Job costing is typically thought of as an accounting function. Margins are only getting tighter so every point of margin possible must be achieved in the execution of projects. The project team’s understanding of the financial aspects can make the difference in having unprofitable or profitable projects and service contracts
JOB COSTING Nature and Purpose Job costing may be defined as a system of costing in which the elements of cost are accumulated separately for each job or works order undertaken by an organisation. Industries which manufacture products or renders service against specific orders use job costing or job order method of cost accounting. In the job costing system, an order or a unit, lot or batch of product may be taken as a cost unit, i.e., a job
THE MAIN DIFFERENCE BETWEEN JOB COSTING AND PROCESS COSTING IS THAT IN JOB CO...Hardik Shah
THE MAIN DIFFERENCE BETWEEN JOB COSTING AND PROCESS COSTING IS THAT IN JOB COSTING AN AVERAGING PROCESS IS USED TO COMPUTE THE UNIT COSTS OF PRODUCTS OR SERVICES. - JUSTIFICATION
| Managerial Accounting | Chapter 1 | An Overview to Managerial Accounting | ...Ahmad Hassan
Chapter 1: an overview of managerial accounting -- managerial accounting and financial accounting, work of management, planning and control cycle, differences b/w managerial accounting and financial accounting, comparing merchandising and manufacturing activities, Chapter 2: managerial accounting and cost concepts -- classifications of costs, manufacturing and non-manufacturing costs, product costs versus period costs, cost classifications for predicting cost behavior, fixed costs and variable costs, direct and indirect costs, differential costs and revenues, opportunity and sunk costs.
With help of two suitable example, Explain following concept under operating costing in case of a transporter (Hotel / Hospital)
Solution:-
1. Fixed Cost / Standing Cost, Variable Cost. Absolute tonne km, Commercial Tonne Km.Effective passenger km.
2. Decision making
3. Integral accounting system
4. Non - Integral Accounting System
JOB COSTING Nature and Purpose Job costing may be defined as a system of costing in which the elements of cost are accumulated separately for each job or works order undertaken by an organisation. Industries which manufacture products or renders service against specific orders use job costing or job order method of cost accounting. In the job costing system, an order or a unit, lot or batch of product may be taken as a cost unit, i.e., a job
THE MAIN DIFFERENCE BETWEEN JOB COSTING AND PROCESS COSTING IS THAT IN JOB CO...Hardik Shah
THE MAIN DIFFERENCE BETWEEN JOB COSTING AND PROCESS COSTING IS THAT IN JOB COSTING AN AVERAGING PROCESS IS USED TO COMPUTE THE UNIT COSTS OF PRODUCTS OR SERVICES. - JUSTIFICATION
| Managerial Accounting | Chapter 1 | An Overview to Managerial Accounting | ...Ahmad Hassan
Chapter 1: an overview of managerial accounting -- managerial accounting and financial accounting, work of management, planning and control cycle, differences b/w managerial accounting and financial accounting, comparing merchandising and manufacturing activities, Chapter 2: managerial accounting and cost concepts -- classifications of costs, manufacturing and non-manufacturing costs, product costs versus period costs, cost classifications for predicting cost behavior, fixed costs and variable costs, direct and indirect costs, differential costs and revenues, opportunity and sunk costs.
With help of two suitable example, Explain following concept under operating costing in case of a transporter (Hotel / Hospital)
Solution:-
1. Fixed Cost / Standing Cost, Variable Cost. Absolute tonne km, Commercial Tonne Km.Effective passenger km.
2. Decision making
3. Integral accounting system
4. Non - Integral Accounting System
- HR History
- HR Function
- HR Role in 3 words
- Recruitment
- Job Analysis
- Purpose of interviews
- Types of interviews
- Interview's questions
- Training & development
- Performance Management
- HR needed qualifications
- HR job titles
Human Resource (HR) is the core element in any organizations. HR has to deal with
documentation, recruiting, selection and retention procedures in all sectors of an organization.
Moreover, linkage between leadership and management is also being demonstrated here. To
make a project up to the “Bench Mark” efficient team building, managerial efficiency,
leadership, monitoring is required for any organization in general. We can find these traits in
British Gas.
What is job costing? What are its main characteristics?
Characteristics
Features
procedure involve in job order costing.
