Those companies who are familiar with Job Costing understand it to be a very useful component of employee time and attendance systems. Job costing is the process of  capturing not just the employee attendance times but also the specific task the employee was engaged in at the time. This allows you to track the labor cost associated with vary activities in your company .

Job Costing is the common term used for this but it  is not the only area of employee activity which is measured. In some cases employee labour is typically more macro managed and in still others it is more micro managed. Every business for example measures the cost of employees labor on the macro scale; The company P&L will almost certainly show a line for wages, salaries and on-costs. Companies may split these further into departments such as Management, Sales and Operations. Some may measure this even further and separate  staff into various functions with each cost centre.

Certainly the best examples of job costing can be found in many service industries . When you take your motor vehicle  to the dealership for service for routine maintenance the activities of the service staff are logged against your car either for the basis of recharging that labour or to measure the performance of the mechanic against a benchmark.

Here is another example: ABC Engineering  quote a client to manufacture and install a number of steel walkways and steps in a clients production facility. The estimation of the steel, based on the engineering plans, is costed into the job as is an estimation of the labour required.  When the job commences on site a portable job costing time clock is used on site to record the attendance times of the labourers, the welders and the steel fixers while, previous to this the preparatory work on this project was also logged in the workshop with a similar time clock. The client is aware that any unquoted work (variations) to the quoted work will be recorded separately and billed accordingly. In keeping with this employees use a different job code when they are working on variations.

Following the completion of the job the engineering company has detailed records on the labour for every aspect of the job. Management can use this information to check for overruns in their quoting and revise their operations or estimation process. If the job is not as profitable as estimated the management staff will know why and they can make adjustments on subsequent projects. Additionally, there is an accurate account of all of the variations which need to be charged for

It is not difficult to find a time and attendance system which incorporates a job costing component but there are some glaring inadequacies in many of the products available. An adequate job costing module should be able able to cope with multiple activities within each job. An adequate product should offer ease of use for the employees when they need to change activities at the time clock. The job costing data should be live to facilitate effective job management. The job hours should be award interpreted hours: i.e they are not just the quantity of hours but the actual cost of those hours taking into consideration overtime and penalty rates.

Job costing when performed manually is a painstaking process but if it can be automated in your business the benefits will be significant as it will add a new dimension to your labour management that will definitely translate into cost savings and improved profitability.

James Bell

Time and Attendance Consultant

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