Instead, we recommend providing corporate cards for every single contractor who may need to make purchases. Still more common is reimbursing employee expenses after the fact, but asking your contractors to float (potentially large) expenses comes with its own set of problems. Some business owners in the construction industry may hand off their business credit card as needed, or drive around making the necessary purchases themselves. How are your contractors paying for the necessary job site expenses? If you have one or two trusted project managers they might have a corporate card. Use an expense management solution or accounting software that provides receipt capture and automatic expense reports on the go. Being able to log your expense tracking with mobile expense reporting is critical-and just so much more efficient. There is no reason for your construction employees to be babysitting receipts and expense report paperwork across chaotic job sites.Īs a construction company owner you’re probably bouncing around multiple job sites, and chances are your best project managers are, too. Each of your contractors has a smartphone in their pocket. Going over budget with employee expenses or labor cost may need to happen occasionally, but should always go through you first (not after you’ve already blown the budget-and your profit margin). Set your budgets by each individual job site, with clear expectations. Some projects may have pre-ordered materials and strict guidelines about the job costs, which will mean highly controlled budgets. Instead of telling your project managers, site managers, or contractors a general budget for each project, or worse-giving them no budget at all-you should help everyone manage business expenses better by setting your budgets according to the job site and project in question.Ī larger project will likely have a bigger onsite budget. The construction industry requires management of multiple sites, and multiple budgets. A list of unapproved expense claims might also prove useful, preventing employees from asking for forgiveness instead of permission. You may consider including recommended price points or preferred vendors. Categorize the expenses in a way that makes sense for you and your employees, with clear definitions for each expense. These job site expenses can quickly become a money pit if you’re unable to define acceptable expenses and your method for processing them-especially if they’re indirect costs.Ī helpful approach is to outline each of the direct cost job site expenses you’ve incurred in the last six months. From replacements to additional materials, it’s likely that your contractors and employees will need to make frequent purchases to keep the wheels turning. Outline job costsĬonstruction site expenses are (usually) necessary to keep your project on track and on time. You can’t manage your construction employee expenses on each individual job site if you don’t first understand and budget for each job. Pay close attention to cash flow as you consider yearlong overhead and the projects that come and go. Each job should cover your overhead costs, all direct and indirect job costs, and then leave margin for profit. Your overhead should remain as low as possible, and then job costs can be more explicit and reflect actual need. Both cases will have incorrect calculations of revenue and profit.Īfter estimating your overhead costs for the year, you can break it down monthly and then use that as a baseline when you calculate job costing. Jobs using that equipment won’t show it as part of the operating expense, and jobs that didn’t use that equipment will incorrectly factor it in as part of the overhead. For example, if you add equipment rental to overhead costs instead of defining it as a specific job cost (which it should be), the equipment costs won’t be attributed to a specific job. Far too many construction company owners lump more general job costs into overhead, such as project managers, which leads to underestimating the indirect cost of each job and miscalculating the margin on a particular construction project.
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