The original firm said every business needs accurate books, but the bookkeeping needs of each business vary. Nowhere is that more obvious than a job. A café can live on a till and a stocktake. A builder, a designer, a lawyer or a fit-out crew can look profitable for a year and still have never made money on the work that paid the rent.
This essay is about the question a part-time controller is paid to ask at month-end: did that job make money, and would we price it the same tomorrow. It is not a construction-law treatise and it is not a valuation standard. Confirm AASB treatment with your accountant if you issue statutory accounts. Then keep a management file you would read aloud.
A job is a promise with a cost
A job starts when you agree scope, price and a way to vary both. If any of those three is missing, you do not have job costing. You have a vibe and a progress claim.
Write, before anyone buys materials: the quoted labour hours, the quoted materials, the quoted subcontractors, the margin you thought you were selling, and the payment pattern — deposit, claims, retention. The quote is a document. The job code in Xero or MYOB is a drawer. The drawer without the document is how variations disappear.
GST is 10% on most taxable supplies. Job-cost the GST-exclusive figures for margin, and keep the GST-inclusive figures for cash. Mixing them is how a “20% job” is actually a conversation about tax. Confirm whether a particular supply is GST-free — some health, some education, some food — rather than assuming the lot is taxable.
Labour recovery is the line owners skip
Materials are easy to put on a job. Labour is easy to leave in “wages” because the pay run already happened.
Decide what an hour costs you. A useful working figure for a small file is wages + Super Guarantee + workers compensation + the allowances you always pay, divided by honest productive hours. From 1 July 2025 SG is 12% — confirm the ATO. From 1 July 2026 payday super follows the pay, which does not change the cost, only the week the cash leaves. Do not invent award rates here. Confirm Fair Work and your instrument.
“Honest productive hours” is not 38. It is 38 minus the time that never reaches a job: toolbox, rain, rework, the afternoon in the supplier carpark, the admin the leading hand does not timesheet. If you recover $70 an hour and it costs you $90 to have the person on site, every “sold” hour is a small loss. Busy is not a margin.
Clinics recover rooms and practitioners, not hours on a slab. Professional firms recover time. The arithmetic is the same: cost of the person versus the amount you actually bill. See allied health and professional services.
If people will not timesheet, you cannot cost jobs. A weekly timesheet that is wrong is still better than a month-end guess. Do not let a leading hand write “job 12” across a whole fortnight unless they really stood there.
Materials, stock and the yard
A pack of panels bought for house A is not “materials — general”. It is house A, or it is inventory if it is sitting in the yard for whoever shouts next. Tradies who code every Bunnings swipe to expenses then open the project tab are looking at a lie. The tradies guide is the claim-side view. This is the margin view.
Returns, pickups and the “I’ll use it on the next one” leftover must move. If house A paid for the leftover, house A keeps the cost until you transfer it. If you transfer it, write the transfer. Stock that walks is not a costing variance. It is a control problem.
Subcontractors belong on the job with the invoice and, if you are in building and construction, with the TPAR discipline. Confirm the current ATO taxable payments rules. A subcontractor parked in “consultants” will not appear on the job and will not appear on the annual report.
Variations are where profit goes to hide
The original scope made money. The job did not, because the client asked for “just a bit more” sixteen times and nobody raised a claim.
A variation needs a date, a description, a price, and a yes. Verbal yeses die when the head contractor’s QS changes. Until you have the yes, you may still do the work — that is a commercial choice — but you may not book the income. Cost without income is WIP or a known loss. Income without a document is how disputes become write-offs.
At month-end, list variations: submitted, approved, rejected, unbilled. The unbilled approved column is the one owners forget to invoice. The submitted-but-silent column is the one they count as cash in the thirteen-week forecast. Do not.
WIP that you would defend
Work in progress, for a management pack, is the job’s cost to date plus, if you use earned-value thinking, the share of margin you have actually earned, minus what you have already invoiced. There are several acceptable formulae. Pick one with your accountant and do not change it because a month looks ugly.
The ugly month is the point. A file that only recognises income when a claim is paid will look poor in a hard-work month and rich in a collection month. A file that recognises everything in the quote on day one will look rich forever. Touch WIP every month you still want the board pack to be true.
Write down jobs that are clearly underwater. A hope is not an asset. If the remaining claims cannot cover remaining costs, the loss belongs on this month’s P&L, not in a drawer called “they’ll approve the variation”.
Retention is not WIP. Retention is a receivable with a padlock, or a payable you are holding. Put it on a register. It has a release date and a habit of being “forgotten” until the warranty argument starts.
The month-end job review
This is the ritual, after the banks are reconciled and before the pack is written. It belongs in the close.
- Every open job: billed to date, costs to date, WIP, variations pending, remaining costs you believe.
- Labour hours on the job versus quoted hours.
- Materials on the job versus quoted materials, including yard transfers.
- One sentence: on track, thin, or we should stop.
- One pricing note for the next quote that looks like this one.
If you have twenty jobs, review the five that are large and the two that smell. Materiality is a professional habit. A $400 tidy-up is not a $40,000 variation.
Do not recode last year in this meeting. Do not redesign the chart. Park those on Friday. The chart of accounts should already have labour, materials, subcontractors and variations as names a stranger can read.
Pricing the next one from a true last one
A job-cost report is only useful if it changes the quote. If you always add 15% because “that’s what we do”, you are not pricing. You are hoping the mix of easy jobs will cover the dogs.
Use the last similar job’s recovered labour rate, not the rate you wish you had sold. Use the supplier prices you actually paid, including the waste. Use the variation pattern — if that client always adds a bathroom, the next quote should assume a bathroom or assume a fight.
Overheads — rent, insurance, bookkeeping, the ute that serves all jobs — need a recovery rule. Per labour hour is common. Per dollar of materials is common in some trades. Per room is common in clinics. Pick one, write it down, and do not change it to save a month. The financial control habit is a rule you can still explain in a year.
What the Rosebery desk was interrupting
Optimism. The owner remembers the claim that landed and forgets the leading hand’s overtime. The software shows a green project because costs were coded to the wrong drawer. The P&L looks fine because WIP was not touched since Christmas.
A boutique file used to interrupt that optimism with a short list: this job made money, this one did not, this variation is not income yet, this retention is not cash. You can buy that interruption as controller hours. You can also run the five-step review yourself on the second Wednesday.
If the review still takes a day, the problem is upstream: no timesheets, a yard without transfers, or claims that do not match the job code. Fix those and the question “did we make money” becomes a page, not a personality. Then go price the next one as if you remember.