Applicability
What is BEP? List out the assumption of breakeven analysis
Assumption of BEP analysis
What is Profit Volume (P/V) Ratio
What is CVP analysis? How does it help the management?
What is process costing? What are its main characteristics? Name the industries where process costing can be applied.
Normal Loss
Abnormal Loss
Abnormal Gain
Job Costing & Process Costing
Accounting for losses in process costing
What do you mean by operating costing? Draw a specimen cost sheet for transport costing.
INDUSTRY AND CORRESPONDING COST UNIT
RECONCILIATION STATEMENT
Problems faced by both the interviewer and the interviewee during an intervie...Azas Shahrier
This report was prepared to identify the core problems faced by both the interviewer and the interviewee during an interview session and how to resolve it.
The internship was divided into four parts
4 weeks: Site execution with emphasis on HSE and QA/QC.
2 weeks: Updating the status of Tower in Tracking Tool and creating a MSP program on the remaining activities left in the building.
1 week : Contract analysis
1 week : Marketing concepts used and preparation of case study on company.
Business Metrics for the AV Industry - PSNi Network PresentationJohn Graham
This presentation is targeted to financial professionals with the focus is on metrics that help in operations and strategic planning, not valuation or financial ratios. We will discuss the current trends we are seeing in the A/V space for metrics, where we see the future for A/V metrics and the barrier to making the most of those metrics
This 2-hour course will show the perspective of what it takes to be an effective CFO in the construction industry from the vantage point of CFO’s, bankers, surety agents and other professional references who work in the industry. This session will examine best practices and protocols of construction financial management.
Learning Objectives/ Outcomes:
• Review and continuation of construction financial statements; using a work-in-progress report
• Review and continuation of job costing and accounting
• “Cash is King” rule of thumb summary
• Discuss the role of owner’s right hand person
CFO Insight For Business Owners: How to Utilize Financial StatementsChase R. Morrison
CFO Insight: This is a primer on how to use financial statements to more effectively operate a privately held business and was used to educate new entrepreneurs at the Valley Economic Development Corporation in Sherman Oaks, CA.
McKonly & Asbury Webinar - LEAN and the Finance and Accounting ProcessMcKonly & Asbury, LLP
We continued our Celebrating 40 Years of Excellence! Webinar Series with a webinar entitled "LEAN and the Finance and Accounting Process" presented by David Blain (Principal) with McKonly & Asbury! Thank you to everyone that attended.
David provided us with a useful understanding of how to use and implement LEAN to enhance the finance and accounting processes within your business. We focused on key concepts of LEAN and tips around how to implement those concepts for improved operational and financial reporting to business leaders, managers, and front line operations personnel.
Check out our Upcoming Events page for news and updates on our future seminars and webinars at www.macpas.com/events.
Financial Planning - Joel Humphrey (Freelandt Caldwell Reilly LLP)NORCAT
Joel Humphrey, partner at Freelandt Caldwell Reilly LLP returns to ENT101 to discuss financing for start-ups.
Joel works with many of the firm’s start-up clients to review business plans, develop financial forecasts, map out cash flow strategies and arrange financing requirements. With Joel’s extensive experience with young companies, this lecture will be extremely informative for all levels.
Watch the presentation at http://www.norcat.org/ent-101/season-3-lectures/
Projects may look attractive for two reasons:1) There are some errors in forecast 2)The company genuinely expects to earn excess profits.
So increase odds in your favor by moving in areas of competitive advantages.
Look at economic rents and where even advantage is absent or entry of competitors will push prices down or costs up, don’t enter .
When you have the market value of an asset use it..rather then over analysis…gold, real estate..airplanes etc…
PV calculations may vary and subject to error …that’s life!!!!!
Gamify Your Mind; The Secret Sauce to Delivering Success, Continuously Improv...Shahin Sheidaei
Games are powerful teaching tools, fostering hands-on engagement and fun. But they require careful consideration to succeed. Join me to explore factors in running and selecting games, ensuring they serve as effective teaching tools. Learn to maintain focus on learning objectives while playing, and how to measure the ROI of gaming in education. Discover strategies for pitching gaming to leadership. This session offers insights, tips, and examples for coaches, team leads, and enterprise leaders seeking to teach from simple to complex concepts.
