Job cost tracking assigns every dollar spent to a specific project. The lumber you bought goes to the Henderson addition. The labor hours worked Friday get coded to the Martinez deck. The electrician’s invoice gets tagged to the Baker remodel. Instead of just knowing you spent $45,000 on materials this month, you know exactly which jobs consumed those materials and how much each project cost.

This matters because it’s the only way to know if individual jobs are profitable. Your business might show a profit for the month, but that doesn’t tell you whether the commercial tenant improvement made money while the residential bathroom remodel lost it. Job cost tracking separates winners from losers so you know which types of work to pursue and which to avoid or reprice.

The tracking works by comparing actual costs to estimates. You bid a job estimating $8,200 in materials, $12,500 in labor, and $4,800 for subs. Job cost tracking shows you actually spent $9,100 in materials, $14,200 in labor, and $4,800 for subs. Now you know materials ran over by $900 and labor by $1,700. That information makes your next estimate more accurate.

Without job-level detail, you’re bidding based on hope. You remember the last kitchen remodel “went well” but don’t have data showing it cost $18,000 when you estimated $16,500. Bid the next one at similar rates and you’re underpricing by 10% without realizing it.

Job cost tracking also shows patterns across similar projects. Your residential remodels consistently run 15% over on labor. Commercial work comes in under budget on materials but over on subs. Knowing these patterns lets you adjust estimates to reflect reality instead of optimism.

The data feeds better business decisions. You can see which customers are profitable after accounting for change orders and callbacks. Which project sizes have the best margins. Which types of work generate consistent profit versus which are break-even at best. Stop taking jobs that feel good but lose money once all costs are properly allocated.

Most construction companies don’t track job costs because their accounting isn’t set up for it. Generic bookkeeping categorizes expenses by type - materials, labor, subs - but doesn’t assign them to projects. You end up with monthly totals that tell you nothing about individual job profitability.

Setting up job cost tracking requires accounting software configured correctly and discipline to code every transaction to the right job as it happens. Wait until month-end to allocate costs and you’ll forget which materials went where or which hours belong to which project. The tracking needs to happen in real time or it doesn’t work.

Job costing services handle the setup and ongoing tracking so you get reports showing profitability by project without spending your time on data entry. The reports only work if someone who understands construction is categorizing and allocating expenses correctly from the start.