Job-cost reviews should improve the next tender

By John Kenney, Cotney Consulting Group. 

An effective job-cost review turns a financial result into useful operating information. 

A roofing contractor can complete a project, issue the final application for payment and close the file without ever fully understanding what the work actually taught the business. That is a missed opportunity. Every completed project contains information that can improve the next tender. It shows how labour performed, whether material quantities were accurate, how long plant remained on hire, where access affected productivity and which assumptions proved realistic. 

The problem is that many businesses review project cost only to determine whether the job made or lost money. That matters, but it is not enough. A final margin tells the contractor the result. It does not always explain why the result occurred.  

A proper job-cost review should connect the financial outcome to the way the project was estimated, planned and delivered. When that connection is made consistently, completed projects begin improving future tenders. Without it, the estimating team may continue using the same rates and assumptions even when actual performance has changed. 

The final margin is only the starting point 

The first question in a project review is often simple.  

Did the project achieve the expected margin? 

That question is important, but the answer should lead to a much deeper discussion. A project may have achieved its target overall while performing poorly in several areas. A profitable variation may have hidden a labour overrun, a favourable material purchase may have covered extended plant hire or a strong final account settlement may have made the project appear operationally better than it was. 

The opposite can also happen. A well-managed project may produce a disappointing result because the original tender was too low, the programme changed or the contractor accepted a commercial condition that created additional cost. 

Looking only at the final percentage can therefore give the business the wrong lesson. The review should separate the result into its main parts and examine how labour, materials, plant, subcontract costs, supervision, delays and variations compared with the original allowance. This turns a financial result into useful operating information. 

Labour needs to be reviewed in detail 

Labour is usually one of the highest controllable costs on a roofing project, but it is often reviewed too broadly. The report may show that the project used 1,200 labour hours against an allowance of 1,000. That identifies an overrun, but it does not explain it.  

The business must understand where the additional 200 hours were used. Were production rates lower than expected? Did the team spend more time distributing materials? Was access restricted? Did the project require additional visits? Were operatives waiting for other trades? Did the client change the sequence? Was more preparation required than the tender allowed? Did quality issues create remedial work? 

The answer matters because each cause requires a different response. If the original production rate was unrealistic, future estimates should change. If the overrun was caused by site disruption, the tender process should identify and qualify that risk more clearly. If the team lacked experience with the system, training or supervision may need improvement. If additional work was completed without recovery, the variation process needs attention. 

The business should never adjust a labour rate simply because one project exceeded the estimate. It should adjust the rate when the evidence shows that the underlying assumption no longer reflects actual performance. 

Production rates should come from real work 

Many estimating systems rely on standard production rates built over time. Those rates are useful, but they should not become permanent simply because they are familiar. Roofing work changes. Materials change, installation methods improve, packaging and delivery arrangements evolve, site restrictions increase and the workforce changes. A rate that was realistic five years ago may no longer reflect the way projects are delivered today. Job-cost reviews provide the evidence needed to keep those rates current. 

If a particular system repeatedly takes longer than the estimating allowance, the contractor should investigate why. The issue may be the rate itself, but it may also be that the rate does not account for details, access or project type. Installing a large uninterrupted area is different from working around numerous rooflights, penetrations and changes in level. A new-build project with planned access is different from a refurbishment project on an occupied building. A continuous workface is different from several small phased areas. 

The estimating database should reflect those differences where practical. The goal is not to create a separate rate for every possible condition. It is to prevent the business from applying one general assumption where the work consistently behaves differently. 

Material review should include quantity, price and waste 

Material cost is another area where the final invoice total does not tell the whole story. The contractor should compare estimated quantities with actual usage and consider whether the measured quantities, packaging assumptions and waste allowances were realistic. 

Did the project require more laps, cuts or detailing than expected? Was material damaged? Were partial packs or rolls left unused? Did changes in sequence create additional waste? Were split orders or urgent purchases required? 

The review should also consider purchase price. The estimate may have used a supplier quotation that expired before the order was placed. A substitute product may have been required. Additional carriage may have been paid, or smaller orders may have reduced purchasing leverage. 

These differences should not automatically be treated as estimating errors. The purpose is to understand whether the original allowance remains realistic and whether procurement decisions affected the result. Waste deserves particular attention because it is often hidden inside total material usage. A project may appear to have consumed the expected quantity overall while one detail or roof area generated considerably more waste than planned. That lesson should return to estimating. 

Plant duration should be compared with the programme 

Plant costs are usually linked closely to project duration. If the programme extends, plant hire often extends with it. A job-cost review should compare the planned duration of cranes, hoists, telehandlers, scaffolding, mobile elevating work platforms and other access equipment with the actual duration. 

If the equipment remained on site longer, the business should understand why. Was the original programme too short? Did access begin later than expected? Was the work resequenced? Did another trade delay release of the roof area? Was the equipment hired too early? Could it have been released sooner? Did the contractor need to return later because the work was completed in phases? 

These questions improve both estimating and project planning. The review should also consider associated costs such as delivery, collection, fuel, operators, permits and repeated mobilisation. The weekly hire rate is rarely the complete financial effect. 

Supervision and management time should not disappear into overhead 

Project management and supervision are often underestimated because some of the cost is carried within company overhead. That does not mean the project did not consume the resource. A contracts manager may spend additional weeks coordinating a delayed project. A site supervisor may remain in place longer than planned. Senior management may become involved in commercial disputes, client communication or recovery planning. 

