

• Staff member works 10 hours
• Cost rate: $59.50/hour (includes super, etc.)
• Time cost: $595.00

Expense costs

Direct expenses linked to job:

• Materials purchased
• Contractor payments
• Travel costs
• Equipment hire
• Software licenses (job-specific)

Other costs

Depending on configuration:

• Inventory items consumed
• Subcontractor fees
• Overhead allocations (if enabled)

Budget management

Setting budgets

Initial budget:

• Enter when creating job
• Usually the quoted amount (excluding GST)
• Can be updated as scope changes

Budget updates:

• Edit in job editor
• Document reason for change
• Adjust if scope increases/decreases
• Track budget history

Budget vs actual

Compare in real-time:

• Budget: Original estimate
• Actual: Time costs + expenses to date
• Remaining: Budget - Actual
• Projected: Estimated final cost

Budget alerts

Warnings when approaching limits:

• 80% warning: Notification when costs reach 80% of budget
• Over budget: Alert when actual exceeds budget
• Configurable thresholds in settings

Profitability calculation

Simple formula

Revenue (Budget) - Costs (Time + Expenses) = Profit

Example:

• Budget: $10,000
• Time costs: $4,500
• Expenses: $800
• Profit: $4,700
• Margin: 47%

Margin percentage

Margin % = (Profit / Budget) × 100

Healthy margins vary by industry:

• Consulting: 40-60%
• Creative: 30-50%
• Construction: 15-25%
• Retail/products: 20-40%

Breakeven analysis

Find the breakeven point:

Breakeven Hours = (Budget - Expenses) / Billable Rate

Helps determine if job is viable.

Viewing job costs

In job editor

Summary panel (right side):

• Budget
• Time costs
• Expenses
• Total costs
• Profit
• Margin %

Updates in real-time as entries added.

In jobs list

Table view columns:

• Budget
• Actual costs
• Profit margin
• Cost status indicator

Sort and filter by profitability.

In insights

Detailed analysis:

• Profitability by job
• Cost trends over time
• Budget variance analysis
• Team cost efficiency

Cost rate accuracy

Why accurate rates matter

Incorrect cost rates = wrong profitability:

• Underestimate costs = think job profitable when it’s not
• Overestimate costs = unnecessary pricing increases
• Inconsistent rates = unreliable comparisons

AU-specific cost rate components

Include in staff cost rates:

• Base hourly rate: Salary ÷ hours per year
• Superannuation: 11.5% of base
• Leave loading: 17.5% (if applicable)
• Workers compensation: Insurance cost
• Payroll tax: If applicable
• Other benefits: Significant perks

Don’t include:

• Office overheads (allocate separately)
• Desired profit margin (add later)
• Billing markup (separate calculation)

Example cost rate calculation

Annual package: $85,000 Working hours: 1,880/year (38hrs × 49.5 weeks)

Components:

• Base rate: $85,000 ÷ 1,880 =$45.21/hr
• Super: $45.21 × 11.5$5.20/hr
• Leave loading: $45.21 × 17.5$7.91/hr
• Workers comp: ~$2.50/hr
• Total cost rate: ~$60.82/hr

Cost tracking best practices

Record promptly

• Enter time daily
• Add expenses immediately
• Don’t batch to end of week
• Accurate timestamps = accurate costs

Use correct jobs

• Code time to right job
• Don’t dump into “General”
• Split if working multiple jobs
• Reassign miscoded entries promptly

Review regularly

Weekly:

• Check budget vs actual
• Identify overruns early
• Adjust if scope changed

Monthly:

• Review all active jobs
• Analyze margin trends
• Adjust quoting if needed

Job completion:

• Final cost analysis
• Compare to original estimate
• Learn for future quoting

Manage overruns

When job over budget:

1. Identify cause: Scope creep? Underestimated?
2. Assess options:
   • Request variation/change order
   • Absorb cost (if minor)
   • Renegotiate scope
3. Communicate: Inform client if necessary
4. Document: Record reason and decision
5. Learn: Update templates/rates for future

Cost analysis reports

Job profitability report

Shows for each job:

• Budget
• Time costs
• Expenses
• Total costs
• Profit
• Margin %

Filter by:

• Date range
• Client
• Job status
• Margin threshold

Team cost efficiency

Analyze by staff member:

• Hours logged
• Cost generated
• Revenue generated
• Billable ratio
• Cost efficiency

Cost trend analysis

Over time:

• Average job costs
• Cost category breakdown
• Trending up/down
• Seasonal patterns

Budget variance report

Jobs over/under budget:

• Variance amount
• Variance percentage
• Root cause analysis
• Pattern identification

AU-specific considerations

GST treatment

• Budgets: Exclude GST (net amounts)
• Costs: Track GST separately
• Profitability: Calculate on net amounts
• Invoicing: Add GST at invoice level

Tax reporting

Job costing helps with:

• BAS: GST on expenses claimable
• Income tax: Accurate profit/loss
• Payroll tax: Labor cost tracking
• Workers comp: Hours and rates

Superannuation

Cost rates must include super:

• SG rate: 11.5% (2024-25)
• Ordinary time earnings basis
• Timely payment compliance
• Job costing accuracy

Award compliance

Time costs support:

• Award rate verification
• Overtime tracking
• Penalty rate application
• Leave accrual accuracy

Troubleshooting

Costs look too high

Check:

• Cost rates include on-costs?
• Hours entered correctly?
• No duplicate entries?
• Expenses coded correctly?

Costs look too low

Check:

• All time recorded?
• All expenses added?
• Cost rates up to date?
• Staff assigned to job?

Profit margin negative

Actions:

1. Verify all data accurate
2. Check for scope creep
3. Review if budget realistic
4. Analyze for future learning
5. Consider variation request

Can’t see cost data

Check permissions:

• User role allows cost visibility
• Manager or admin access needed
• Job settings → Team permissions
• Contact admin if needed

Budget not updating

Check:

• Saving after edit
• Correct job selected
• No open invoice from job
• User has edit permissions

Integration with other modules

Quotes

• Quote amount = initial budget
• Compare quoted vs actual
• Improve future estimates

Invoices

• Billable costs → invoice lines
• Mark costs as billed
• Track unbilled WIP

Payroll

• Time feeds payslip costs
• Superannuation calculations
• Cost rate verification

Reports

• Profit and loss by job
• Margin analysis
• Cost center reporting
• Business performance

Best practices summary

1. Set realistic budgets: Based on quotes + buffer
2. Use accurate cost rates: Include all on-costs
3. Record time promptly: Daily is best
4. Track all expenses: Link to jobs immediately
5. Review weekly: Catch overruns early
6. Update budgets: When scope changes
7. Analyze completed jobs: Learn for future
8. Train team: Everyone understands importance

Related pages

• Job Editor - Viewing costs in job details
• Time Tracking - Recording time costs
• Job Settings - Configuring cost rates
• Job Invoicing - Converting costs to revenue