Month-End Job Cost Review for Contractors

Contractors need to accurately track and review project costs monthly to ensure profitability and compliance, especially considering the complexities of construction expense management for under $10/user (2026). To achieve this, they must stay up-to-date on current tax rates, per diem allowances, mileage reimbursement rates, and common pitfalls in job costing. By doing so, they can identify cost overruns or inefficiencies early, allowing them to make adjustments and stay on track.

Understanding Current Tax Rates and Regulations

• Review Current FICA Tax Rates: This comprises 6.2% for Social Security (up to a wage base limit) and 1.45% for Medicare (with no income cap, plus an additional 0.9% for employee wages over $200,000).
• Know the Wage Base Limit for Social Security Tax:
• Understand M&IE Rates for Taxpayers in the Transportation Industry: For taxpayers in the transportation industry, the special M&IE rates are $80 for travel within the continental United States and $86 for travel outside the continental United States.
• Verify Tax Rates and Regulations:

Tracking and Managing Job Costs

• Track Subcontracts and Purchase Orders
  • Log subcontracts and purchase orders as soon as they are executed.
  • Ensure committed costs are accurately reflected in your records.
  • Prevent hidden exposure by keeping track of all committed costs.
• Accurate Cost Tracking
  • Keep a record of all job-related expenses, including labor costs, materials, and equipment.
  • Record per diem allowances and mileage reimbursement rates as per company policy.
• Regular Cost Updates
  • Update your job cost tracking records regularly to reflect current costs.
  • Review and adjust your cost tracking records as necessary to ensure accuracy.

Identifying Cost Overruns and Inefficiencies

• Review Daily Per Diem Allowances
• Verify Compliance with Prevailing Wage Rates
  • Check if any federal construction contracts exceed $2,000 and require payment of prevailing wage rates.
  • Verify that workers are being paid at least the local prevailing wage rate, which includes base hourly wages and fringe benefits.
  • Review wage determinations, which are updated and specific to project location and construction type.
• Reconcile Employee Pay and Benefits
  • Verify that employee pay and benefits are accurate and compliant with tax laws.

Compliance and Reporting Requirements

• Keep accurate and detailed records of all job costs, including labor, materials, and equipment expenses.
• Ensure all invoices and payments are properly documented and accounted for.
• Review and update your company's compliance with federal, state, and local regulations, including tax laws and labor standards.
• Monitor deadlines for tax filings and payments, including quarterly and annual returns.
• Keep records of all business-related mileage and per diem allowances, and ensure compliance with relevant regulations.
• Review and update your company's compliance with any industry-specific regulations, such as those related to environmental or labor laws.
• Consult with a tax professional or accountant to ensure your company is meeting all compliance requirements.

Best Practices for Monthly Job Cost Reviews

• Review job cost reports at least monthly, but consider weekly reviews for larger or riskier projects.
• Verify that job costs are accurate and up-to-date, including labor costs, material costs, and equipment costs.
• Compare actual costs to budgeted costs and identify any cost overruns or inefficiencies.
• Ensure that per diem allowances and mileage reimbursement rates are current and compliant with tax regulations.
• Document all changes and updates to job cost reports, including explanations for any cost overruns or inefficiencies.
• Use this information to adjust budgets and make informed decisions about future projects.