Track Budget, Cost Codes, and Job Cost Reports

A. Finished-Project Specification

Deliverable: one operating residential job-cost control system, containing aligned cost codes, a locked original budget, current budget, commitment, actual-cost, pending-cost, forecast, and revenue fields, entered purchase orders, labor, material, equipment, and subcontractor costs, updated allowance and change status, investigated variance, and one issued job-cost report with narrative, reviewed with the appropriate parties and preserved as a period record.

B. Job-Cost Report Field Schedule

Field	Content	Source	Purpose
Original budget	Labor, material, equipment, subcontract, general conditions, allowances, contingency, overhead, and other approved categories	Book 24 estimate, contract value	Establishes the locked starting point for every later comparison
Current budget	Original budget plus approved transfers and change orders	Change log	Reflects the budget as formally revised by approval
Commitments	Purchase orders, subcontracts, rentals, and approved changes	Procurement register, subcontracts	Records obligated cost before invoices arrive
Actual cost	Labor, material invoices, equipment, subcontract invoices, fees, other costs	Time records, invoices	Records verified cost actually incurred
Pending cost	Unapproved changes, expected invoices, damaged material, rework, claims, known exposure	Change log, field reports	Prevents known exposure from being reported as zero cost
Forecast-to-complete / forecast-final-cost	Remaining cost to finish each cost code; total forecast cost at completion	Field review, productivity data	Projects the final cost outcome for each cost code
Revenue	Original contract, approved changes, allowances, alternates, billings, retainage, collections, remaining value	Contract, billing records	Tracks the revenue side alongside the cost side
Variance and narrative	Variance by cost code and cause; corrective action and management decision	Comparison of current budget and forecast	Explains why cost differs from budget and what will be done about it

C. Information and Document Takeoff

• Source records: the Book 24 estimate, executed contract value, approved WBS and cost codes, purchase orders, subcontracts, verified labor time records, material and equipment invoices, and subcontractor invoices, sufficient to populate every field in the schedule above without inventing missing figures.
• Comparison records: the change log and allowance log from Project 11, used in Steps 19–20 to update commitments and forecast balance for allowances and approved and pending change events.
• Authority record: written confirmation of commitment authority limits, obtained before Step 13, so that no purchase order or subcontract is entered against a cost code beyond the responsible person's approval limit.
• Period-history convention: a report-numbering and archive convention sufficient to distinguish the current job-cost report from every previously issued period record.

D. Acceptance Standards

Check	Standard
Cost codes	Aligned across estimate, WBS, accounting, procurement, labor, and changes; no orphan codes on either side
Original budget	Locked and unchanged; revisions tracked only through the current-budget field
Commitments and actuals	Every purchase order, subcontract, invoice, and labor entry recorded against the correct cost code
Pending cost	Every known unapproved or unbilled exposure recorded, not treated as zero cost
Forecast	Based on field-reviewed installed quantity and remaining scope, not budget minus actual alone
Variance	Identified by cause for every cost code with significant variance; investigated before reporting
Report and history	Reviewed with the appropriate parties, distributed under confidentiality rules, and preserved as a dated period record

E. Setup — Import, Align, and Lock the Budget

1. Import the approved Book 24 estimate and contract value into the project cost system. Use the approved figures without modification at this stage.
2. Align cost codes with the WBS, accounting, purchase orders, subcontracts, labor, equipment, changes, and billing. Confirm every code used by one system has a matching code in every other system.
3. Create original-budget lines for labor, material, equipment, subcontract, general conditions, allowances, contingency, overhead, and other approved categories. Populate each line from the estimate.
4. Lock the original budget and preserve revisions separately. Do not allow the original-budget field to be edited once locked.
5. Create current-budget fields for approved transfers and change orders. Keep this field distinct from the locked original budget.
6. Create commitment fields for purchase orders, subcontracts, rentals, and approved changes. Populate as commitments are issued, before invoices arrive.
7. Create actual-cost fields for labor, material invoices, equipment, subcontract invoices, fees, and other costs. Reserve these fields for verified cost only.
8. Create pending-cost fields for unapproved changes, expected invoices, damaged material, rework, claims, and known exposure. Do not leave this field blank when exposure is known.
9. Create forecast-to-complete and forecast-final-cost fields. Prepare these fields to be populated from field-reviewed data in Step 22.

