Saturday, March 21, 2009

Getting to 100% Complete on Jobs

Following is a repost of an earlier blog post, I have many contractors ask about this process:

Most software written for construction will automatically calculate a percentage complete on a job. This percentage is a percentage of actual costs to the job budget. If you haven't entered a budget, most software will calculate the percentage as 100% because it will assume your budget should be what your costs are. The way to avoid this problem of course is to be sure you enter a budget for every job.

Another challenge in construction is to get the calculation to 100% complete when the job truly is complete. It is rare that a jobs cost is equal to its budget. There will most always be a slight variance. I recommend the following when a job is complete.

  1. Set up a cost code or tracking code called "over/under budget".
  2. Review the job (see previous blog) to be sure it is complete.
  3. Enter an internal change order (which only posts to budget, not to contract amount) for the amount of the difference so that you force the budget to equal the final costs.

Be sure to record the amount in #3 to the code called "over/under budget", this preserves your original budget figures and also allows you to see your "over/under budget" amount by job at any time which would be a great report to view by Project Manager, Estimator or Crew Leader over a specific length of time.

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