Job Costing for Tradies: Close Out a Finished Job

The van has left, but one time entry sits on the wrong job and a supplier credit is still missing. Job costing for tradies starts by fixing those records, not by copying the estimate.

Treat it as a finished-job closeout. Match revenue and costs to the same scope.

Run job costing for tradies from actual records

The job costing explainer shows how to assign the cost of doing work to one job. Revenue alone does not tell you whether that job made money.

Use this formula:

Actual job cost = actual labour + actual materials + subcontractors and hired equipment + other direct expenses + allocated overhead

Every amount needs a record behind it. That might be an approved time entry, payroll record, supplier tax invoice, stock withdrawal, receipt or documented overhead allocation.

The estimate is the plan. It gives you something to compare against. It is not proof of the finished cost.

Use one closeout sheet for every job:

Keep the buckets consistent with your estimates. If labour and materials were bundled together in the estimate, the finished result will not tell you which allowance failed.

Lock the finished scope before using the numbers

Pull together the estimate, accepted quote, work order, approved variations and final invoice. Check that they carry the same customer, site and job reference.

Then write a missing-cost list. Include crew time not approved, supplier tax invoices not received, materials waiting for return, credits not posted, stock usage not entered and outside invoices still expected.

A completed site can still have an incomplete cost record. Mark the job as awaiting cost rather than silently leaving an item out.

Revenue and cost must cover the same work before you calculate job profitability. If the invoice includes a variation but the variation labour and materials are missing, separate it from the original work until both sides are known.

Make the scope match first. Do not let the invoice total drag incomplete work into the profit calculation.

Build actual labour from time and payroll records

Check each time entry against the tradie, date, job number and task. Move time entered against another work order. Ask about blank periods while the crew still remembers the ceiling, access and rework.

Use internal labour cost. Do not use the hourly rate charged to the customer. The customer rate is revenue.

Start with recorded gross wages for productive time on the job. Add the employment-cost components included by your documented method, such as superannuation, workers’ compensation premiums and payroll-related costs.

Leave cost must enter through one documented method only. Load it into the internal labour cost across productive hours or place it in the overhead pool, never both.

For a sole tradie without payroll records for owner time, agree on a documented internal labour-cost method with your bookkeeper or accountant. Apply that method to every job. Do not substitute the customer charge-out rate.

Record supervisor time directly when it belongs to one job. Put general supervision across several jobs in overhead under the documented method.

Watch rework. Record the time where it happened, even when the customer was not charged for it. Otherwise, the next quote will be built from a false labour result.

Reconcile materials and outside job costs

Start with purchases carrying the job number. Then check what actually stayed on the job.

Subtract returned materials and posted supplier credits. Remove items transferred to another site. Add fittings, cable or consumables taken from van or workshop stock using the business’s consistent recorded cost.

Stock still has a cost when no supplier tax invoice carries the finished job number. Cost tracking needs a stock withdrawal or transfer tied to the job.

Clear outside costs as well. That includes subcontractor tax invoices, equipment hired for this job, disposal charges and other expenses that can be traced directly to the work.

Do not close around a missing credit. If unused fittings went back but the credit has not appeared, leave the item open and review it again when the supplier record arrives.

Finish with a physical question: what was bought, used, returned, transferred or taken from stock for this job? Make the records match that answer.

Allocate overhead once, then check for duplicates

Direct costs happen because of one job. Shared overhead supports several jobs or the whole business.

A machine hired only for one site can be a direct cost. General vehicle costs, office costs or supervision across multiple jobs may sit in shared overhead under your documented method.

Define the overhead pool for a set accounting period. Include only shared costs that are not already sitting in direct costs or the internal labour calculation.

Choose one allocation driver. Productive labour hours or direct labour cost can work when that driver reflects how your jobs use overhead. Use the same driver from job to job.

Calculate the allocation rate:

Overhead allocation rate = overhead pool ÷ total driver units for the period

Apply it once to each job:

Job overhead = job driver units × overhead allocation rate

If the job closes mid-period, use a documented provisional rate and true it up after the period closes, or hold the result open.

Reconcile the overhead allocated across all jobs with the overhead pool for the same period. Investigate any difference. Do not bury it in one job.

Then look for double counting. Employment costs may already be included in your internal labour calculation. A vehicle may already sit in shared overhead. Supervision may already be in labour or overhead. Hired equipment may already be recorded as a direct expense.

If you cannot explain where a cost entered the job, trace it before approving the total.

Compare actual vs estimated cost by bucket

Calculate a variance for every bucket:

Cost variance = actual bucket cost − estimated bucket cost

A positive variance means the actual cost was higher than the allowance. A negative variance means it was lower. Review the buckets before judging the total.

Labour might be over because access was poor, a task was missed, rework occurred or time came from another job. Materials might be over because the list was short, waste increased, stock was not allowed for or a transfer was missed.

Name the cause. Write the change beside the bucket.

Do not change every future quote because one job went wrong. Find the cause. Decide whether it can repeat. Change only the affected labour allowance, material list, exclusion, site check or overhead treatment.

Close the Oak Street scope without inventing profit

Oak Street is the house electrical example. All figures are sample currency units, not Australian rates or a price list.

R. Chen’s job at 14 Oak Street covered a bathroom exhaust fan, 150mm and ducted through the roof, plus four LED downlights. Estimate E-1847 was 900–1,400. Quote Q-1847 was 1,105.

The ceiling was lined, and the quote excluded chasing. Extra cable and chasing were approved on site as a 160 variation. Invoice INV-1847 was 1,265.

The supplied job cost of 850 is measured against the original quote of 1,105:

• Original quote: 1,105
• Original-scope job cost: 850
• Profit: 1,105 − 850 = 255
• Margin: 255 ÷ 1,105 ≈ 23%
• Markup: 255 ÷ 850 = 30%

Markup is added to cost to build a price. Margin is profit as a share of the selling price. Use the profit margin calculator to check those two calculations with your own completed-job figures.

Do not subtract 850 from the 1,265 invoice. The costs of the 160 variation are not supplied. Its revenue is known, but its labour and material costs are not.

Keep the original quote and original-scope cost together. Add the variation only after both its revenue and costs are recorded.

Set the GST basis before calling the result final

Check whether revenue, estimated costs, supplier costs, stock values and overhead allocations are being compared on the same GST basis. Mixing GST-inclusive and GST-exclusive amounts distorts the variance and profit result.

The correct basis depends on whether the business is registered for GST and whether GST on each cost is recoverable. Confirm the treatment with your accountant or the Australian Taxation Office. Use that basis across the closeout.

Do not approve the result until every amount in the comparison follows the same treatment.

Carry the evidence into the next quote

A finished job is evidence about one scope, site and crew. It is not a rate card.

Use repeatable causes to correct the next estimate. Adjust the labour allowance when a recorded task consistently needs more time. Add a missing material. Keep a useful chasing or access exclusion. Repair an overhead method that omitted or duplicated a cost.

Once the cost assumptions are corrected, use the tradie guide to pricing a job with margin to build the next selling price.

Finished-job closeout gate

Run this gate before approving job costing for tradies or using the result in another quote:

• Finished scope matches the quote, variations and invoice.
• Crew time is approved against the correct job.
• Purchases, stock, returns and credits are reconciled.
• Outside invoices and direct expenses are complete.
• Overhead is allocated once on a consistent basis.
• Revenue and cost use matching scope and GST treatment.

Pick one recently completed job. Clear its open records, calculate each bucket variance and carry the first proven correction into the next similar quote.