The target margin percentages for Direct Costs (or Cost of Goods Sold – COGS) and Overhead are defaulted. Adjust any of the target margin percentages to match your business model.
Enter the information requested in the “Actual $” column. This information is found on the latest Income Statement for your company.
Check the resulting calculations shown in the “Actual %” column against the “Target %” column to determine where the variances are.
Check your accounting Chart of Accounts to ensure that all direct costs (expenditures that can be related to a specific project) and all project-related indirect costs (supervisor, utilities, etc.) are included in the Direct Costs (or Cost of Goods Sold – COGS) section of the statement.
If you are tracking job costs, you can analyze one project or a group of projects to determine if they are meeting your target numbers.
You might want to analyze:
all projects estimated by one estimator;
all projects run by one site supervisor;
or any other performance metrics you would like to see.