Issue link: https://construction.trimble.com/en/resources/i/1520103
Why Focus on Cost Codes? Cost codes give construction companies a tool for organizing activities and items into logical categories. Applying and assigning cost codes consistently through the estimating, budgeting, scheduling and execution phases of projects allows them to track and analyze the financial performance of those activities and items. This data is extremely valuable in adjusting estimates and operations to improve profitability on an ongoing basis. There is no single best solution for designing a cost code structure. There are, however, proven strategies for developing a system to match the unique requirements of each individual company, balancing practical usability in the field and the office with a level of detail that will provide meaningful insight. Identifying the Goals Many contractors rush into a highly detailed cost code system. The belief is that, any activity or item that can be coded and tracked should be. A better approach is to begin by assessing what the company wants to get out of the coding system. Asking questions like 'What information do we already know about operations? ' and 'What kind of additional data could give us valuable insight into running operations more profitably? ' can shape a cost code structure with solid business justifications rather than one built to track anything and everything. For most companies, the answers to these questions will center around getting a better picture of actual production rates, bidding more accurately, analyzing equipment costs and finding out precisely which activities are making or losing money. Cost codes create a common language to unify estimating, operational and accounting workflows. SYNCH WITH ACCOUNTING How a new cost code structure will fit in with existing accounting systems and practices or the requirements of a new accounting system is an important consideration in the planning stage. CREATE A COMMON LANGUAGE 3 ESTIMATING ACCOUNTING OPERATIONS