Listen to the keynote address and hear about the latest developments from Rachana Ananthakrishnan and Ian Foster who review the updates to the Globus Platform and Service, and the relevance of Globus to the scientific community as an automation platform to accelerate scientific discovery.
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Globus Connect Server Deep Dive - GlobusWorld 2024Globus
We explore the Globus Connect Server (GCS) architecture and experiment with advanced configuration options and use cases. This content is targeted at system administrators who are familiar with GCS and currently operate—or are planning to operate—broader deployments at their institution.
Climate Science Flows: Enabling Petabyte-Scale Climate Analysis with the Eart...Globus
The Earth System Grid Federation (ESGF) is a global network of data servers that archives and distributes the planet’s largest collection of Earth system model output for thousands of climate and environmental scientists worldwide. Many of these petabyte-scale data archives are located in proximity to large high-performance computing (HPC) or cloud computing resources, but the primary workflow for data users consists of transferring data, and applying computations on a different system. As a part of the ESGF 2.0 US project (funded by the United States Department of Energy Office of Science), we developed pre-defined data workflows, which can be run on-demand, capable of applying many data reduction and data analysis to the large ESGF data archives, transferring only the resultant analysis (ex. visualizations, smaller data files). In this talk, we will showcase a few of these workflows, highlighting how Globus Flows can be used for petabyte-scale climate analysis.
We describe the deployment and use of Globus Compute for remote computation. This content is aimed at researchers who wish to compute on remote resources using a unified programming interface, as well as system administrators who will deploy and operate Globus Compute services on their research computing infrastructure.
Field Employee Tracking System| MiTrack App| Best Employee Tracking Solution|...informapgpstrackings
Keep tabs on your field staff effortlessly with Informap Technology Centre LLC. Real-time tracking, task assignment, and smart features for efficient management. Request a live demo today!
For more details, visit us : https://informapuae.com/field-staff-tracking/
Cyaniclab : Software Development Agency Portfolio.pdfCyanic lab
CyanicLab, an offshore custom software development company based in Sweden,India, Finland, is your go-to partner for startup development and innovative web design solutions. Our expert team specializes in crafting cutting-edge software tailored to meet the unique needs of startups and established enterprises alike. From conceptualization to execution, we offer comprehensive services including web and mobile app development, UI/UX design, and ongoing software maintenance. Ready to elevate your business? Contact CyanicLab today and let us propel your vision to success with our top-notch IT solutions.
In software engineering, the right architecture is essential for robust, scalable platforms. Wix has undergone a pivotal shift from event sourcing to a CRUD-based model for its microservices. This talk will chart the course of this pivotal journey.
Event sourcing, which records state changes as immutable events, provided robust auditing and "time travel" debugging for Wix Stores' microservices. Despite its benefits, the complexity it introduced in state management slowed development. Wix responded by adopting a simpler, unified CRUD model. This talk will explore the challenges of event sourcing and the advantages of Wix's new "CRUD on steroids" approach, which streamlines API integration and domain event management while preserving data integrity and system resilience.
Participants will gain valuable insights into Wix's strategies for ensuring atomicity in database updates and event production, as well as caching, materialization, and performance optimization techniques within a distributed system.
Join us to discover how Wix has mastered the art of balancing simplicity and extensibility, and learn how the re-adoption of the modest CRUD has turbocharged their development velocity, resilience, and scalability in a high-growth environment.
OpenFOAM solver for Helmholtz equation, helmholtzFoam / helmholtzBubbleFoamtakuyayamamoto1800
In this slide, we show the simulation example and the way to compile this solver.
In this solver, the Helmholtz equation can be solved by helmholtzFoam. Also, the Helmholtz equation with uniformly dispersed bubbles can be simulated by helmholtzBubbleFoam.
Innovating Inference - Remote Triggering of Large Language Models on HPC Clus...Globus
Large Language Models (LLMs) are currently the center of attention in the tech world, particularly for their potential to advance research. In this presentation, we'll explore a straightforward and effective method for quickly initiating inference runs on supercomputers using the vLLM tool with Globus Compute, specifically on the Polaris system at ALCF. We'll begin by briefly discussing the popularity and applications of LLMs in various fields. Following this, we will introduce the vLLM tool, and explain how it integrates with Globus Compute to efficiently manage LLM operations on Polaris. Attendees will learn the practical aspects of setting up and remotely triggering LLMs from local machines, focusing on ease of use and efficiency. This talk is ideal for researchers and practitioners looking to leverage the power of LLMs in their work, offering a clear guide to harnessing supercomputing resources for quick and effective LLM inference.
