The estimate and the actual never match
You can compare the estimate to the job cost report, but the two use different words, so the comparison means nothing.
Estimating groups cost the way the bid is built, and accounting groups it the way the ledger is structured. When those two were never aligned with each other, variance is noise. You can't tell a bad bid from a bad build, so every review turns into an argument about whether the numbers are even right.
Three moves, in order
Step 04: Estimating system
The estimate maps one to one onto the job cost codes, so variance means something the day it appears.
Other problems step 04 solves
Other things that go wrong
What owners ask
Estimate vs actual construction job cost?
You can compare the estimate to the job cost report, but the two use different words, so the comparison means nothing. Estimating groups cost the way the bid is built, and accounting groups it the way the ledger is structured. When those two were never aligned with each other, variance is noise. You can't tell a bad bid from a bad build, so every review turns into an argument about whether the numbers are even right.
Which part of the system fixes this?
The step is number 04, estimating system. The estimate maps one to one onto the job cost codes, so variance means something the day it appears. It's drawn from chapter 4 of CONTROL: The Construction Financial Operating System.
Is this normal for my trade?
Across the 48 trades that publish a figure, net profit at $1M–$5M averages 7% before taxes. If you're well under that and this page describes your month, the two are usually the same story. The published average tells you where the pack is, and your own job costing tells you where you are, which is the number that pays payroll.
Where do I start?
Map every estimating line to a cost code, one to one, with nothing left over.
Can I fix this without touching anything else?
You can try, and it doesn't hold. Step 04 depends on step 01, job cost structure and step 03, overhead calculation. Install it ahead of those and it produces numbers the field won't trust, which is worse than the problem you started with.
Wrote CONTROL, the 8 step system behind these figures. More about the author.