The estimate vs. actual detail report is one of the most useful reports in Quickbooks for aiding home building companies in finding any problems there may have been in the estimate they made on a given job.
In the video above, I go over a case study of a job done by a home building company, using the actual numbers. The report I’m using for the case study has some flaws in it, and so I wanted to use it to demonstrate how you can avoid such flaws and use the Quickbooks estimate vs. actual report productively.
The estimate vs. actual report can be used for a variety of industries, but my case study is specific to home builders. The services shown in the report are listed sequentially from first to last in terms of when they need to be performed. So it starts with pre-construction—including planning, building permits, utilities—then moves on to excavation and things like concrete, masonry, framing and through all of the steps and ends up with landscaping and clean up.
One important point is that you should record your actual costs and revenue on an accrual rather than a cash basis. The virtue of recording them on an accrual basis is that the accrual report will show all of the activity connected to the job. For example, if you’ve been billed for something and put it in your system but have not yet actually paid the bill, it will still show up on an accrual report, but not on a cash basis report. The same thing is true for the revenue column. If you’ve sent out an invoice for something but not yet received the payment, that will show up on an accrual basis report but it will not show up on a cash basis report.
The estimate vs. actual report is very useful in giving you an overview of the entire job and revealing which parts of the job you estimated accurately and those you did not by comparing estimated and actual costs, as well as estimated and actual revenues, for each item billed.
So I encourage any home builder to start using this Quickbooks report for all of your jobs, if you’re not already using it.
Understanding Financial Statements
