For decades, financial management has been essential to growing and scaling construction firms in Australia. Since contractors tackle multiple projects at once, having an efficient system to manage finances can give construction agencies a significant advantage over market competitors. This would allow business owners and managers to improve cash flow, which is crucial in finishing projects and keeping operations afloat.
Apart from the cash flow, another crucial toll in budget management is job costing, which refers to the overall cost needed for contractors to deliver or finish a project. This makes it easier for project managers to efficiently compare estimates from the actual expenses used in a project. Job costing is vital as the budget allocated for different tasks is usually categorized into three: overhead, labour, and materials.
The first stage of job costing is usually done by determining the scope of the job and the possible factors that might affect how the project will be done. After this, the managers will prepare the budget based on the abovementioned categories.
The labour budget is usually set aside for the worker’s salary and benefits. Meanwhile, the material costs are the funds paid to purchase raw materials that can be classified into direct and indirect expenses. Direct expenses are those products directly used to build a property, such as wood, steel, and concrete. On the other hand, indirect expenses are assigned to purchasing other things that would help during the construction, such as fasteners and safety equipment. The overhead budget is the money used for other things that might be needed for the project, such as taxes and insurance.
Although coming up with a budget might sound easy, most construction firms take much time to finish job costing. This is where investing in modern tools can come in handy for the contractors, allowing them to automate the process and save them time that can be used for other tasks. Having construction financial software will enable construction businesses to optimize job costing and have a convenient and easy-to-use tool to finish the job.
To learn more about how investing in construction management software can help optimize job costing, check this infographic by Bizprac. , the leading supplier of document management software in Australia.