Back costing
Back costing: what the job really cost
Back costing is comparing what you allowed for a job against what it actually cost, once the job is finished. It is the single most useful habit a building business can build.
What you compare
Estimated against actual, category by category: labour hours and labour cost, materials, subcontractors, other direct costs, and approved variations. Then gross profit in dollars, gross profit margin as a percentage, and the variance on every line.
Cost labour at internal cost
The most common back costing error is valuing actual labour at the charge-out rate instead of the loaded internal cost. That builds your own margin into your own cost and makes a losing job look fine. MARGIN always costs actual labour at the internal rate frozen to that job, and shows the customer charge equivalent separately.
Keep contingency and P&G out of incurred cost
Allowances in a quote are not costs. Contingency and preliminary and general items stay visible as what was allowed, so an unspent contingency shows up as margin you earned rather than money you spent.
Freeze history
When wages or your business rate change next year, last year's completed jobs must not change with them. MARGIN locks each job to the labour rates that applied when the work was done, so your history stays true.
What you do with the answer
One back cost tells you about one job. Ten tell you where your pricing is wrong: which work types run over on hours, which allowances are always short, and where variations aren't being written up. That feeds straight back into your charge-out rate and your next quote.
NZ$30 per month including GST after the trial. Cancel any time.