Job costing in the shop before the job closes

How do you keep track of a job while it is running?

With one number updated every week, the estimate at completion: the cost already incurred plus the cost needed to finish. The margin that counts is the price minus that estimate, not the price minus what you have spent so far. Halfway through, a job almost always looks fine, because most of the hours and the subcontractors are still to come, and if you only look at what has been spent you find out once the job is closed.

An example with round numbers. A job is sold at 20,000 € and estimated at 15,000 € of cost, a 25% margin. Halfway through you have spent 9,000 €, and the shop supervisor reckons another 7,500 € is needed to finish. The estimate at completion is 16,500 €, and the expected margin drops to 17.5%. Looking at what was spent, 9,000 € out of 15,000, you would have seen nothing.

A 20,000 € job halfway through

euro

Estimated cost15,000Spent halfway through9,000Estimate at completion16,500Selling price20,000

The cost to finish is not the estimate minus what was spent: that sum always gives you back the estimate, and the forecast never moves. It is estimated by whoever knows the part, operation by operation: how many hours the mill still needs, how many parts are left to inspect, which heat treatment has yet to come back from the subcontractor. It is the same condition that the Italian accounting standard OIC 23, the one on long-term contracts, sets for anyone measuring progress by hours worked: reliable, up-to-date forecasts of the hours and costs still to come.

OIC 23 is for the financial statements, and there you apply it with your accountant. Its two methods for measuring progress, cost incurred and hours worked, also work in day-to-day control. With the first, progress is the cost incurred divided by the total estimated cost; with the second, the hours worked divided by the total planned hours. The standard says the second fits best where labour weighs far more than materials and the work is complex. If the cost of your jobs is mostly hours, that is your case.

This guide is for shops that work to the customer's drawing: contract machining, metal fabrication, building machines and fixtures. If you repair vehicles, the jobs are different and so is the software; you will find it on the page about workshop management software.

What should be recorded, and when?

Labour and machine hours, setup, materials, outside processing, scrap, rework and customer changes, each tied to the job at the moment it arises, not when the document that pays for it arrives. The right moment changes from item to item.

On materials the rule is the one OIC 23 sets for progress: materials bought for the job but not yet used stay out, because they would make the work look further along than it is. A bar in the store is not progress; a bar cut for the job is.

Outside processing goes into the job when it leaves, at the cost of the subcontractor's quote, and the invoice corrects it later. A heat treatment or a galvanising run that only shows up on the invoice arrives when the job has already shipped, and next month's margin pays for work that is no longer there.

Separate setup is the figure that helps whoever writes the quotes most. It does not depend on the number of parts: on a batch of 20 it weighs far more than on one of 500. Mixed into run time, you cannot tell whether a job is losing on setup or on the cycle. Every hour, every issue from stock and every delivery note carries the job code: whatever lacks it ends up in overheads, and the margin looks better than it is.

How do you work out the hourly cost of a person and of a machine?

You divide a year's costs by the working hours of a normal year, with two separate rates: one for the person, one for the machine. A person's hours are valued at their cost to the company, not at their pay: gross salary, social contributions, severance accrual and deferred pay, divided by the hours they actually spend on jobs. These are fewer than the hours paid, once holidays, training, cleaning and waiting are out. A machine's hours are valued at its costs: depreciation or lease, maintenance, energy, tooling and floor space, divided by the hours it works.

An example with round numbers, to redo with yours. A person who costs the company 45,000 € a year and spends 1,500 hours on jobs costs 30 € an hour. A machining centre that costs 40,000 € a year in depreciation, maintenance, energy and tooling and works 2,000 hours costs 20 € an hour. If the person tends two machines at the same time, their hours are split between the two jobs, and the machines' hours are counted in full.

Then there are the costs that belong to no job: engineering office, administration, rent, the shop supervisor. They are spread with a fixed rule, usually by department or cost centre. OIC 23 asks for them to be allocated on the normal level of activity, and that is also the right choice for quoting. Divide by the hours of a busy month and the rate looks low, divide by those of a quiet one and it looks high, and neither tells you what to sell at.

The calculation is done once a year, with your accountant or whoever handles management control, and redone when a new machine arrives or a contract changes. A job's margin is only as good as the rate you value its hours at: at the cost of pay alone, every job seems to make money.

How often do you look, and when do you step in?

Every week, always on the same day, and you step in when a job crosses the thresholds set in advance. The week's hours are closed on Friday, and the shop supervisor checks them against attendance; on Monday, for every open job, the cost to finish and the expected margin are updated. The meeting lasts half an hour and covers only the jobs outside the thresholds. Long jobs, or jobs already in trouble, are also looked at daily.

The thresholds are set in advance, so that nobody argues each time over whether a variance is serious. These are a starting point.

The answers from AI assistants we read on 23 October 2026 give thresholds almost identical to these, and none has a study behind it. Treat them as rules to tune: after two months, look at which alarms led to a decision and which did not, and move the thresholds to fit your jobs.

When a job crosses a threshold there are four levers: the cycle (setup, tooling, program), the materials (offcuts, supplier), the price (a change to quote to the customer) and the delivery date. A cost already incurred does not come back: you can only stop the remaining operations from repeating it. That is why seeing it on Monday matters, not at the end of the month.

What do you need: paper, Excel, MES or business software?

Paper and Excel are enough with a few open jobs and one person copying the hours every day. Beyond that, the choice depends on how many jobs you have open at once and on who writes the hours. The tool matters less than the method: with one code per job, hours per operation and Friday closed, a tidy spreadsheet holds up better than you would think; without them, no software gives the right margin.

