5 Job Costing Mistakes That Kill Contractor Margins

You are Growing Revenue But Bleeding Cash on Jobs

Most contractors we work with are booking more jobs than ever. Revenue is up. The crew is busy. But when they sit down at the end of the month, the bank account tells a different story. The problem almost always traces back to job costing — or the lack of it.

Here are five mistakes we see over and over, and what to do about them.

1. Not Tracking Labor by Job

This is the big one. If your crew logs 40 hours but you cannot tell how many of those hours went to which job, you are flying blind. You might be quoting 20 hours for a job that actually takes 35. Multiply that across a dozen jobs a month and the margin erosion is massive.

• Use time tracking software that tags hours to specific jobs
• Review labor-to-revenue ratios weekly, not monthly
• Compare estimated vs. actual hours on every completed job

2. Ignoring Material Waste and Overages

Quoting materials at supplier list price and then eating the 10-15% overrun on every job is a silent killer. Contractors often treat material waste as just part of the business when it should be tracked, measured, and priced into bids.

3. Lumping Overhead Into One Bucket

Rent, insurance, truck payments, tool replacement — when it is all one line item, you cannot see which jobs are actually profitable after overhead allocation. A 0,000 job looks great until you realize it consumed 30% of your fleet for a month.

4. Quoting From Gut Feel Instead of Data

We get it — you have been doing this for 20 years and you know what a job costs. But markets shift. Material prices change. Labor rates climb. The contractors who consistently maintain healthy margins are the ones who quote from actual historical job cost data, not memory.

The best contractors we work with review their job cost reports before they send a single proposal. It takes ten minutes and it is the difference between a 25% margin and a 12% margin.

5. Waiting Until Year-End to Look at the Numbers

Job costing is only useful if you are looking at it in real time. If you wait until your accountant pulls the annual numbers, you have already spent 12 months repeating the same mistakes. Monthly job cost reviews — even informal ones — catch problems while there is still time to fix them.

The Fix Is Simpler Than You Think

You do not need a $50,000 ERP system. Most contractors can get 80% of the way there with the tools they already have — QuickBooks, a time tracking app, and a simple spreadsheet that compares estimated vs. actual costs per job. The hard part is not the tools. It is building the habit of looking at the numbers before they become problems.