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Tracking work to appropriate cost codes is an important part of any construction project — especially for contractors. Project managers, accountants, and estimators use cost code data to accurately assess job progress and plan future budgets. Establishing a standardized system for cost code tracking is essential to receiving high-quality data and gaining better insights that help contractors stay on time and on budget.
When workers complete time cards, they generally track their time worked to a specific cost code related to the task. These codes are determined in advance based on the needs of the business. Cost codes show contractors exactly where and how most of a job’s allocated time and budget are being spent. They help management teams keep current projects on track and set appropriate budgets for work in the future.
This kind of insight is essential in the construction industry. Not only does it cost code data inform project finance from an internal perspective, but it can also be shared with stakeholders and used as a means to measure a project’s success or improve processes. Showing clients a detailed breakdown of time (and costs) spent improves customer engagement and provides documented, organized proof of the complex work that’s being completed.
The Main Benefits of Cost Codes
Setting realistic budgets for construction work is almost impossible without the type of granular information an effective cost coding system provides. These are the main benefits of cost codes at a glance:
- Gaining better productivity insights
- More accurately measuring KPIs
- More accurately planning future project estimates
Contractors rely on cost code data to stay profitable. Without consistent, accurate data, planning finances is like a shot in the dark.
How To Optimize Cost Code Data
Construction contractors must establish an organized, standardized cost code system to ensure the data collected from the field is as accurate and impactful as possible. How a business structures its cost codes depends entirely on the type of insights needed to monitor success.
Determining Cost Code Structure
Balance is key to determining an appropriate cost code structure. Companies need to collect enough information without getting overly granular or complex.
For example, project managers may first want to designate every task possible with its own cost code for maximum visibility, but ease of reporting must be taken into account. A complicated cost code system that is difficult for field workers to use will result in inconsistent, less accurate data overall.
Project managers and other internal stakeholders may ask these questions:
- What information do I need to make better estimates?
- What data does the accounting team require?
- Can any part of the cost code process be streamlined?
- How can field contractors easily track time to cost codes on jobsite?
Gather input from different members of the organization who use cost code data and design a system that meets the needs of everyone involved.
Organized by Subproject
The ideal cost code structure is separated by subprojects. Within each subproject, costs can be further organized by labor, materials, equipment, and crews. The goal for each cost code is to identify which part of the project the tracked work relates to, and what kind of resources were used to complete it.
Typically, getting more granular than that will result in unnecessary complexity or confusion. However, it may be important for some concrete contractors to be very specific when it comes to tracking materials or the location of work completed. It’s up to the business how detailed cost codes need to be, and there should be enough flexibility within your system that it can continue to evolve.
The most important thing to remember when designing a cost code system is consistency. Setting expectations and providing the field team with a defined structure for cost code tracking will allow for better insights across all projects over time.
Using Mobile Data Capture
Modern technology makes collecting accurate cost code data easier, even when that data is highly detailed. Gone are the days of trying to remember how many linear feet of rebar you used or cubic yards you poured. Digital reporting software that allows contractors to collect information using a cell phone or tablet straight from the field makes the most of your cost code process in the following ways:
- Enhanced Accuracy and Ease Of Use: Pen and paper reporting is time-consuming and leaves room for error. A mobile data capture app with an intuitive interface saves crews time and allows them to capture more accurate data, faster. Apps that allow for digital reporting eliminate the need for manual data entry and keep field teams focused on job-related tasks, while providing professional, standardized daily documentation.
- Real-Time Insights: Using mobile data capture and sharing information between teams via cloud storage means that insights from the field can be viewed by the office in real-time. When monitoring project finances, these instant insights are incredibly convenient. Analyze cost code performance and adjust schedule and budget as needed to catch potential issues early before they develop into significant obstacles.
- Detailed, Accessible Documentation: Digital reporting also makes it easier to look back on a project that has been completed. When project managers need to refer to a past project to determine budgets or schedules for new work, they can easily access and search previous productivity data and reports. Plus, information is generally better organized and published in a clear, consistent format, which makes for easier review.
- Easier, Faster Payroll: In addition to project managers, the accounting team will also appreciate a move to digital data over paper reporting. With less manual review and manual data entry, payroll and other accounting processes can be completed more quickly and painlessly, leading to less disputes and less downtime.
Cost Codes: An Essential Part of Any Construction Project
Collecting accurate cost code data is necessary for construction contractors to reach project goals and stay within budget. Every business must determine specific cost tracking needs and establish a cost code structure that is detailed enough to provide high-quality insights without being too difficult or complex to use.
Using modern technology that streamlines mobile data capture can allow construction teams to collect better data and gain productivity insights in real-time. Improving documentation will allow project managers to more easily plan budgets and schedule for future opportunities.
There are two things that keep a concrete contractor up at night: productivity and profitability. With the right cost code technology, tools, and planning, you can set your team up for success.