SYMESTIC, a cloud MES, gives an order of magnitude at list price. On 23 October 2026 it costs 500 € a month for one machine on the Starter plan and from 10,200 € a year for five machines on the Professional plan, with a 36-month contract. If needed, the devices that read the machines' signals cost 450 or 550 € each, one-off. All prices exclude VAT, billed annually in advance. The list prices of off-the-shelf systems and the signals that a spreadsheet is no longer enough are in the guide Excel or business software. Where business software ends and the MES begins is in the guide on ERP and MES.

With us the thresholds of every custom project apply. A first module, for example hours per job and operation from the shop floor with the Monday report, starts at 10,000 € with 6-8 weeks of work. An essential management system, like the one for a workshop in the cost guide, starts at about 15,000 € with 2-3 months. A platform with several departments and roles and integrations with ERP and CRM starts at 45,000 €. The top of the range is written in the contract.

How do you start without stopping the shop?

From closed jobs, before any software. You start from the point that hurts most today, and in a machine shop that is almost always the quote that does not add up.

1. Redo the sums for five closed jobs: estimate, hours, materials, subcontractors and final price. Look at where the estimate went wrong: it is usually the same place every time.
2. Set the codes: one code per job, a few numbered operations, the reasons for stops and scrap. The more there are, the fewer get filled in.
3. Work out the hourly rates, for people and for machines, on the hours of a normal year.
4. Before changing the way hours are recorded, check with your employment consultant what the law requires for the tool you have chosen, and explain on the shop floor what the data is for.
5. Start with three or four running jobs, keeping paper as a backup for two weeks.
6. On Friday the hours are closed, on Monday the estimate at completion and the meeting on the jobs outside the thresholds.
7. Once a job is closed, the estimate against the actuals: the difference corrects the next estimate.

The fourth step has a law behind it: the Italian Workers' Statute, law 300 of 1970. Its article 4 says that tools which also make it possible to monitor workers' activity remotely may be installed only with a union agreement or, failing that, with the authorisation of the National Labour Inspectorate. The rule does not apply to the tools the worker uses to do the job, nor to those that record access and attendance. In every case workers must be informed of how the tools are used and how checks are carried out, in line with the Italian privacy code. Which case a terminal or a time tracking app falls into is for your employment consultant to say: ask before you buy, not after.

The rest is up to the shop floor. Hours get recorded well when the people recording them see that they serve to quote better, not to watch them. The seventh step is the one that shows them: the next estimate is more accurate, and a losing job shows up on Monday, not at the end of the month.

An example: a 25-person fabrication shop, hours on paper

A metal fabrication shop has 25 employees. Shop floor hours are written on paper, and the office works out the actuals at the end of the month. On 23 October 2026 we asked Google, ChatGPT and Perplexity how to get to know every week how much is being spent on each job. Google gives no organic result at all, only the AI Overview and Excel templates to download; the AI answers do, and they agree on the method.

They say to move hours to digital, per job and per operation, with an hourly cost per department, and to load materials and outside processing from the delivery note without waiting for the invoice. They also advise closing hours on Friday and reading the report on Monday, and trying it on a few jobs before extending it. On costs they stay vague: “a few euros per user per month” for a time tracking app, a 150 € tablet, with no source for either figure. None of those we read mentions article 4 of the Workers' Statute; Google's AI Mode only advises explaining to the workers that it is not there to watch them.

From there, the path that pays off is this:

1. one tablet per department, cutting, welding, assembly and painting, or the phone for whoever installs on site, with the job read from the code on the work order;
2. the department rates worked out once, with the accountant, and updated every year;
3. materials and subcontractors from the delivery note, at the quoted cost until the invoice arrives;
4. on Monday, for every open job, what has been spent, the cost to finish and the expected margin, next to the estimate.

For a time tracking app and a tidy spreadsheet, an off-the-shelf product is enough. The first custom module is for jobs with operations, changes and on-site assembly that an app does not follow. With hours from the shop floor, delivery notes and the Monday report connected to the accounting software you already have, it starts at 10,000 €. In one of our projects for a consulting group the same structure, jobs, hours entered from a smartphone and reports per job, lives in a single system in place of emails and Excel files. It is the case study on resource and job planning. If an off-the-shelf product is enough for you, we tell you before the quote, because custom software that is not needed is good for neither of us.

When is new software not needed?

When jobs are few and short, a few days each, and the owner sees all of them: then a good estimate and the sum once the job is closed are enough, because there is no time to correct anything halfway. And when the software you have already has a job module with hours per operation that nobody uses: there the work is on the method, the codes, Friday closed, the Monday meeting, not on another program.

Software that collects hours nobody looks at on Monday does not change the margin. What changes it is the decision taken on Monday, about the operation still to come.

Sources and further reading

• Fondazione OIC, “OIC 23 Lavori in corso su ordinazione” (OIC 23, Construction contracts), December 2016, with the amendments of 19 April 2023fondazioneoic.eu, in Italian, accessed 23 October 2026
• Law no. 300 of 20 May 1970, article 4, “Impianti audiovisivi e altri strumenti di controllo” (Audiovisual equipment and other monitoring tools)normattiva.it, in Italian, accessed 23 October 2026
• SYMESTIC, “Prezzi” (Pricing)symestic.com, in Italian, accessed 23 October 2026