106 - Job Costing: The System That Changed Everything
From Brickonomics: The Business of Building · 00:29:54
Show by Nick Scroggs
Job Costing for Builders: Why the 20% Markup Myth Is Costing You MoneyNick Scroggs explains why conventional residential pricing (often framed as 10% overhead and 10% profit) fails for many growing construction companies with significant internal staff, and argues that builders must price from their real cost structure using job costing. He describes a divisional model that treats project-facing employees as job costs, not overhead, and shows how to calculate fully burdened, realistic billable rates based on utilization. He recommends stress-testing pricing by comparing fixed-price and cost-plus estimates, which should land within 5–10% if costing is accurate, and emphasizes transparent contingency (typically 5–10%) to cover errors, omissions, and price escalation while protecting client relationships. He outlines five steps to improve costing, warns against common misconceptions, and previews a next episode on overhead as a growth risk.00:00 Welcome and Job Costing02:45 The 20 Percent Myth05:50 Staff as Job Costs07:14 Divisional Cost Model08:42 Billable Rate Math12:05 Markup Relativity Explained16:03 How Contingencies Save Relationships17:18 Building Real Contingency22:04 Five Steps to Improve25:14 Common Job Costing Traps27:34 Key Takeaways and Next
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