Project Management

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Topics: Construction, Cost Management
Standard Accounting -
I have cost codes for my projects and then cost types breaking out labor, materials, subcontracts, etc. Is it standard practice to have one cost code that include multiple cost types to roll the cost up? My argument is that it is more difficult to track when it is rolled up because the level of detail is not seen unless it is dug several levels down in the cost reports. I was told it was standard accounting practices, which may be, but I would like other people's opinions.

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GAAP seems to be constantly changing to include evermore detail! I recommend matching your practices to your purpose. If the purpose of this cost tracking is for Accounting reporting, then the detail should support those standard accounting practices. However if the purpose is for project reporting, then track costs the way it would be most useful for your project managers and teams. Accounting should be satisfied with invoices containing the necessary details required.
We typically have a single charging code for projects. Although it all rolls up to a single cost at the project level, it can also be broken out by functions, labor vs. non-labor etc. based on who is charging, because there are also additional codes for things like the specific groups who are charging their time against the project. When I enter my time against a project, the time entry system knows who I am and who I report through. The Finance department will manage how all that charging is accounted for as far as color-of-money, and other such issues.

Based on our own experiences, we have found that trying to use multiple charging codes on a single project can lead to a lot of confusion, especially when people are trying to split their time between different codes.

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