Back Costing Made Simple

Why back costing is painful

We've been doing a bit of back costing lately… on our own home renovations!

One of the first things we ask builders we talk to is ‘do you back cost?’ and usually the answer is either oh yeah sometimes….. or no I don’t have time.

Now we don’t know how you guys do your back costing…. But there is NOTHING hard about it, and not really anything time consuming about it either.

If you diligently add the invoices you pay including the labour into a spreadsheet each time you pay your bills, then that is your back cost.

So as we go through the process myself…. We reckon that there might be a bit more to it.

And we do actually get that….. going through a process that might show you have lost a boatload of money on a job? Terrifying!

So, we think that you sweep it under the rug, cross your fingers and hope for the best. If you don’t know you went over on your labour allowance, it doesn’t count, right?

There’s money in the account…. But sometimes you have to push out paying your invoices.

Christmas is coming which means downtime and no money coming in, will you have to rely on your credit cards to see you through the holidays?

If anything here makes you feel squirmy… then we hate to say it but that is a reason to back cost, even if the reality hurts.

So, rip off the band-aid and get stuck into it…

Back costing isn’t the nightmare one might think

The easiest way to back cost…… (if you are a part of our membership portal then you will already have access to a template of what I used to use when I was tendering and running jobs back in the day), it’s just a good old spreadsheet.

1. Every job you do, right from the moment you have a set of plans wander in that your price needs to be referenced somehow.

2. Ask your subs to reference it on their invoices, ask your guys to reference it on their time sheets.

3. Make that job number the number one consistent thing that every single person is aware of. Trust us, it will make things easier!!!!

4. Make a spreadsheet. Across the top, you will list out a bunch of things such as the all-important job number, the date, the trade, the $$, a notes field, the hours, the person etc, etc.

5. EVERY SINGLE TIME any info arrives for a job… enter it in.

6. Enter in the total value of the initial quote.

7. Enter in any agreed variations.

8. Enter in every time sheet, invoice, etc.

9. Break things down trade by trade.

10. Then use filters (if you don’t know what they are, look it up on youtube – your life will change!).

Filtering allows you to pick out data….. and it means you can pick any job number at any time and see an entire snapshot on how much has been spent versus how much was quoted.