Job costing: An analysis of the construction industry

Bottomley, Blake and Bosman, Rudi (2018) Job costing: An analysis of the construction industry. Applied Management Conference, Hamilton, New Zealand, 23-25 October, 2018.

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Abstract or Summary

The construction industry in New Zealand is very large and shows no signs of slowing down in the near future. It is one of the largest contributors for employment growth. However, some of the largest construction companies are seeing huge losses and debts. This report sets out to find out why this is happening and will do so by analysing job costing methods and investigating variances of quoted and actual costs in the construction/painting industry. Many Potential Job Costing methods have been identified, but the best-suited options were the profit point analysis and micro costing methods. Another potential method to improve quoting would be to use a structured project learning approach. However, the answer may not lie within job costing but with the fact that material and labour prices are increasing yearly and will be different when jobs are quoted from when they are carried out. A survey was sent via email to 85 construction businesses. 10 viable responses were gathered back. A financial analysis was also carried out on 45 jobs gathered from a painting business known to the researcher. The financial analysis found there was an average variance of 5 %, with labour contributing 69% of this. When looking at jobs under $5000 it was found the average variance was 19%, while jobs over $5000 averaged 1% variance. The survey results found that average estimated variance for labour was 6% and materials were 1%. The researcher recommends using a structured learning approach. It is essential that construction businesses are aware of increasing material and labour costs. It is also evident that smaller jobs saw larger variances, therefore smaller jobs should be quoted as accurately as larger jobs.

Item Type:Paper presented at a conference, workshop or other event, and published in the proceedings
Keywords that describe the item:construction industry, job costing, business
Subjects:H Social Sciences > HF Commerce
Divisions:Schools > Centre for Business, Information Technology and Enterprise > School of Business and Adminstration
ID Code:6436
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Deposited On:13 Dec 2018 03:56
Last Modified:13 Dec 2018 03:56

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