What it means
Instead of looking only at the company’s overall profit, job costing assigns every cost to the job that caused it: labor hours from timesheets, materials from supplier invoices, equipment rentals, subcontractors and other direct costs. Comparing those actual costs with the estimate or the price charged shows which jobs — and which kinds of work — are profitable.
For electrical contractors, the two biggest pieces are usually labor and materials. Accurate job costing depends on hours being recorded against the right job, material invoices being matched to the right job, and change orders being tracked separately.
An example: a contractor estimated a tenant fit-out at a set number of labor hours and a material budget. Job costing shows labor came in over estimate because of rework, while materials came in under because of a good supplier quote — useful lessons for the next bid.
Why it matters
- Better bids. Knowing what similar jobs actually cost makes future estimates more accurate.
- Early warnings. Tracking costs as the job progresses shows problems while there’s still time to act.
- Knowing what to sell. It shows which services and customers are worth pursuing.