Job Costing 101: Why You Need to Track Materials by Project

At the end of the year, you know how much you spent on cable. What you probably don't know is which jobs ate the most material, which were profitable, and which quietly bled money.

That's the job costing problem. Without tracking materials to specific projects, you're running blind. You can't tell a winning bid from a losing one until it's too late. And by then, you've already repeated the same mistakes on the next job.

Let's break down what job costing is, why it matters, and how to actually do it without drowning in paperwork.

What Is Job Costing?

Job costing means tracking all the costs associated with a specific project: labor, materials, equipment, subcontractors. When the job is done, you can compare actual costs to what you estimated and see if you made money or lost it.

For electrical contractors, materials are often 40-50% of project costs. Cable, wire, conduit, boxes, fixtures—it adds up fast. Yet most contractors have no idea how much material actually went to Job A versus Job B.

They know total material spend for the year. They know what they billed clients. But the connection between the two? It's fuzzy at best.

Why Most Contractors Don't Track Materials by Job

It's not that contractors don't care. They just face real obstacles:

• Materials come from stock. When you pull cable from the yard, there's no invoice tied to that job. It just disappears from inventory.
• Tracking feels like overhead. Who has time to log every piece of material to a job code? The crew is focused on getting work done.
• Reels move between jobs. A reel goes to Job A, then gets moved to Job B when A is finished. How do you split the cost?
• The accounting is messy. Even if you track materials, reconciling with QuickBooks or your accounting system is a headache.

These are valid problems. But the cost of not solving them is higher than you think.

What You're Missing Without Job Costing

You Don't Know Which Jobs Make Money

Some jobs are profitable. Some are money pits. Without job-level material tracking, you can't tell which is which until your accountant looks at the year-end numbers—and by then, it's too late to do anything about it.

Job	Bid Amount	Estimated Materials	Actual Materials	Result
Hospital Wing	$85,000	$32,000	$34,500	Over budget
Office Buildout	$42,000	$18,000	$15,200	Under budget
School Renovation	$120,000	$48,000	$61,000	Way over

That school renovation looked profitable on paper. In reality, it burned $13,000 more in materials than estimated. Without tracking, you'd never know why.

Your Bids Are Based on Guesswork

When you estimate materials for a new bid, what are you basing it on? Memory? Old spreadsheets? A gut feeling?

If you tracked materials on past jobs, you'd know exactly what a similar job actually used. Not what you thought it would use—what it actually consumed. That's the difference between a profitable bid and a losing one.

You Can't Spot Waste Patterns

Is one foreman consistently using more material than another? Are certain job types always going over budget on cable? Is there a particular client whose projects always eat more material than expected?

Without job-level tracking, you'll never see these patterns. You'll just wonder why margins are thin.

Change Orders Miss Material Costs

When the client changes scope mid-project, do you capture the additional material costs? Or do you just eat them because you can't document what got used?

Proper job costing means you can pull a report showing exactly what materials went to a project before and after the change order. That's documentation for billing—and ammunition for negotiation.

How to Start Tracking Materials by Job

You don't need enterprise software to do job costing. Here's a practical approach:

Step 1: Tie Every Material Movement to a Job

When cable leaves the yard, log which job it's going to. When materials come back, log what's remaining. The difference is what got used on that job.

This is the core discipline. No exceptions. Every reel, every box of connectors, every roll of tape—if it goes to a job, it gets logged.

Step 2: Use Actual Costs, Not List Prices

A 1,000-foot reel of 12/2 might have a list price of $400, but you paid $320 because of your supplier discount. Use the actual cost you paid, not the theoretical price. This is what hits your bottom line.

Step 3: Record Footage Used, Not Just Reels

Cable doesn't get used by the reel. You might pull 400 feet for Job A, then take the remaining 600 feet to Job B. Track footage, not just "reel checked out."

Step 4: Compare Estimated vs. Actual

At job closeout, pull the material costs and compare to your estimate. Did you go over or under? By how much? On which materials?

Do this for every job. Over time, you'll build a database of actual material consumption by job type, size, and complexity. That's gold for future bidding.

Step 5: Review Patterns Monthly

Once a month, look at the data:

• Which jobs are consistently over budget on materials?
• Are certain cable types getting used more than estimated?
• Which foremen run tight ships, and which burn through inventory?
• What's the average material variance across all jobs?

The patterns will tell you where to focus: better estimating, tighter field controls, or adjusting your markup.

What Good Job Costing Reveals

Once you have a few months of data, you'll start seeing things you never noticed:

• Job type profitability. Maybe residential remodels are your most profitable work, while commercial TI projects consistently underperform.
• Foreman performance. Some foremen are tighter with materials than others. Now you can see it in the numbers.
• Estimating accuracy. Are you consistently low on conduit estimates? High on wire? The data shows exactly where your bids need adjustment.
• Client profitability. That big GC who keeps giving you work—are those jobs actually profitable? Sometimes the answer is no.

This information changes how you bid, who you work for, and how you run jobs. It's not just tracking—it's intelligence.

Common Mistakes to Avoid

Tracking Direct Purchases but Not Stock

If you buy material specifically for a job, it's easy to code to that project. But what about material from your yard? That's where most contractors lose visibility. Stock pulls need tracking just as much as direct orders.

Not Closing Out Jobs

A job isn't really finished until you've done the material reconciliation. Did everything that went to that job come back or get used? Is there cable sitting on-site that should be in your yard? Close out the paperwork, not just the work.

Ignoring Small Jobs

"It's just a small service call, not worth tracking." But ten small jobs add up. And if you're not tracking them, you don't know if your hourly rate actually covers materials—or if you're subsidizing them.

Not Using the Data

The point of job costing isn't to create reports. It's to make better decisions. If you're collecting data but never reviewing it, you're wasting effort. Build the review into your monthly rhythm.

The Bottom Line

Material costs are too significant to track in aggregate. You need to know what went where, which jobs made money, and where your estimates are off.

Job costing isn't complicated, but it requires discipline. Every material movement tied to a job. Every job compared to its estimate. Every pattern examined and acted on.

The contractors who do this well bid more accurately, run tighter jobs, and protect their margins. The ones who don't are perpetually surprised when projects lose money—and never quite understand why.

Which one do you want to be?