Check out the webinar slides to learn more about how XfilesPro transforms Salesforce document management by leveraging its world-class applications. For more details, please connect with sales@xfilespro.com
If you want to watch the on-demand webinar, please click here: https://www.xfilespro.com/webinars/salesforce-document-management-2-0-smarter-faster-better/
Quarkus Hidden and Forbidden ExtensionsMax Andersen
Quarkus has a vast extension ecosystem and is known for its subsonic and subatomic feature set. Some of these features are not as well known, and some extensions are less talked about, but that does not make them less interesting - quite the opposite.
Come join this talk to see some tips and tricks for using Quarkus and some of the lesser known features, extensions and development techniques.
GraphSummit Paris - The art of the possible with Graph TechnologyNeo4j
Sudhir Hasbe, Chief Product Officer, Neo4j
Join us as we explore breakthrough innovations enabled by interconnected data and AI. Discover firsthand how organizations use relationships in data to uncover contextual insights and solve our most pressing challenges – from optimizing supply chains, detecting fraud, and improving customer experiences to accelerating drug discoveries.
Providing Globus Services to Users of JASMIN for Environmental Data AnalysisGlobus
JASMIN is the UK’s high-performance data analysis platform for environmental science, operated by STFC on behalf of the UK Natural Environment Research Council (NERC). In addition to its role in hosting the CEDA Archive (NERC’s long-term repository for climate, atmospheric science & Earth observation data in the UK), JASMIN provides a collaborative platform to a community of around 2,000 scientists in the UK and beyond, providing nearly 400 environmental science projects with working space, compute resources and tools to facilitate their work. High-performance data transfer into and out of JASMIN has always been a key feature, with many scientists bringing model outputs from supercomputers elsewhere in the UK, to analyse against observational or other model data in the CEDA Archive. A growing number of JASMIN users are now realising the benefits of using the Globus service to provide reliable and efficient data movement and other tasks in this and other contexts. Further use cases involve long-distance (intercontinental) transfers to and from JASMIN, and collecting results from a mobile atmospheric radar system, pushing data to JASMIN via a lightweight Globus deployment. We provide details of how Globus fits into our current infrastructure, our experience of the recent migration to GCSv5.4, and of our interest in developing use of the wider ecosystem of Globus services for the benefit of our user community.
Understanding Globus Data Transfers with NetSageGlobus
NetSage is an open privacy-aware network measurement, analysis, and visualization service designed to help end-users visualize and reason about large data transfers. NetSage traditionally has used a combination of passive measurements, including SNMP and flow data, as well as active measurements, mainly perfSONAR, to provide longitudinal network performance data visualization. It has been deployed by dozens of networks world wide, and is supported domestically by the Engagement and Performance Operations Center (EPOC), NSF #2328479. We have recently expanded the NetSage data sources to include logs for Globus data transfers, following the same privacy-preserving approach as for Flow data. Using the logs for the Texas Advanced Computing Center (TACC) as an example, this talk will walk through several different example use cases that NetSage can answer, including: Who is using Globus to share data with my institution, and what kind of performance are they able to achieve? How many transfers has Globus supported for us? Which sites are we sharing the most data with, and how is that changing over time? How is my site using Globus to move data internally, and what kind of performance do we see for those transfers? What percentage of data transfers at my institution used Globus, and how did the overall data transfer performance compare to the Globus users?
Enterprise Resource Planning System includes various modules that reduce any business's workload. Additionally, it organizes the workflows, which drives towards enhancing productivity. Here are a detailed explanation of the ERP modules. Going through the points will help you understand how the software is changing the work dynamics.
To know more details here: https://blogs.nyggs.com/nyggs/enterprise-resource-planning-erp-system-modules/
Large Language Models and the End of ProgrammingMatt Welsh
Talk by Matt Welsh at Craft Conference 2024 on the impact that Large Language Models will have on the future of software development. In this talk, I discuss the ways in which LLMs will impact the software industry, from replacing human software developers with AI, to replacing conventional software with models that perform reasoning, computation, and problem-solving.
