Cost codes for custom home builders
The small setup decision that makes job costing work, or not.
Short answer: Cost codes are labels for the types of work in a house, such as site work, foundation, framing, roofing and finishes. A good setup uses one short list across the estimate, the project management software and the accounting system, so every cost lands in the same bucket everywhere and budget vs actual is a direct comparison.
A starter list
Many builders start from a list organized in the order a house is built. A simple example:
- 01 Pre-construction: plans, permits, fees
- 02 Site work
- 03 Foundation
- 04 Framing
- 05 Roofing
- 06 Windows and exterior doors
- 07 Mechanical, electrical, plumbing
- 08 Insulation and drywall
- 09 Interior finishes
- 10 Exterior finishes
- 11 Allowances (one line per allowance)
- 12 Cleanup and closeout
Adjust it to how you estimate. The best list is the one your team will actually use.
Rules that keep it working
- One list, used in the estimate, project software and books
- Enough detail to act on, not so much that people guess
- Allowances as separate lines
- Change orders tracked against the cost code they affect
- Review new codes before adding them
Common mistakes
- Different lists in Buildertrend or JobTread and QuickBooks
- A catch-all "Materials" code
- Adding codes mid-project without updating the budget
- Using cost codes in place of houses (you need both)
Common questions
How many cost codes should I have?
Enough to see where money goes, few enough that coding is quick. Start small and add only when you need to.
Do I need cost codes in QuickBooks Online?
You need some way to tie cost to type of work in the books, such as items, classes or accounts. We set this up during onboarding.
Can you set up our cost codes?
Yes. It is part of setup after the Checkup.
Related
By John Mos, Founder. Updated . We do not give tax or legal advice. Please ask your CPA or attorney.
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