BUSINESS
How to Track Job Cost Variance
Contractor method for comparing budget to actual cost and protecting your margin.
Job cost variance tells you whether your bids are accurate. A repeated negative variance means you're systematically under-bidding and losing margin.
THE SHORT ANSWER
How do you track job cost variance?
Set a detailed budget, track actual costs in real time, then compute variance = budget − actual. A $12,000 budget against $13,500 actual is a −$1,500 (−12.5%) variance you must fix in the next bid.
Set a clear budget
Break the job into labor, materials, subs and overhead before you start. A detailed budget is the baseline you compare against.
- Itemize every cost category
- Note the budget date and scope
- Flag assumptions in the budget
- Share it with the crew
Track actual cost in real time
Record hours, materials and subs as they happen. Don't wait until the job ends — real-time tracking catches overruns while you can still act.
Compute the variance
Variance = budget − actual. Positive means under budget; negative means over. Use the Job Cost Variance Calculator and compare revenue to actual for the true profit.
Fix the next bid
A variance above 10% means your estimating method needs a correction. Adjust your rates or allowances and re-check on the next job.