Implement Cost Accounting in Construction – File Structure
Minimum Bottom Line Profit Should Average 9.4%!
For Trades & Subcontractors, at Least 11%
After Income Taxes Are Paid!
Taking the small construction company to the next level of financial success, requires implementation of cost accounting. This article is one in a series designed to illustrate how you implement cost accounting in a small construction business. The first step in this process is design a file structure. This includes creating a project numbering format, identifying classes of construction, and finally developing a phase breakout of your project work. The next article in this series will illustrate how to create a documentation flow system, and finally sorting the documents to the correct files. Future articles will cover setting up your accounting software (QuickBooks & Sage 50) files and generating and interpreting the financial reports.
Cost accounting is a measurement tool in accounting. By grouping costs and assigning them to a particular project, a reviewer of financial results can pinpoint discrepancies between the estimated cost and the actual cost. As an example,