Job Costing - An Execution Guide for Operations NSCA Best Practices Conference
1. Job Costing -
An Execution Guide for
Operations
Brad Dempsey/Solutions360 Inc.
2. What gets measured …
Gets done.
The purpose of this
seminar is to introduce
financial concepts that will
help operations staff better
understand and manage
projects.
3. Overview
• Job costing is typically thought of
as an accounting function
• Margins are only getting tighter
• Every point possible must be
achieved in execution
• The project team’s understanding
of the financial aspects can make
the difference
6. What we will cover
• What is job costing?
• Why do we need it?
• The sales handoff
• Project / Job creation
• The budget
• Resources
• Managing material
• Managing labor
• On-going financial analysis
7. What we will cover
• Project KPI’s (Key Performance
Indicators)
• Invoicing
• Sub Contracting
• Labor burden
• Material burden
• Over/Under billing
• Change Orders
• Sample jobs for analysis
8. Glossary
• GM = Gross Margin
– Dollar value of revenue minus cost of goods
• GP = Gross Percentage
– Percentage of GM / revenue
• Price – what we charge the customer
• Cost – what we pay our vendors
• Brokerage – or box sales, simple sale of product
without labor
• T&M – Time and Material
• Progress Billing – A job that we earn revenue on
based upon our estimate and a fixed price
16. What we see happening
• Margins are slimmer than ever
• PM’s that watch job costing
closely are achieving greater
results
• Jobs that are well managed and
measured lead to better
proposals
17. What we see happening
• There is frequently a gap
between sales / operations /
accounting with respect to
information sharing
• Many operations teams have
no interest and or visibility into
the financial aspects of the job
18. What is a project/job?
A project is essentially a unit of
work that allows us to manage,
measure and execute the delivery
of products and/or services to our
customer.
19. Why a project and why is
the financial aspect so
important?
Sales are made based upon an estimate of
the cost to deliver the goods and services.
The accurate measurement and control of
those costs are critical to the survival of the
company.
Project accounting (job costing) is a tool to
help us manage those costs, and make
adjustments if required as early as possible
in the process.
20. Goals For This Seminar
• Understand and appreciate the
4 GP’s
• Introduce tools to help you
improve your financial project
management
• Help bridge the gap between
operations and finance
22. What is job costing?
From Wikipedia, the free encyclopedia
Job Costing involves the calculation of
costs involved in a construction "job" or
the manufacturing of goods done in
discrete batches. These costs are
recorded in ledger accounts throughout
the life of the job or batch and are then
summarized in the final trial balance
before the preparing of the job cost or
batch manufacturing statement.
23. Why
Without a method of job costing,
we don’t know which projects
were profitable and why.
24. The Business Why
Without job costing, we lack
valuable knowledge to bid and
manage the next job.
25. The Accounting Why
Accounting standards (GAAP) dictate that
revenue and costs should be in sync
(Matching principle).
The revenues and costs that hit our income
statement are used to report to the bank
and bonding companies. It is important to
maintain consistent profitability to sustain
our bank covenants and our ability to obtain
performance bonds.
27. Assets
• A spy working in his or her own country
and controlled by the enemy.
• The entries on a balance sheet showing
all properties, both tangible and
intangible, and claims against others that
may be applied to cover the liabilities of
a person or business. Assets can include
cash, stock, inventories, property rights,
and goodwill.
28. Liabilities
• A company's legal debts or
obligations that arise during the
course of business operations.
29. Equity
• Funds contributed by the
owners (the stockholders) plus
the retained earnings (or
losses). Also referred to as
"shareholders' equity".
32. Cash Accounting
• An accounting method where
receipts are recorded during the
period they are received, and
the expenses in the period in
which they are actually paid.
33. Accrual Accounting
• An accounting method that
measures the performance and
position of a company by
recognizing economic events
regardless of when cash
transactions occur.
