By REMODELING Magazine Staff. Job cost reports can be tricky. To avoid being fooled into misidentifying the source of cost overruns, Jud Motsenbocker of JUD Construction in Muncie, Ind., makes the following recommendations:
Compare hours estimated to hours spent. Certain tasks can take longer when performed by less-skilled workers, but their lower pay rate keeps the overall cost code within budget. To find out if this is what happened, look for on-budget costs but hour counts that are out of whack.
Review how higher-paid workers spent their time. Don't assume all cost overruns are caused by misestimates or poor productivity. Often, part of a project costs more than projected because higher-paid workers did the work. Before making price adjustments, fix manpower allocation problems.
Look at all the details. Summary reports usually provide enough information, but sometimes they can be misleading. Reviewing overall job profitability won't uncover cost overruns in one phase that were balanced by savings in another. Unless you find out what went wrong, you might not be so lucky next time.
