Job costing, WIP schedules, and retention tracking from someone who spent five years as controller at a construction company, not someone reading about it.
Justin Baum spent five years as Controller of a construction company generating more than $250 million in annual revenue, with responsibility for job costing, work-in-progress reporting, equipment costing, payroll, and financial reporting. This is not construction knowledge picked up from a client engagement. It is Controller-level experience from inside the industry.
Which means we have sat through the meeting where a job everybody thought was making money turned out to be twelve points underwater because nobody updated the cost-to-complete. We have chased retention that was six months past acceptance. That experience is the whole reason this page exists.
Contractors in Lexington, Nicholasville, Georgetown, Winchester, and out through Richmond run into the same wall. The books are on a cash basis, the job cost report is a spreadsheet somebody updates when they remember, and the P&L only tells the truth once a year. Meanwhile you are bidding new work off numbers that came from a hunch. The fix is not complicated, but it takes discipline: costs coded to jobs as they happen, WIP updated monthly, and retention tracked separately from ordinary receivables.
Every dollar has to land on a job and a cost code. Labor with the burden loaded in, not just base wage. Materials matched to the job they got delivered to instead of the vendor invoice date. Subcontractor costs recorded when the work is done, not when you cut the check. Equipment time allocated so a machine sitting on one site does not quietly subsidize another. We set up the cost code structure to match how your estimator bids, because a job cost report that does not line up with the estimate cannot tell you where you gained or lost. Then the report goes out monthly with estimate, actual, and variance side by side, per job.
Percentage of completion is where contractors either look sophisticated or look like they are guessing. The WIP schedule ties contract value, approved change orders, costs to date, estimated cost to complete, and billings into one page that says whether you are overbilled or underbilled on every open job. Overbilled feels great and is borrowed cash. Underbilled means you financed work you have not invoiced. We build and maintain the schedule monthly, get your project managers to give real cost-to-complete numbers instead of copy-pasting last month, and produce compiled statements when a lender, surety, or bonding agent asks.
Retention is your profit sitting in somebody else's account, sometimes ten percent of a contract, sometimes for a year after substantial completion. If it lives in the same receivables bucket as everything else, it distorts your aging and nobody chases it. We track retention receivable as its own line by job and by customer, with the release conditions noted, so you know what is collectible and when. On the payable side, the same discipline applies to what you hold from subs. Add lien waiver tracking and a clean pay application process, and the collections conversation stops being awkward because the paperwork is already right.
Construction cash flow is brutal because the outflows lead the inflows by weeks. Payroll runs every Friday. Material suppliers want their money in thirty days. Your customer pays forty-five days after a pay app that took two weeks to approve. A rolling forecast built off the actual billing schedule and job timeline tells you which week gets tight, early enough to draw on a line or push a purchase. We build that forecast, update it monthly, and pair it with a budget versus actual so overhead does not creep while everyone is focused on the field.
Yes. We work in QuickBooks Online, QuickBooks Desktop, Xero, Sage, and NetSuite. QuickBooks Desktop still runs a lot of contractors well when the job costing is set up properly, and plenty of firms do not need to migrate. If a change makes sense, we say so and give you the reason. If it does not, we work in what you have.
For internal decision-making and for lenders, you want accrual with percentage of completion. That does not have to change how your CPA files. We keep the internal books on a basis that tells the truth about job performance, and your outside CPA handles any conversion at return time. Book a consultation and we will walk through what that looks like for your setup.
Payroll processing and payroll tax filings are part of the work, including crews with multiple pay rates and time split across jobs. That splitting is what makes burdened labor land on the right job in the first place. We run payroll through ADP, Paychex, Paycor, Gusto, or QuickBooks Payroll depending on what you already use.
Other work in this area that tends to come up in the same conversation.
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Read moreBook a consultation and we will look at where things stand today and what it would take to fix them.
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