Ask a contractor if last year was profitable and most can answer. Ask which of last year’s jobs were profitable and far fewer can. That gap is what job costing closes — and in construction, the job-level number is the one that actually runs the business.
What job costing is
Job costing means every transaction is coded to a specific project (and ideally a phase within it), so each job carries its own revenue and its own four cost buckets:
- Labour — your crew’s hours on that job, at loaded cost (wages plus the employer’s share of payroll).
- Materials — supplier invoices tied to the job, not dumped into one “materials” account.
- Subcontractors — each sub’s invoices against the job (this is also what feeds your T5018).
- Equipment — rentals or an internal rate for owned equipment used on the job.
Now you can put actual cost against the estimate for each job, line by line, while there’s still time to act — before a job you thought had 15% margin quietly finishes at 2%.
Progress billing and work-in-progress
Construction revenue isn’t earned the day you invoice — it’s earned as the work gets done. Progress billing invoices the client as the job advances, and work-in-progress (WIP) tracking recognizes revenue and cost in step with completion. Together they stop two classic distortions: a month that looks amazing because you billed a deposit, and a month that looks terrible because costs landed before you billed. With WIP, each job’s margin shows up smoothly as it’s actually earned.
What good job costing gives you
- Bid better. Real cost history on past jobs makes your next estimate sharper — you stop guessing labour and subcontractor costs.
- Catch overruns early. A job trending over estimate shows up mid-project, not at year-end.
- Clean compliance. Subcontractor files, holdbacks and T5018s are a byproduct of coding each cost to a job, not a year-end scramble.
- Know your real overhead. Costs that aren’t job-specific become visible as true overhead, so you can price it in.
We set this up in QuickBooks with job/class tracking from day one — see contractor bookkeeping or the full construction guide. General information, not advice for your specific operation.
Frequently asked questions
What is job costing in construction?
Coding every cost — labour, materials, subcontractors, equipment — to a specific project and phase, so each job shows its own profit against the estimate, instead of being lumped into company totals.
What is the difference between progress billing and WIP?
Progress billing is invoicing the client as the job advances. Work-in-progress tracking recognizes revenue and cost in step with completion, so a job’s margin shows up as it’s earned rather than jumping around with invoice timing.
Do I need special software for job costing?
Not necessarily. QuickBooks Online handles job/class tracking well for most contractors; larger operations may add a dedicated construction tool. We set it up so each job reports cleanly.
Sources
- CRA – Business records you have to keep
- Revenu Québec – Registers and supporting documents
- CRA – T5018 slip, Statement of contract payments