Post-project costing (estimate vs actual)
Post-project costing compares what a project or order actually cost with the estimate the quote was based on.
Also known as: post-calculation, estimate versus actual, job costing review, etterkalkyle
The estimate is made before the quote: hours per discipline, materials, bought-in components, subcontractors and mark-up. Post-project costing sets the actual figures against the same structure once the job is finished, and shows where the variance came from: more engineering hours than expected, more expensive materials, a subcontractor who invoiced extra, changes that were never invoiced. Its value is twofold. It shows whether this particular project made money, and it makes the next estimate better. Its weakness is timing: by the time the post-project costing is done, it is too late to do anything about the project it covers. That is why the aim is often to follow estimate versus actual throughout the project, so variances show up while there is still time to steer.
Example
A machine builder sees in the post-project costing that assembly went as estimated, but engineering hours ran well over, and two change orders from the customer were never invoiced. The next quote gets more design hours, and change orders are logged with their cost before the work starts.
Read more in the in-depth article on this topic.
Related terms
- Project accounting — Project accounting is the tracking of income and costs per project: budget or estimate, hours and purchases incurred, amount invoiced and the expected result when the project is finished.
- Engineer-to-order — Engineer-to-order (ETO) is a production model in which the product is designed for each order to the customer's specification, before materials are bought and the equipment is built.
- Billable utilisation — Billable utilisation is the share of working hours invoiced to customers, calculated as billable hours divided by the total hours logged.