46. 2. Current Projection
• Current budget inclusive of
– Internal change orders
– Customer change orders
• Internal change orders may be cost-
only changes to the budget so that
estimated cost at completion is
correct
47. 3. Invoicing Position (Actuals)
• Invoiced amounts and expenses
incurred
• This is an “accrued position”
• Assumes customer collections and
vendor payments are about the same
period of time
• Analysis of unpaid amounts should also
be viewed
50. Cash vs. Revenue
• An invoice billed is not always revenue, and
a check cut is not always an expense
– When a pre-paid service is invoiced, it
becomes a liability on your balance sheet
– When the service or product is actually
delivered, and the cost is incurred, the
revenue can be recognized
– Deferred revenues and prepaid expenses are
proper accounting, but they complicate
discerning your actual cash position
51. Invoicing vs. Rev. Example 1
0
2
4
6
8
10
12
14
16
Project
Start
Month 1 Month 2 Month 3 Month 4 End
Cash
Revenue
52. Invoicing vs. Rev. Example 2
0
2
4
6
8
10
12
14
16
Project
Start
Month 1 Month 2 Month 3 Month 4 End
Cash
Revenue
53. Invoicing vs. Rev. Example 3
0
2
4
6
8
10
12
14
16
Project
Start
Month 1 Month 2 Month 3 Month 4 End
Cash
Revenue
54. Invoicing vs. Rev. Key Points
• The gap between invoicing and revenue is
critical to the sustainability of the business
• A clear understanding of the contract terms
is key for the operations team to help
manage this gap
• Payment for stored materials, draw
schedule, and retention terms are all
elements of the contract that impact cash
flow
55. Breaking Down Costs
Four major categories
1. Material
2. Labor
3. Sub-Contract
4. Miscellaneous
How much detail should we use?
56. Breaking Down Costs
Only justify more detailed information if
such data would impact your decision
criteria.
57. Cost Categories vs. WBS
Work breakdown structure
From Wikipedia, the free encyclopedia
A work breakdown structure (WBS), in project management
and systems engineering, is a deliverable oriented
decomposition of a project into smaller components.
A work breakdown structure element may be a product, data,
service, or any combination thereof. A WBS also provides the
necessary framework for detailed cost estimating and control
along with providing guidance for schedule development and
control.
61. T&M – Time and Material
• Charge based upon delivered
labor and material
• Recognize expense of labor
and material at time of invoicing
62. T&M – Example
• Ship 2 displays on Jan 20
• Install the displays on Jan 22
• Invoice customer on Jan 31
• Jan 31 entry
• Revenue $1200 material and labor
• COGS – Material $800
• COGS – Install Labor $200
• GM = $200
63. Hours to Hours Revenue
Recognition
To do this, we compare actual hours against
estimated hours. This ratio is expressed as a
percentage
Actual Hours
------------------------
Estimated Hours
This percentage represents the completion of the
project.
64. Hours to Hours Revenue
Recognition
e.g. If we estimate that a project will
take us 500 hours labor to complete,
and we have expended 200 hours of
actual labor:
200
------------ = .40= 40%
500
65. Hours to Hours Revenue
Recognition
This job was contracted for
$50,000.
So we have now earned:
• 40% x $50,000 = $20,000
66. Cost to Cost Revenue Recognition
To accomplish this on a project, we use the cost to cost
method of job costing. To do this, we compare actual
expenses against estimated expenses. This ratio is
expressed as a percentage
Actual Cost
------------------------
Estimated Cost
This percentage represents the completion of the
project.
67. Revenue Recognition
e.g. If we estimate that a project will
cost us $500,000 in material and
labor to complete, and we have
expended $200,000 of actual cost:
$200,000
---------------- = .40= 40%
$500,000
68. Revenue Recognition
This means our project is 40%
complete, which also means we can
recognize 40% of the revenue.
So in this case, if our contract was
for $1,000,000
Revenue earned = 40% x
$1,000,000 = $400,000
69. Revenue Recognition
Cash flow on a project is out of sync with the
performance of the work. The relationship
between revenue recognition and cash flow is
very important as well.
This represents our over / under billing.
If we are over billed, we are using the customer’s
money, and are in a positive cash position.
If we are under billed, we are using our own
resources, and in a negative cash position.
70. Revenue Recognition
Managing the revenue recognition process is
critical to strong financial statements on a monthly
basis. The statements are critical to maintaining
our bank relationship and covenants, and bonding
relationships for performance bonds.
