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Custom, Spec Home & Production Builders

Like many of the other facets of the construction industry  you are constantly at risk for time and cost over-runs and tight gross profit margins. If you are a spec home builder, you also face the possibilities of excess holding costs on land and unsold homes. If you are a production builder, you face the possibilities of high land costs, excess holding costs on land held for construction, and holding costs on unsold homes.

To balance those hazards, you need accurate week-to-week job-cost information so that you can:

  • Track each job’s progress and monitor financial results.
  • Keep an eye on changes that impact your profit margin.
  • Be in a position to make informed decisions as a job progresses.

If your building projects are being financed, you also will need to provide regular, timely, and accurate reports to your banker – for your entire company, as well as for individual units in order to obtain draws. But probably the most important benefit of accurate job-cost information is the ability to shape your own financial future. How?

When you are intimately familiar with your job cost numbers, you’ll be able to create more accurate estimates and make smarter pricing decisions.

At a minimum, you need your accounting system to:

  • Assign materials, trade contractor, and other production costs to jobs.
  • If employees work on development, to be able to assign payroll and payroll tax cost for direct labor employees to jobs.
  • Report on Estimated vs. Actual results (by job stage) for all jobs.
  • Track (and collect on) Change Orders.
  • Perform a variety of basic accounting functions within an integrated accounting system.
  • Enter land purchases, and track land and construction loan draws, balances and interest.
  • Post accurate information from sales and closings.
  • Create a variety of valuable financial reports.

You may need more advanced features such as:

  • Purchase Orders.
  • Budgeting.
  • Payroll preparation and related tax filings.
  • Recording payments to vendors via financing agents.
  • Fixed assets tracking.
  • Using QuickBooks to assign fully burdened labor cost to jobs.
  • Calculating and making Work in Process (capitalized cost of construction) entries.

Additionally, you may want a system that:

  • Can be customized to match the specific way that you do business.
  • Can be managed in-house – often by clerical level employees.
  • Is reasonably priced, with low or no maintenance fees.