tag presents construction job costing and accounting for agc
DESCRIPTION
TAG | The Accounting Group | TAG provides outsourced accounting and software for the construction industry. As part of the Construction Financial Management Series, TAG hosted "Job Costing and Accounting" for the San Diego Chapter of the Association of General Contractors. visit www.teamtag.net to learn more about services for the construction industry.TRANSCRIPT
February 27, 2014
Presented by Rob Scherer
Job Costing and Accounting
Workshop #2
www.teamtag.net
TAG supports and strengthens your company’s accounting department and management with outsourced bookkeeping, controller, and CFO services.
Whether you are a CFO who could use a quality controller once a week, a controller who needs bookkeeping assistance, or an office manager looking for higher level finance and accounting oversight, TAG can fill the need.
From sales to implementation, training to consulting, TAG’s team of certified consultants work to improve your efficiency and reporting capabilities with the best accounting software for the building industry. TAG is a an Authorized Reseller with a team of Certified Consultants for:
• Sage 300 Construction and Real Estate (Timberline)
• Sage 100 Contractor (Master Builder)
• Sage Estimating
• Contractor V
Beyond the Numbers…
TAG provides valued financial and business resources & counsel for companies and individuals on the move.
January 30, 2014 - Understanding Your Construction Financial Statements
February 27, 2014 - Job Costing & Accounting
March 27, 2014 – Banking & Bonding Management
April 24, 2014 – Tracking your Field Production
May 29, 2014 – Best Practices in Construction Accounting Software
June 26, 2014 – Construction Financial Management Boot Camp
Purpose:
The primary purpose of accounting is to provide a
system for tracking the financial activities of a business
and to provide management with meaningful and
relevant information to make business decisions. The
secondary purpose is to provide financial information to
third parties regarding the financial position of the
business.
Accounting Cycle
The accounting cycle is usually twelve monthly
periods within a year. A Corporation can choose a
calendar year or a fiscal year, however an individual,
partnership, or S Corporation typically uses a
calendar year.
Keys to Accounting: There are a few keys to accounting that can help to provide an accurate and relevant accounting system
such as:
KISS (Keep it Simple Stupid!)
Cash Is King
Billings are Money
Accounts Payable Process
Payroll Processing
Reconcile and Review
KISS (Keep it Simple Stupid!): There is no need to overcomplicate the process. If you don’t understand how it’s working, you won’t understand what it’s telling you. Keeping this in mind may also keep the cost to produce the information much more manageable. An inexpensive system such as QuickBooks may accomplish the objective instead of a more powerful and expensive program.
Cash is King Accounting for the money received and the money spent will accomplish the major portion of the process. Reconciling the bank account activity to the accounting records on a monthly basis will help to ensure that all cash activity has been captured.
Billings are Money: Timely and accurate billing is the key step to creating cash. Billing should be done on a regular basis and the collection of those billings should be closely monitored.
Accounts Payable Process: Nobody likes to pay out money, however the worst part is paying bills you didn’t think you owed (like taxes). Payables that are not processed timely and accurately will result in: billings being processed late; planning and budgeting will be useless; and unwanted surprises that persist.
Payroll Processing:Determine how payroll time will be collected, whether manually, using a time card or electronically, using various mobile time collection technology.
For accurate job costing, payroll must be entered with job and cost code detail. With this information you will be able to run various labor production reports.
Change Orders:The proper use of change orders are important to job costing. Keeping you budgets up to date by entering changes to your scope of work (change orders) will help you analyze where you excel and/or where improvement is needed.
Reconcile and Review: Cash, investments, accounts receivable, accounts payable, credit card liabilities, and other significant balance sheet accounts should be reconciled to a third party statement on a monthly basis. The activity in these accounts and the overall financial statements should be reviewed on a monthly basis for reasonableness and used as a basis for planning and for making business decisions.
Users Of Financial Statements: Besides management, there are other people or
organizations that request and/or review the financial statement of the company. A few examples are as
follows:
• Bankers
• Surety Company
• Shareholders
• Tax Agencies
Purpose:
The purpose of job costing is to provide
accounting of contract performance and to
assist in managing the job, as well as to
provide management with relevant information
regarding contract activity in order to make
business decisions .
Contract Cycle:
Contract cycles can vary significantly from
contract to contract as well as from the type of
work performed. Shorter contract periods may
make the job costing process a little more
difficult, but no less important.
Keys to Job Costing: The “keys to accounting” previously discussed also
applies here, however, there are a few other issues to consider such as:
Identify Key Cost Components
Tracking Cost Components
Performance Measurements
Monitor Results
Make Adjustments
Identify Key Cost Components:Labor, materials, equipment, subcontractor costs are the typical components of job costs. Identify any other significant costs that relate to your contract performance. These would typically be the same costs you estimate in the bid process.
Tracking Cost Components: Determine a method to track the costs by job keeping in mind the keys to accounting discussed above. Consideration should be given to the accounting system in place and its ability to generate and/or track cost flows. Include bid and revised estimates within the job cost system.
Performance Measurements: When designing the system, consideration should be given to including performance criteria within the job cost system. Items such as pounds/yards, etc.; per man hours; material per square foot, etc. These performance measurements may provide you with additional information as to job performance outside the typical cost information.
Let’s review some common reports used to track Performance Measurements of the
core components of Job Cost.
Monitor Results: Review the results on the job to assist in evaluating performance, as well as assist in estimating future bids and making business decisions.
Make Adjustments: As the business and/or the jobs change, the job cost system may need to be modified to meet the new changes. If you’re monitoring the results on a regular basis, the adjustments needed should come to light
Accounting & Job Costing-Rule of Thumb Strategy:
1. Keep the accounting and job cost process simple.
2. The information produced should be relevant and understandable.
3. Review and use the information to make individuals accountable and to make business decision.
4. Accounting and job costing are not the answers but they can assist in getting you the answers.
January 30, 2014 - Understanding Your Construction Financial Statements
February 27, 2014 - Job Costing & Accounting
March 27, 2014 – Banking & Bonding Management
April 24, 2014 – Tracking your Field Production
May 29, 2014 – Best Practices in Construction Accounting Software
June 26, 2014 – Construction Financial Management Boot Camp