Given the continuously changing nature of your construction projects, properly managing and tracking costs is vital to your project’s outcome. A core piece is to have the capacity to determine and compare how much specific tasks or item costs so you can accurately forecast and manage cash flow.
And this is where construction cost codes come into play. Construction companies should use cost codes to document, categorize, and analyze costs more effectively. But how do construction codes work, what benefits it entails, and what should you know to implement cost codes in your projects successfully?
Keep reading to find out.
What are Cost Codes in Construction?
Construction cost codes help companies separate costs into certain categories assigned to specific divisions. With these codes, it is easier to see how much specific tasks and jobs can cost you and how it compares to what was predicted or budgeted.
Cost codes are an effective and easy way to categorize and sort costs through the different phases of your project – from budgeting to documenting the job to monitoring and analyzing spending.
A few of the primary benefits of cost codes in your business can be summed up with the following:
- Clear Budget Management
- Real-time cost tracking
- Data standardization
- Accurate estimating for your future projects
- Determine Profitable Tasks vs. Weak Points
The Benefits of Having Cost Codes
While there are many other benefits of utilizing cost codes, most of them lie in five main advantages. In this section, we will give you more insights into these benefits:
1. Clear Budget Management
Using construction code codes improves overall efficiency in every single aspect of your project budget management. For instance, as you divide projects into defined activities and roles, assigning a code to each and calculating the specific line items is easy. And whenever the scope of your project changes, line items can easily be added or deleted to re-estimate the cost.
In addition, cost codes reveal important spending trends that allow your company to control labor costs and the use of materials. And by figuring out where these costs are generated, your company can stay on budget while ensuring that every cost is linked to its profit.
2. Real-time cost tracking
Construction cost codes allow you and your stakeholders to have a realistic overview of all expenses and keep everybody engaged in the construction project.
Real-time cost tracking gives your company the advantage of easy-to-read and detailed costing information, allowing for easier adjustments that can improve project efficiency even before spending gets completely out of hand.
3. Data standardization
Having a standard list of cost codes will help in simplifying data. You cannot count on everyone associated with a certain construction project to use the same terms for a cost. However, a cost code is helpful and unmistakable. There are also universal codes that you can use that allow you to standardize data and reduce human errors.
4. Accurate estimating for your future projects
Construction costs, especially for labor and materials, are dynamic, often leading to massive fluctuations in your project budget. However, with cost codes, it is easier to clearly see how much materials and tasks are costing.
The data collected using standardized cost codes make it easier for you to precisely and competitively bid on your future construction projects. Incorporate this process with construction management software extensions. In this platform, you can input a table of your cost codes, which you can access, save, and update via the cloud. Using this software, you can expect real-time data and more accurate estimation.
5. Determine Profitable Tasks vs. Weak Points
When working different jobs at multiple locations, your cost code lists will help you determine what portions of your construction project are the most profitable and which are not. The cost codes provide concrete data that continuously increases investment in some areas where your company is more productive.
On the contrary, when your project is taking way longer than you expect or perhaps incurring additional costs, using cost codes will make it easier for you to manage to overspend and actively brainstorm possible solutions.
How to Implement Cost Codes in Your Construction Project?
Let’s assume you now already have your cost codes. The next thing you have to do is to implement them on your projects. So how can you optimize your cost codes and integrate them into your construction projects for the best results? Easy. You simply need to follow the tips we shared below:
1. Adopt the right construction software solution
Since you are dealing with project costs, you need a solid construction management solution with customization and flexibility features that will help you track and structure your cost codes.
With Pro Crew Schedule – a fully-integrated construction scheduling software with amazing built-in features, you can seamlessly customize your budget structures, including important sections like cost codes, cost type, sequence, and more. This helps you create a more ordered system.
Above everything, the suite of features Pro Crew Schedule offers will give you full control over every aspect of your project, not just costs. You can manage and track your resources and people and organize your entire construction plan. Setting milestones is much easier using this sophisticated software, where you can break down a complicated construction schedule into more manageable bits.
Most importantly, this is the only software in the market that offers scheduling and inventory features. So, you get the best of everything when you invest in this software solution. Pro Crew Schedule is truly a great addition to your list of investments.
2. Define Objectives and Project Scope early
Changes are one of the main things that continuously happen in construction. Sometimes, these changes derail your construction schedule and project budget, especially if you do not forecast and respond to them earlier.
Let’s say design changes happen in your project. These changes in the design are one of the biggest factors in project overruns. So, it is crucial to determine objectives and project scope as early as possible to prevent any further change orders. Early alignment and constant communication across your teams and stakeholders are necessary to do this successfully.
Still, a cost management software solution will not be a huge help since it locks you into rigid workflows and processes that may not work for the ever-evolving nature of construction. What you need is software that offers a range of customizable project management solutions and serves as construction project management software add-ons like Pro Crew Schedule.
3. Do not go overboard with construction cost codes
While you can define hundreds of cost codes, you can use only some of them. As a matter of fact, you can opt to use only a few dozen cost codes and not all of them. For example, you may use a single code to reference all work done by your subcontractors rather than having separate codes for the construction labor itself, the materials used, etc.
And by sticking to only a specific set of cost codes for your projects, you can avoid the hassles of regularly combining expenses that should be sorted together.
4. Carefully consider who will reference the cost codes
When deciding how detailed your cost codes have to be, consider who will be in the right position to reference them. Know that different teams and stakeholders require various levels of detail. You must provide enough information for your team when it comes to referencing the data to make informed, smart decisions.
Make use of crew scheduling software to communicate all important information to your team. Only a sophisticated construction solution can help you connect with your crew and share necessary updates anytime and anywhere.
5. Do not stop with cost-tracking
Cost codes are necessary for cost tracking, and it does not end there. All the details you will be collecting for time, cost, and profitability will give you the advantage and help you determine areas where sustainable growth happens.
Cost codes provide a much clearer picture of where growth is possible, the actual rate at which growth will happen, and how this growth will be going to cost your company. Moreover, the data you will be getting will help you manage your cost and time, giving you more room to revolutionize productivity and efficiency.
Track Your Cost Codes Seamlessly with Pro Crew Schedule
Having a list of cost codes is tedious and difficult to manage. On top of that, you will deal with many moving parts in your projects. Hence, the reason why you have to streamline the process.
The quickest way to streamline your cost code tracking processes is to invest in Pro Crew Schedule – a top-tier construction time tracking software with fully-integrated features. This software solution has settings that give you control over who can access and update cost codes, which eliminates the risks of human errors and confusion.
In addition to tracking features, Pro Crew Schedule proves to be fully integrated and well-rounded software since it also has other amazing features:
- Crew Scheduling
- Inventory management
- Time tracking
- Construction project management
- Document management
- And more