Match revenue to costs – GAAP
Revenue does not follow cash flow – important to
understand the relationship
Even out revenue recognition – Bank covenants,
performance bonds
71. Retention
• Common practice for withholding a
portion of the contract amount until
final acceptance
• This dollar amount should not
show up as a receivable and be
aged
• It must be included on the balance
sheet as an asset
73. Retention Posting
• $12,614 posts to project deferred
revenue
• $11,352.60 posts to AR
• $1,261.40 posts to Retention
74. Backlog
• The contract amount is what we have sold,
and have a customer commitment for
• Earned revenue is what we have delivered
• Backlog is the difference
• It represents essentially “guaranteed work”
• It is important to compare closed job GP
against Backlog GP. If jobs aren’t finishing
on budget…then the backlog GP may be
overstated
76. Labor and Burden
Burden is the actual cost to a company
to have an employee, aside from the
salary the employee earns. Other than
salary, costs include benefits.
e.g.
• health insurance
• payroll taxes
• pension contributions
• technology and tools
77. Burden
• Labor burden is usually a
percentage
• J. Smith earns $20 / hr
• Burden is 40%
• Each hour of project time posts
$28
78. Material and Burden
Material may also be subject to a
burden. This could cover the internal
handling costs for purchasing,
warehousing etc.
80. Material Costing - Serialized
• Generally items over a threshold
value
• Each item has a unique number
• Cost is captured at time of
acquisition
81. Material Costing - Identified
• Generally drop shipped or job
allocated upon receipt
• Commonly done on a P.O. basis
82. Material Costing – Avg or FIFO
• Most commonly weighted average
• Risk of costs not matching budget
• Can be especially problematic
when negotiating special purchase
prices
83. Material Costing – Avg Example
• Part # AB1234
• 5 in warehouse worth $500
• Average cost is $100 each
• Purchase 5 more at $250
• 10 in warehouse worth $750
• Average cost is now $75 each
84. Material Costing – Burden
Example
• Part # AB1234 with a 3% burden
• 5 shipped at $500 cost
• Project costs allocated:
• $500 debit to material expense
• 3% x $500 = $15 debit to material
expense
85. Material Costing – PPV
• Purchase Price Variance
• Difference of PO price and invoiced
price
• Can affect the job in a positive or
negative way
86. Material Costing – PPV
• We cut a P.O. for a display at $500
• On receipt we increase inventory
value by $500
• On shipment to customer we DB
the job $500 COGS material
• Vendor now charges us $475
• $25 PPV must be applied
somewhere
87. Allocation of In-Direct Costs
Allocation of in-direct cost should be
done using logical “cost drivers”.
E.g., allocating superintendent time
based on direct labor dollars to each
job
92. Change Orders - ICO
• Internal Change Order
• Changes the cost budget only
• Possible reasons:
• Equipment no longer available
• Labor over budget
• Unexpected installation challenges
93. Change Orders - CCO
• Customer Change Order
• Changes price and possibly cost
budget
• Possible Reasons:
• Increased scope
• Equipment models no longer available
94. Finance Costs
There is an expense to financing
receivables. In some cases,
companies will allocate a cost to
overdue invoices.
95. Minimum KPI’s and Reports
• WIP
• Gross Profit per Period
• Labor Budget vs. Actual
• Revenue Backlog
• GP Backlog
96. WIP – Work In Process
• Point in Time report, much like a
balance sheet
• See example spread sheet WIP
97. WIP – Analysis Tips
• Sort by projected GP and look for
the highest and lowest numbers
• You will have a good idea of what
is “normal” for you business (25-
35% possibly)
• Analyze the outliers first
98. WIP – Analysis Tips
• Use the same process as used for
projected GP on earned GP
• Hide columns and put projected
GP next to earned GP and look for
differences
99. Gross Profit per Period
• Change over a period of time,
much like an income statement
• See example spread sheet
Monthly GP
104. Closing the Project
Check list:
• Invoicing complete
• All material accounted for (shipped,
cancelled etc.)
• Material cost posted
• All time bill entries logged and
posted
• All PO’s received or cancelled
• All vendor invoices received (PPV)
105. Closing the Project
• Misc expenses posted (expense
reports, credit cards etc.)
• All revenue posted
• Lien and bonding documentation
completed
106. Summary
1. Monitor the 4 GP’s frequently
2. Focus on budget changes
3. Break the budget down to a detail
level you can manage, and one
that will assist in making decisions
4. Gather job cost information early
enough to take corrective actions