Those hours have value. If one project demands far more management time than expected, the business should understand why. Was the project inherently complex? Was the tender allowance too low? Did poor information create repeated questions? Did weak site reporting require more office involvement? Did the client’s management structure increase meeting and reporting demands? Did commercial problems require senior intervention? 

Not every hour needs to be charged directly to the project for the review to be useful. The contractor should still recognise which projects consume disproportionate management attention. That information can influence future pricing, staffing and project selection. 

Variations can distort the lesson 

Variations are an important part of the final project result, but they can make the underlying operating performance harder to see. A project may finish above its original margin because additional work was priced favourably. That does not necessarily mean the base contract performed well.  

The contractor should separate original-scope performance from variation performance where possible. Did the tendered work achieve the expected margin? Did variations recover their full labour, material, plant and management cost? Were any changes completed but not valued? Did the business carry the cost for too long? Was additional work recorded clearly enough to support recovery? 

This distinction prevents profitable changes from hiding weaknesses in the original delivery plan. It also shows whether the variation process itself is working. A variation that creates revenue but disrupts the base programme may still reduce overall project efficiency, so both the commercial value and operational effect should be reviewed. 

Interim review and final review serve different purposes 

A detailed final review is valuable, but contractors should not wait until completion to look at cost performance. If labour is already exceeding the allowance halfway through the project, the business needs to know then. If material usage is higher than expected, the team should investigate before placing the final orders. If plant is likely to remain on site longer, management should understand the reason while options still exist. 

Interim reviews help protect the current project. Final reviews improve the next one. A monthly or milestone-based review can provide enough information to identify trends without creating an excessive administrative burden. The frequency should reflect the size, duration and risk of the project. The important point is that cost information must reach the people who can influence the outcome. A report that arrives after every decision has been made is accounting history. Useful job costing supports current management and future estimating. 

The review must include the people who know what happened 

Financial reports alone cannot explain project performance. The estimator understands how the allowance was built. The project manager knows which conditions changed. The site supervisor understands what affected labour and sequence. Procurement knows what happened with suppliers and lead times. The commercial team understands variation recovery and payment. 

A useful job-cost review brings those perspectives together. This does not require a large meeting or an elaborate presentation. It requires the right people to compare what was planned with what occurred and agree on the lesson. 

If labour exceeded the estimate, the site team should explain the operating conditions. If material cost increased, procurement should explain whether the cause was price, quantity, timing or delivery. If the programme extended, the project manager should identify the events that drove the delay. If recovery was weak, the commercial team should explain whether the issue was records, notice, valuation or entitlement. Without that discussion, the business risks changing the wrong thing. 

Lessons must reach the estimating system 

A project review has limited value if the conclusions remain in meeting notes. The lesson must change something. A production rate may need to be revised, a waste factor adjusted, a plant allowance increased for a particular type of project or a tender checklist expanded to address access, phasing or occupied premises. A supplier lead time may need updating, a recurring detail may need a separate labour allowance or a qualification may need to be strengthened. 

The change should be specific and assigned to someone. Otherwise, the same lesson will appear again on the next project. This is where many contractors lose the benefit of job costing. They identify the problem but do not update the estimating tools, procedures or assumptions that created it. The meeting ends, the project is archived and the next tender begins from the same information as before. That is not continuous improvement. 

Not every result should change the rate 

Job-cost reviews must also be used carefully. One unusual project should not automatically rewrite the estimating system. A severe access restriction, client-driven delay or unexpected condition may make the project unrepresentative of normal work.  

The contractor should look for patterns. If the same issue appears across several projects, the evidence is stronger. If one system repeatedly uses more labour, one detail regularly creates excess waste or one project type consistently requires more supervision, the estimating model should reflect that experience. 

The review should distinguish between a one-off event, a project-specific condition, a repeated operating problem and an estimating assumption that is no longer accurate. That distinction prevents overreaction and keeps the estimating system grounded in reliable information. 

Good data supports better project selection 

Job-cost reviews can also help the contractor understand where the business performs best. A particular type of project may appear attractive by contract value but consistently demand excessive management time. Another may generate strong margins but create heavy cash-flow pressure. Some clients may provide repeat work with predictable conditions, while others create frequent change and delayed recovery. 

The business should understand which systems, project sizes and client relationships fit its workforce and management structure. Not every available project is the right project. A contractor that understands its actual performance can pursue work where its experience and operating system create an advantage. 

Job costing should create a learning cycle 

The most valuable job-cost system is not the one with the most reports. It is the one that changes future decisions. The tender establishes the expected cost and operating plan. The project produces actual results. Interim reviews help protect the work while it is still in progress. The final review explains the differences and converts them into better estimating assumptions. 

That cycle should continue throughout the life of the business.  

• Estimating informs delivery. 
• Delivery creates evidence. 
• Evidence improves estimating. 

When that connection is strong, the contractor becomes more accurate over time. Labour allowances become more realistic, procurement risks become easier to identify, and project teams begin with better information. When that connection is weak, the business repeats the same assumptions and hopes for a different result. A job-cost review should do more than confirm whether the project made money. It should make the next tender better. 

Learn more about Cotney Consulting Group in their Coffee Shop Directory or visit www.cotneyconsulting.com.

About the author 

John Kenney has more than 45 years of experience in the roofing industry. His career has included every level of roofing operations, from field installation and estimating through executive leadership. He is CEO of Cotney Consulting Group, a partner member of the International Federation for the Roofing Trades and earned the MIoR designation from the former Institute of Roofing in the United Kingdom. He works with roofing contractors to improve estimating, project management, operational performance, leadership and profitability.