Projects always come in under budget if you don’t post any costs to them. Projects always come in under budget if you don’t post all job related costs to that job. Don’t teach the computer to lie to you. Be honest with your entries and if a cost is job related post it to that job.
If the entry is going to push the actual cost over the estimated cost, make the entry! Don’t run and adjust the budget either. You need to know. You can’t fix a problem if you don’t know you have a problem.
Example: A construction company needed 10 loads of Stone delivered to a Job Site. They were using their truck to pick the stone, but only the Invoice for the Stone was getting charged to the cost of the Job. What about the use of their Truck? What about the Driver? What about the wear and tear on the truck?
The typical reason the cost of the truck does not get charged to the job is that it is hard to do. Who is responsible to make the entry and verify it gets posted to the Job Ledger? Same for the truck driver. He doesn’t want to take his time to fill out a Time Allocation Ticket to 8 Jobs each day. So the true cost of the job is light, and revenue opportunities are left on the table.
Solution: Build a “culture” in your business that tracks the details. Empower all employees to post their time and anything else they feel is appropriate to the cost of the job. If Job Profitability starts to fall apart, you are getting a truer picture of the job. Future jobs can be priced more appropriately based on better history.