Do You Know the Real Value of Your Projects

Project costing is a process that will enable businesses to budget income and costs associated to their projects. It can also help govern important decisions including timing of cash receipts, labour requirements and measure profitability.

Why is project costing important?

It can often be difficult to quantify exactly what a specific job will cost.

  • Do you really know the effectiveness of your labourers?
  • Do you have excess material at the end of the job and how much does this cost?
  • Do projects overrun?
    Are there additional unexpected costs?
  • Do you get cash from customers in a timely manner to pay for materials?
  • How do you allocate the cost of tools to each project?

Preparing a detailed ‘budget’ will enable you to allocate expected income and costs directly to a specific project. Once prepared the actual project can then be monitored closely, at regular intervals with a comparison to the original outlook. This is beneficial as it can identify areas of risk, which if captured early enough can be used to make decisions that could bring the project back on track!

project costing

What costs should be allocated to a project?

Businesses that run projects will usually quote upfront for a job but how accurate is the quote?

The main factors of a quote will be cost of materials and time but what about ‘other costs associated to your business’ do you allocate these when considering how to price jobs? Often overhead costs are forgotten as they are paid at different times and not directly attributable to a job, however this could be resulting in businesses losing profit unnecessarily as there maybe opportunity to improve margins which can offset some of those hidden costs.

What is the process for managing project costing?

Project costing can be quite in depth as there are numerous ways to develop and manage those budgets. Wilkinson Accounting Solutions specialise in analysing commercials and have some top tips on how to develop an effective project costing technique.

Conclusion

Want to learn more, and have support with project costing? At Wilkinson Accounting Solutions Ltd we work with businesses, large and small, so they can effectively manage their project costing. What we can bring to any organisation is much more than finance, we are true business partners providing strategic support and specialise in translating our expertise into terminology, that will help management define and measure their overall business objectives.

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