F. Entry — Record Commitments and Actual Costs

10. Create revenue fields for original contract, approved changes, allowances, alternates, billings, retainage, collections, and remaining value. Keep revenue fields distinct from cost fields.
11. Establish the accounting cutoff, update frequency, responsible person, and review cycle. Record these on the cost-code register.
12. Enter purchase orders and subcontracts against the correct cost code. Verify the code before entry; do not enter to a convenient or general code.
13. Prevent commitments from exceeding authority without approval. Confirm the responsible person's authority limit before releasing a commitment above it.
14. Enter labor hours, wage, burden, crew, phase, and cost code from verified time records. Use only records confirmed by field supervision.
15. Compare labor production and percent complete with the Book 24 estimate basis. Identify labor cost codes running ahead of or behind the estimated production rate.
16. Enter material invoices with quantity, supplier, purchase order, delivery, tax, freight, credit, and cost code. Match each invoice to its purchase order before entry.
17. Enter equipment rental, owned-equipment, fuel, delivery, operator, and standby costs. Assign each to the cost code for the work the equipment supported.
18. Enter subcontractor invoices only after scope, progress, stored material, change orders, lien documents, and approval are reviewed. Do not enter an unreviewed subcontractor invoice as actual cost.

G. Reconcile, Forecast, and Investigate Variance

19. Update allowance commitments and forecast balance. Reflect the current selection, committed amount, and remaining balance from the allowance log.
20. Update approved and pending change events. Reflect current-budget and pending-cost effects from the change log.
21. Reconcile invoices received after the accounting cutoff through accrual or pending cost according to company policy. Do not omit a late invoice from the period it belongs to.
22. Estimate remaining cost based on installed quantity, remaining scope, productivity, commitments, procurement, and current conditions. Confirm the estimate with field supervision before finalizing.
23. Do not forecast remaining cost as budget minus actual without field review. Treat this shortcut as a failed forecast requiring correction.
24. Identify variance by quantity, unit price, productivity, waste, scope, damage, rework, schedule, freight, tax, and timing. Record the specific cause for each significant variance.
25. Investigate cost codes with high actual cost but low reported progress. Confirm whether the cause is productivity, waste, damage, rework, or a reporting error.
26. Investigate high progress with missing invoices or commitments. Confirm whether cost has simply not been entered yet or genuinely was not incurred.

H. Report, Review, and Preserve

27. Compare cost forecast with schedule progress and procurement status. Confirm the cost picture is consistent with the current schedule and procurement records.
28. Prepare a job-cost report showing budget, changes, current budget, commitments, actual, pending, forecast, variance, and percent complete. Populate the report from the fields established in Sections E and F.
29. Prepare a narrative for material variances, corrective action, and management decision. Write the narrative in plain language tied to the specific cost codes involved.
30. Review cash flow, billing, retainage, collections, supplier terms, and upcoming commitments. Confirm the revenue side supports the cost side.
31. Protect confidential payroll, vendor, owner, and financial information. Distribute the report only to the parties authorized under the project's confidentiality rules.
32. Review the report with project management, field supervision, accounting, procurement, and management. Confirm each reviewer's area of the report before distribution ends.
33. Assign corrective action for overruns, missing commitments, delayed billing, and forecast risk. Record one responsible party and one due date for each corrective action.
34. Preserve each issued report as a period record rather than overwriting history. Archive the report with its date and accounting cutoff intact.
35. Reconcile final job cost, contract value, allowances, changes, credits, retainage, and closeout costs before project closure. Complete this reconciliation as the job-cost system's final entry at Chapter 20 closeout.