Cost Codes versus Trades
Updated
JobPlanner has features to manage both Cost Codes and Trades. The following is an explanation of Trades and Cost Codes, how they relate and how they are used in Jobplanner.
Trades
A trade is a skilled labor category or specialty that performs a specific type of construction work. Examples of trades would be:
- Electrician
- Plumber
- Carpenter
- Drywaller
- Roofer
- HVAC technician
Trades are the people or subcontractors who perform the work.
Cost Codes
Cost codes describe what work is being done from a financial perspective. Cost Codes are financial tracking categories used to describe, organize and monitor project costs. A cost code identifies the type of work or cost money is being spent on. Examples of Cost Codes would be:
03100 - Concrete Reinforcement
15100 - Plumbing
06100 - Rough Carpentry
00950 - Gypsum Wallboard
07050 - Shingles, Roof Tiles, and Roof Coverings
15900 - HVAC Instruments and Controls
Trades versus Cost Codes
Trades and Cost Codes are two separate things and are setup and managed differently. They are connected but they are not interchangeable.
For example, a Project Manager identifies what Trades (specialty people or subcontractors who are needed to perform the work), gets quotes from Trades for the work, hires the Trades to do the work and monitors the Trades to perform the work. Trades are all about the work, the type of work and getting the work done.
Cost Codes are all about finances. From a financial perspective, the above work cost needs to be estimated, money budgeted to pay for the work and money paid when the work is performed. This is done by assigning the work to a Cost Code and managing the costs via the Cost Code.
In some organizations, Trades = Cost Codes. There is one Cost Code defined for every Trade (and vice versa). For example:
Trade: Plumber has a one for one connection to the Cost Code: 15100 - Plumbing
However, in other organizations, they are not the same. This could be for various reasons, as Cost Codes are setup specific to the accounting system and for accounting purposes. Their purpose is not to manage the Trades (but manage costs):
- Cost Codes in an accounting system may use different terminology and that accounting terminology doesn't make sense for Trades management.
- Cost codes could be more of a set of universal financial categories, not a list of trades.
- Trades could be more general for the needs of managing the work but Cost Codes need to be more specific for managing the costs.
JobPlanner can be configured to match any requirements for any organization, whether their Cost Codes match their Trades or not.
Note* When determining how to setup Trades and Cost Codes, keep in mind, that Cost Types are also used from the financial management. See Settings - Cost Codes (and Cost Types) for more information on Cost Types, but in summary they are a further categorization of the Cost Codes such as Materials, Equipment, Labor. Both a Cost Code and Cost Type are always required for financial management, so for Cost Type: 15100 - Plumbing there would be:
15100 - Plumbing - Materials
15100 - Plumbing - Equipment
15100 - Plumbing - Labor
Therefore, a Trade called Plumbing would be hired, but the costs would be broken down by Materials, Equipment, Labor.
How its Setup in JobPlanner
The list of Trades are setup by Administrators in Settings (see Settings - Trades).
A global list of Cost Codes are also setup by Administrators in Settings (see Settings - Cost Codes (and Cost Types)). Project Managers are also able to setup Project specific Codes Codes (see Cost Codes - Overview).
So there are two separate lists setup separately for Trades and Cost Codes.
Trades
When new Contacts are setup, they can be assigned Trades from the above list to indicate the type of work they do. Then when doing Invitations to Bid or assigning Contracts to Projects, they can be searched for via the Trade.
Cost Codes
Cost Codes are setup for each Project. They can be selected from the global list or created specific to that Project.
Then when creating a Schedule of Values for Contracts, Change Requests, Contract Change Orders, Commitments or Commitment Change Orders or creating a Budget, only the Cost Codes setup for the Project can be used to categorize each line item on the Schedule of Values.
Managing Trades and Cost Codes
A project manager or estimator sits at the intersection of the people doing the work (trades) and the financial system tracking the costs of the work (cost codes). Their responsibility is to make sure the two stay aligned so the project stays on budget, and on schedule. The following is an overview of where Trades and Cost Codes are managed by the Project Manager.
The Project Manager/Estimator manages invitations to bid usually via Trades (as they are focused on the work at this point)
Once the Bids are complete, the Budget and all the other Job Costing is managed by Cost Codes. So the Project Manager/Estimator will map Bids for a Trade to Cost Codes (and Cost Types) on the Budget and/or Contract or Commitment Schedule of Values.
The work done in the field is tracked by the Trade (Action Items, Inspections, RFIs, Punch List, Schedule, Submittals)
Financials related to that work is tracked by the Cost Code:
- Hours can be entered for the Cost Code via Time Cards
- Quantities produced during those hours can be tracked
- Quantities produced can be entered for the Cost Code (without a Time Card)
Next Steps
Setup Trades, see Settings - Trades.
Setup the global list of Cost Codes, see Settings - Cost Codes (and Cost Types).
Setup Project specific Codes Codes, see Cost Codes - Overview.
