Cost Coding in Construction: How to Get the Most Out of Your Data

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Construction cost codes are essential in every construction project. Project managers, accountants, and estimators are just a few of those who regularly use cost codes. With so many people depending upon accurate cost code data, it’s important to have a standardized system in place.

This article will cover how to organize your cost code structure, as well as provide some tips on how to get the most out of your cost codes.

The value of construction cost codes

In their simplest form, construction cost codes make budgeting construction projects easier. They are essential in the construction industry, since construction companies rely on them for project financials, relaying information to various stakeholders, and general business reporting. More specifically, calculating job costs for accurate bid estimates is impossible without breaking up project expenses. Having budget categories also helps you monitor budgets throughout projects.

A few of the major benefits of cost codes can be summed up as the following:

  • Assess project productivity
  • Monitor KPIs
  • Improve estimate accuracy

To optimize your cost code data, it’s vital to establish an organized cost code structure from the start of any project. Let’s take a look at how you can structure cost codes.

Cost code structure

Your cost code structure will be used throughout a project—and after to estimate future bids—so it’s important that it is well thought out. It must have enough information for all parties to obtain crucial information, while not being so detailed that it is too complicated to log information or work with final data. To get started, think through how cost code data will be used when structuring it by asking questions like:

  • What information is most important for calculating future estimates?
  • What data does accounting need throughout projects? Can I improve time card collection by streamlining the cost code process?
  • How can I make it easy to apply cost codes on-the-go, while at a jobsite?

Your cost code structure should be separated by subprojects, and within each subproject, costs should be separated by labor, materials, equipment, and subcontractors. Generally, breaking cost codes up much further can result in confusion or unnecessary complexity.

However, sometimes more specifics are needed. Looking at materials, you may need to know how much of each material was used on individual floors of a building. In this case, you could break the material cost codes up like this:


Establishing a standard for cost code documentation makes it easy to compare job costs over time.

How mobile data capture can increase the benefits of construction cost codes

So you have an effective cost code structure. But are you getting the full benefit of your cost code data? Mobile data capture, or collecting field data using a cell phone or tablet, can amplify the benefits of cost code data. These are a few ways how:

Accurate data to work with

An intuitive mobile data capture app can make life easier for everyone on the construction jobsite. Using an app, instead of pen and paper, means supers and others documenting project progress don’t have to stop to write info down. It also means they don’t have to try to read those scribbles later and take their best guess at what it says when copying that data to a computer.

Real-time visibility

If you are a project manager or subcontractor, real-time project visibility can make or break a project. When data is collected in the field using a construction management app, it is immediately available to you. This gives you time to course correct, and decide how to fix, pass off, or document any unplanned costs. Otherwise, you won’t know until the end of the project which cost codes were over budget or underperforming.

Documentation and standardization

Digitally documenting cost codes means all that data is available in the cloud and readily available in case there is any question of a job completed. Digital documentation also makes it easy to roll out a standard collection and documentation format—making it easy to compare numbers from different jobs.

Accounting made easier

Every company relies on accounting teams for numerous workflows, so making their job easier helps the entire company move forward. Digitally recording cost codes can make payroll and other accounting processes smoother, as there is no longer a need for manual re-entry.

Cost Code Insights

Valuable insights

Cost coding tech can also calculate insights around budgets and timelines, so you can understand whether your projects are inline with goals. These insights help you make real-time, informed decisions around construction cost codes and your team’s productivity.

How Gramercy used cost codes to track demolition of five buildings

Gramercy had used cost codes in the past, but with five buildings to demolish—and the need to track progress and resources per building, per activity, along with allocated resources—they needed a more efficient way to track cost codes and production.

With Raken, their workflow became streamlined. “Before Raken, we relied on written daily reports and extra work tickets that were incomplete and barely legible,” said Gramercy’s Project Manager Maxiel R. “Looking back, and at how we handle it now? It’s two different things. Completely. Raken made it so easy.”

See how Raken can help you utilize cost codes

The right project management software can make activity based costing easy. Whether you are managing resources throughout jobs, or looking at the cost of specific tasks to calculate future bids, fully utilizing construction cost codes can lower job costs and improve overall efficiency.

Plus, features like production insights trends allows you to compare up to five cost codes at once—and all with real-time data. Which means you always know exactly where productivity stands.

If you want to learn how project management software like Raken can improve cost code processes and overall productivity, schedule a demo.