What is a Job Cost Structure?

Job Costing, in the context of the construction industry, is a specific accounting methodology used to track costs and profitability associated with individual projects. It hinges on a project-by-project approach, meaning every construction project is treated as its own separate financial entity with its associated expenditures and revenues. This process might involve itemizing labor rates, material expenses, subcontracting work, equipment usage, direct and indirect costs, etc - all attributable to a particular job. Through this project-centric focus, construction firms can assess the financial success of each job, understand where costs are exceeding estimates or budgets, thereby facilitating better bidding, budgeting, and overall project management in future projects. It's a critical tool for aligning project performance with business profitability goals.

In the construction industry, a claim refers to a request or demand for compensation or remediation rights. Such claims often emerge for varying reasons, including unexpected project situations, changes in project scope, unforeseen conditions, or disputes over contract interpretations. For instance, if a construction team encounters an unexpected geological impediment on a site, delaying the project, they might file a claim to recover the costs caused by this delay. These claims are typically addressed in detail within the terms and conditions of construction contracts and might have to be resolved in court or through arbitration if the two parties cannot reach an agreement. It is imperative for every party involved in any construction project to be aware of potential claims to understand their rights and obligations. Therefore, effective claim management is key to successful construction project execution.

A sworn statement is a legal document used in construction projects that lists all contractors, subcontractors, and suppliers providing labor or materials for a project. When signed, it serves as a sworn declaration that the information provided is complete and accurate, meaning the signer is swearing under oath that no parties other than those listed need to be paid for work on the project. 

Sworn statements include detailed financial information for each party, such as contract amounts, previous payments, current amounts due, and remaining balances. Because these statements are made under oath, providing false information can result in perjury charges.

For subcontractors, sworn statements create transparency in the payment process, ideally to help prevent payment disputes. They’re typically submitted alongside payment applications, especially when requesting final payment. While not required in most states, Michigan and Illinois mandate sworn statements for all construction projects, with Michigan requiring a specific standardized form. Submitting sworn statements proactively—even when not explicitly required—can build trust with general contractors (GCs) and often results in faster payments. However, accuracy is critical; any discrepancies with sworn statements can have the opposite effect—delayed payments and damaged relationships. Check out this blog post for more tips on managing sworn statements.

Siteline can simplify the sworn statement process through integrations with popular construction accounting systems like Sage 300 CRE, Sage 100, Sage Intacct, Spectrum, and Vista. These integrations automatically pull accounts payable (A/P) information to complete sworn statements and subcontractor affidavits accurately, preventing costly errors and delays. See for yourself—book a no-obligation demo of Siteline today.