Job Cost Setup for General Contracting

Locate the fully executed contract, including any addenda or clarifications. Make sure you are using the latest scope documents, not an old proposal or draft version. If there are multiple versions, confirm with the project manager which is final.

Check the contract and client information to confirm the legal name of the customer and any specific billing entity or division that must be used. Note mailing address, email addresses for invoices, and any required references such as purchase order numbers.

Determine whether the job is lump sum, unit price, time and materials, cost plus, or a mix. Note how often the client expects invoices (monthly, milestone-based) and any special billing instructions written in the contract.

Identify the contractual retention percentage, payment terms (for example, net 30 days), tax requirements, and any special conditions such as early pay discounts or penalties. Write these down clearly so they can be entered accurately.

Ask leadership or operations who will be the primary project manager and which executive, if any, is the internal sponsor or job owner. You will use these names in the job setup records and approval workflows.

Start a simple checklist listing all required data and confirm each item as you gather it. Keep this checklist with the job file so anyone can see what has been confirmed and what is still pending.

Follow your company’s job numbering convention to assign the next available job number. If job numbers are centrally assigned, submit a request to the person responsible and record the number when it is issued.

In the accounting software, create a new job record using the assigned job number. Enter the job name, client name, project location, project manager, contract type, and start and expected completion dates based on contract documents.

Link the job to the correct customer record or create a new customer if needed. Enter key contacts such as billing contact, project contact, and email or mailing addresses for invoices and statements.

Enter the original contract value, retention percentage, and payment terms as specified in the contract. If the contract is not yet fully executed, mark the value as “pending” or “provisional” according to company rules.

If your company uses a separate project management or scheduling system, create a matching project record there using the same job number and name. Sync key fields such as client, location, and project manager.

Review the new job record against your job setup checklist and the contract summary. Correct any spelling errors, wrong dates, or incorrect client links before moving on to cost code and budget setup.

Open the company standard list of cost codes or cost categories for general contracting projects. Note which phases (such as pre-construction, sitework, structure, interiors) and cost types (labor, materials, subcontract, equipment, other) are typically used.

Look at the estimate and schedule to see which phases and major scopes exist for this job. Determine whether any special phases are needed (for example, design assist, early demolition, tenant coordination) that are not in the standard list.

Using the standard list, choose the cost codes that apply to this job and note any that should be omitted. For project-specific scopes that do not fit existing codes, work with accounting or estimating to create new codes if your policy allows.

Group cost codes by phase or building system (for example, sitework, foundations, structure, envelope, interiors, general conditions) so reports are easy to read. Confirm that the groupings match how the project will be managed in the field.

In the job setup area, add the selected cost codes to the new job, assigning them to the correct phase or category. Double-check that codes are active and that each has the right cost type settings.

Export or print a list of all cost codes assigned to the job. Save this list in the job file and share it with the project manager and key team members so they know which codes to use.

Request the final, approved estimate from estimating or the project manager. Confirm that it reflects the awarded scope and any last-minute changes agreed with the client.

Review the estimate line items and determine which cost code each item should roll into. For each item, note the corresponding job cost code and whether the value is labor, materials, subcontract, equipment, or other.

If your accounting system supports importing budgets, prepare a spreadsheet in the required format with job number, cost code, cost type, and budget amounts. If not, use a worksheet to guide manual entry.

Load the budget into the job, either by importing the prepared file or by manually typing totals into each cost code and cost type. Double-check that totals match the estimate.

Compare the sum of all cost budgets to the estimate total and verify that fee or markup is handled according to company standards. Confirm that the total contract value in the job record matches the contract, not the cost budget.

If your system allows, mark the initial budget as the baseline so future changes can be tracked as budget revisions or change orders. Save a copy of the budget export in the job file for reference.

Review the executed contract to confirm the base contract value and any accepted alternates. Note which amounts are included in the initial contract sum and which may be added later by change order.

In the job billing settings, choose the correct billing type (lump sum, unit price, time and materials, or cost plus) based on the contract. Ensure this selection matches how invoices will actually be prepared.

If the contract requires a schedule of values, work with the project manager to break down the contract value into logical line items. Either enter these manually into the billing system or import a prepared schedule from a spreadsheet.

Link each schedule of values line item to the relevant phase or group of cost codes, if your system supports this. This helps align progress billing with actual cost performance.

In the billing configuration, enter the retention percentage, tax rules, and any special client requirements such as separate tax lines or alternate payees. Check that calculations display correctly on a sample draft invoice.

Generate a test or pro-forma invoice (without sending to the client) to confirm that schedule of values lines, retention, and tax are all calculating and displaying as expected.

