Questions and answers on the subject of post-calculation in the skilled trades:
Why is post-calculation important for Tradesmen and women?
With the help of the post-calculation you can check whether the actual costs incurred correspond to your cost estimate. In this way, you systematically determine where you can offset more or whether you have made a profit or loss.
How do I create a post-calculation in the trade?
In the post calculation, you compare the actual costs incurred (ACTUAL costs) with the costs planned in advance (TARGET costs) and calculate the difference. With the Excel template available for download here, you can easily create a post-calculation:
Post-calculation is very important for trade businesses. It allows you to see what additional charges you have to make, which Jobs you are processing profitably and how economically you are running your business. However, in Job to prepare the final costing correctly, your mobile employees must record the work hours spent and the material costs incurred precisely and continuously. If you are missing data or information is lost in the paper chaos, you will quickly arrive at incorrect results and consequently make the wrong decisions.
The final costing is a control calculation that relates to individual projects or Jobs. It is based on the actual costs and actual times, i.e. on the costs that were actually incurred for a project. As a rule, the final costing refers to a preliminary costing or cost estimate prepared in advance. It compares the planned costs with the actual costs incurred.
Post-calculation is of existential importance, especially for companies with make-to-Job and contract manufacturing, including trade businesses. Particularly in the trades and on the construction site, the actual ACTUAL costs of the Job often differ from the calculated TARGET costs. For example, random weather events, unforeseeable construction conditions or changing construction site, delivery and performance conditions can influence costs. In practice, you formulate an additional clause for any additional expenses incurred in your quotation. In this way, you protect yourself against circumstances that cannot be calculated; increasing costs due to material supply bottlenecks but also, for example, pipelines that run differently than marked.
Importance of post calculation in the craft sector
The final costing is a TARGET-ACTUAL comparison and the basis for many important findings and decisions in connection with your job costing. It can be used to determine whether you have met or exceeded your budget. The goal is:
- Charge for additional expenses, such as overtime on Jobs
- To review which items contributed to the profit,
- Avoid estimation errors,
- Review your calculation for accuracy and cost effectiveness,
- sources of loss to be found in the area of wages and materials,
- To calculate the actual profit margin and margin,
- Determine new costing rates for future Jobs, thus avoiding errors in future costing.
With the classic post-calculation, you only deal with the target costs after the Job has been completed. This has the major disadvantage that any miscalculations are discovered too late. In addition, you can no longer exert any influence on the construction work and billing. For this reason, simultaneous final costing - also known as synchronous costing - is a much more effective form of final costing. It takes place parallel to the progress of the Job and is carried out for each work step after its completion.
Even while work is in progress, you can keep an eye on how much material and time your employees are spending on what work. This information can be continuously compared with your previously calculated values. This allows you to identify any deviations and their causes at an early stage and make appropriate adjustments.
To create a final cost estimate, proceed as follows: To do this, compare the TARGET costs planned in advance from your cost estimate with the ACTUAL costs actually incurred. In addition to the costs, it is worthwhile to look at the number of units incurred (for example, the number of work hours or the material consumption). This is useful because you can usually influence the quantity consumed, but not the prices themselves. Nevertheless, it is also worthwhile to examine price deviations: If the costs deviate permanently, you should adjust your offer prices or look for more favorable suppliers in purchasing.
It is important that you structure the final costing in the same way as your preliminary costing. This means that you use the same method for calculating the individual items for both the preliminary cost estimate and the final cost estimate.
We have created for you a practical and free Excel template for recalculation:
How to work with the post calculation template
- First, enter the calculated TARGET values of your Job in the "Preliminary costing" column.
- Then transfer these values to the "Final costing" column. In case of deviations of the actual values, change the values of the items in the column "Post calculation".
- The "Deviation" column is used to analyze the data.
Conclusion: Post-calculation in the craft sector
Especially in the skilled trades, deviations between the calculated target costs and the actual costs occur in almost every project. For this reason, post-calculation is of vital importance for trade businesses. Only with its help can you assess what profit a particular Job has generated or whether you have even carried it out at a loss and whether you have been able to offset your additional expenses. In addition, a profound proof of all ACTUAL costs can be provided to the client. Last but not least, you can calculate your future projects more precisely.
However, you can only create a meaningful final costing if your construction site reports correctly show all the work hours actually incurred and materials consumed. A running final costing also requires a constant exchange of information between the office and the construction site. As a result, job costing can be complex, time-consuming and ultimately costly. Especially for small and medium-sized trade businesses, this amount of work is hardly manageable. This is exactly where the Meisterwerk app comes in.
The Meisterwerk app is a powerful software solution for trade businesses with 5-50 employees. In addition to digital Job and employee planning, the app supports you in your construction site controlling in real-time: Your mobile employees can record the working times directly on site in the app via their own smartphone or tablet. You can then incorporate this as project time recording into your concurrent post-calculation. The app enables you to document documents, receipts and invoices, including legally binding Signatures, in terms of images and content. These can then be assigned to the respective Jobs and are immediately transmitted to your office. In this way, you can assign costs to the right project in no time at all and create your post-calculation. This saves you the time of searching for notes and information!