Estimating with no real costs from past jobs
Code every job like your estimate and your own costs build up.
You bid from supplier quotes, a price book, and what you think the crew can do in a day. The jobs you finished last year hold your actual costs, but they're in QuickBooks under a few big accounts and no one can pull out unit costs. So each bid starts from scratch and starts from guesses. When the guesses are low you win the job and lose the profit.
Three moves, in order
What CFOS does about it
CFOS imports your estimate as the job budget by cost code, so the estimate and the job cost use the same codes. Job cost is updated every hour against that budget, with seven cost types and three levels of cost code. After a job closes, you compare what you estimated to what it cost, code by code. A won bid becomes a job with its contract value, so the bid pipeline and the job cost stay connected. Over a year of jobs, you'll have your own costs to bid from.
Who owns this: Owner.
At $4M, twenty finished jobs coded the same way beat any price book. You can start with the five most recent. Add more as jobs close.
We email you when CFOS for QuickBooks opens, plus a few updates before then. Your address stays with Run On CFOS. One click unsubscribes.
30 days free, a 90-day money-back guarantee, and cancel anytime. It opens January 2027. We email you the day it opens.
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
Estimating using historical job costs?
Code every job like your estimate and your own costs build up. You bid from supplier quotes, a price book, and what you think the crew can do in a day. The jobs you finished last year hold your actual costs, but they're in QuickBooks under a few big accounts and no one can pull out unit costs. So each bid starts from scratch and starts from guesses. When the guesses are low you win the job and lose the profit.
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: C.F.O.S. Construction Financial Operating System.
Is this normal for my trade?
Across the 48 trades that publish a figure, net profit at $1M to $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?
Pick your ten most common bid items and give each one a cost code that you use in both the estimate and the job cost.
How many jobs do I need before my own costs are useful?
Even five or six jobs of the same type will show you where your estimate was off. The numbers get more reliable as you add jobs, but you can start using them right away. Look at the biggest cost codes first.
My past jobs weren't coded to match my estimates. Is that data useless?
Not entirely. You can often sort the old costs into your estimate codes manually for a few of your best jobs. It's slow, so do the two or three most recent jobs of your main work type and code every new job correctly from now on.
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.