Confirm how your company handles labor costing (actual rates vs. standard rates) and what burden factors apply (payroll taxes, benefits, insurance). Note whether these are set at a company level or can vary by job.

Ask the project manager which types of employees will charge time to this job (for example, field laborers, foremen, superintendents, project engineers). Match these to the labor rate categories in your system.

If the job uses special labor rates (for prevailing wage, union agreements, or contract requirements), set up job-specific labor rate tables in the accounting system according to company guidelines.

Verify that the correct burden multipliers and overhead allocation methods are applied to this job in the system settings. Make adjustments if the job should be treated differently due to contract or company policy.

Enter a small test time entry (in a test environment if possible) for a typical labor category against a cost code. Run a cost report to confirm that the extended labor cost and burden appear as expected.

Write a short note or summary describing how labor, burden, and overhead will be handled for this job. Save this in the job file and share with the project manager so they understand how costs will appear.

Confirm the retention percentage, any tiered retention rules, and whether tax is included in the contract value or added on top. Note any client-specific rules such as tax exemptions or separate taxation by line item.

Identify the tax jurisdiction where the job is located (city, county, state, province) and confirm applicable sales or value-added taxes for construction services and materials. Coordinate with tax or accounting specialists if needed.

In the job setup screen, enter the default retention rate, tax codes, and any special tax handling rules. If the system allows, set separate retention rules for subcontractors versus owner billing if they differ.

If the project requires certified payroll reporting, minority participation reports, or other special reporting, turn on the appropriate flags or fields in the job profile. Note any additional data that must be captured for these reports.

Run a test billing and a test vendor payment (in a test environment if possible) to see that retention and tax are calculated and stored correctly. Verify that compliance flags appear on the correct forms.

Write a brief summary of tax, retention, and reporting rules for this job and place it in the job file. Share this information with the project manager and accounts payable so they know what to expect.

In the job record, set the division, region, market type, and profit center fields according to company rules. These fields drive how the job appears in portfolio and management reports.

Identify which job cost reports the project manager and leadership will use regularly, such as cost-to-date vs. budget, committed cost reports, and margin reports. Confirm that the job will appear correctly on these reports.

Set the WIP method for the job (for example, cost-to-cost percentage complete or units complete) based on company policy and contract type. Ensure required fields such as estimated cost at completion and forecast final cost are available in the job settings.

If the job involves multiple currencies or requires specific report formats for the client, adjust settings accordingly. Coordinate with finance leadership if the job needs special WIP or revenue recognition treatment.

After entering basic data and a few test transactions, run job cost and WIP reports to confirm the job appears in the right sections with correct grouping and totals. Fix any grouping or display issues now rather than mid-project.

Create a short list describing which reports will be used for monthly reviews, who receives them, and where they are stored. Share this with the project manager and finance team.

Once initial setup is complete, schedule a short meeting with the project manager (and project engineer or superintendent if needed) to walk through the job setup. Share the agenda in advance so they know what you will cover.

During the meeting, review the job number, client details, contract value, billing type, schedule of values, cost code list, and budget summary. Highlight any assumptions you made during setup.

Walk through the cost code list and cost groupings with the project manager, asking whether it matches how they plan to track and manage the job. Note any codes that need to be added, removed, or renamed.

Review the billing setup and schedule of values with the project manager to ensure it matches what they plan to submit to the client. Confirm retention percentage and any milestone billing requirements.

Write down any changes requested during the review, then update the accounting and project management systems accordingly. Re-run any affected reports or test invoices to confirm changes worked.

Ask the project manager to confirm (by email or a simple sign-off form) that the job cost setup is acceptable. Save this confirmation in the job file as a reference for how and why the job was configured.

In the accounting system, restrict who can add or edit cost codes and budgets for this job. Ensure only designated finance or admin staff can make structural changes once setup is complete.

Create a one- or two-page document listing cost codes, their descriptions, and examples of what should be coded to each. Include notes on how to code time, materials, equipment, and subcontracts.

Share the coding guide with project management, field supervisors, foremen, purchasing, and accounts payable. Use both email and a printed copy in the project binder or trailer.

Hold a brief meeting or call with key users to explain how costs should be coded. Walk through a few common examples, such as labor for concrete work or an equipment rental, and show which codes to use.

Where possible, configure default cost codes in timekeeping and purchase order systems to reduce coding errors. For example, pre-fill common codes for specific crews or work types but allow changes when needed.

During the first few weeks, review posted costs to see if they are landing in the expected codes. If patterns of miscoding appear, follow up with targeted coaching and, if needed, update the coding guide.