Job Tracking

If you provide customised services, you should create a customer job sheet or equivalent to track revenue and costs to each job.

This can range from very simple – a piece of paper –  to complex computer systems but it’s important that it doesn’t become more complicated than it needs to be.
If we look at an example of an imaginary roofing company – each job is unique because it will replace the old, damaged roof with a new roof or repair the roof if possible.

A job sheet might record:

Sales value £8,500

Materials £3,300

Sub contract work £700 (perhaps this is setting up the scaffolding)

Giving a contribution of £4,500

Staff labour time £2,000 (with the labour being treated as a fixed cost because they are employed whether there is roofing work or not).

The Job Profit is £2,500 to pay general overheads and profit for the owner.

Although labour is treated as a fixed cost in this example… the costs of the time should still be booked against the job.

This way you learn which jobs are particularly profitable…and you want more of them.

You know which jobs are not so profitable…so you can increase your prices…and if you lose the job to a competitor, you don’t really mind.

Finally which jobs should have been profitable but weren’t…because something went wrong…in the estimating and pricing of the job…or in doing the work.

When you know there was a mistake…your focus shouldn’t be on punishing those involved…but learning for the future.

If their own labour was already being used, they would hire sub-contract roofers.

That would be a variable cost…incurred only because there is an extra sale…and those costs would be deducted before calculating contribution.

Return to P1M4 Four Ways To Increase Profit

If this is too detailed for your business, see Product Tracking.

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