Manage contracts, budgets & projects with ease

Most contractors compare budget to actual cost. That comparison is always late, because a purchase order issued in March may not be invoiced until June, and the overrun exists from the day the order was placed.

When purchase orders and subcontracts are raised against the project, the committed figure is live. The site engineer who orders extra steel has changed the cost position of the job that afternoon, not in the following quarter's report.

The other half is that the comparison has to be per cost head rather than per project. A job can be exactly on budget in total while concrete runs forty percent over and preliminaries run under. Only one of those two facts helps you price the next tender.

Unbilled variations are the most common way a contractor loses money without anyone making a bad decision. The client's engineer asks for something, the site does it because stopping is worse, and the paperwork follows whenever there is time.

Six months later the claim is disputed because the instruction was verbal, the cost is buried in the general materials figure, and the person who agreed it has moved to another project. There is nothing to argue with.

Holding the variation as its own line against the job separates two questions that usually get mixed up. What did this cost us, and what have we been paid for it. Both are answerable at any point instead of at final account.

Progress billing is also where retention quietly builds up. A percentage is held on every certificate and released at handover or after the defects period, and the total sitting with clients across several jobs is often larger than the contractor realises.

The same applies in the other direction with subcontractors. Amounts held back from their payments are a liability with a release date, and forgetting one is either an argument or a payment made twice.

Keeping those balances against the project and the account they belong to turns them into something you can look at. What is retained, by whom, on which job, and when it should be released.

Contractors lose material in ordinary ways. Over-ordering to avoid a stoppage, a delivery signed for by someone who left the company, surplus moved between two sites in a pickup truck with no paperwork, and a genuine amount of waste that is never separated from the rest.

The value of site stock locations is not that theft stops. It is that the difference between what was bought and what was consumed becomes a number, and a number can be investigated. Sites that consistently show a wide gap get attention.

It also protects the cost report. Material bought for one job and used on another distorts both, and that distortion is what makes historical costs useless for pricing the next tender.

Subcontracted packages are frequently the largest cost on a contract and the least controlled. The award is agreed in a meeting, the certificates are handled by whoever is on site, and the accumulated total is checked when someone senior finally asks.

With the commitment recorded, the arithmetic runs continuously. Awarded value, certified to date, invoiced to date, retained, paid. A package that has been ninety percent certified at sixty percent completion is a conversation you want to have that week.

Back charges work the same way. Materials you supplied, plant you provided, damage you repaired: if those are recorded against the subcontractor rather than absorbed into site costs, they can be deducted when it matters.

This is the honest caveat that most contracting implementations run into. If everything on site is booked to a single line called materials, the reports will confirm what you already know and tell you nothing you can act on. If the breakdown is too detailed, nobody on site codes it correctly and the data is worse than useless.

The workable answer is usually a breakdown that matches how you tender. If your bills are structured by trade, your costs should be too, because that is the only way last year's actual cost can inform next year's price.

Wizard Cloud ERP runs fourteen modules on one database, so procurement, stock, payroll and the ledger all post to the same project record. Contractors typically start with project costing and procurement, then add site stock once the coding structure has settled in practice rather than only on paper.