You quoted the job carefully. You factored in labour, materials, and a reasonable margin. The client signed off. The project started.
Then somewhere between the kick-off meeting and the final invoice, the numbers shifted. The actual cost came in higher than the estimate. The margin you planned for disappeared. And when someone asks why, the honest answer is that nobody really knows.
This is one of the most common problems for UK businesses that deliver project-based work. It is not unique to any one industry. It happens in manufacturing, engineering, distribution, and professional services. And it happens repeatedly, on project after project, because the underlying cause is never properly addressed.
The cause is almost never bad quoting. It is a lack of visibility into what is actually happening on the job while it is still running.
Why Project Costs Drift
Project costs drift for predictable reasons. The same ones come up again and again.
Labour is underestimated.
The quote assumed ten days of engineer time. The job took fourteen. Nobody flagged it at day eleven because there was no system tracking actual hours against the budget in real time.
Materials get missed.
Small purchases, additional components, and last-minute orders go through without being coded to the job. By the time someone reconciles the costs, the project is closed and the margin is already gone.
Subcontractor costs overrun
A third party was brought in to cover a specialist task. The cost was agreed verbally. The invoice came in higher than expected and it was approved because the project manager was too busy to challenge it.
Scope creep goes uncosted
The client asked for a small change. It seemed minor. Nobody raised a variation order. The team absorbed the extra work and the cost landed on the job without any corresponding revenue.
None of these are unusual. All of them are avoidable with the right system in place.
The Spreadsheet Problem
Most project-based businesses that do not use an ERP system manage job costing in spreadsheets.
The project manager keeps a tracker. Costs get added when someone remembers. Hours get logged at the end of the week. Materials get added when the invoices come through, which might be weeks after the goods were used.
By the time the spreadsheet reflects the true cost of the job, the project is often nearly finished. The window to take corrective action has closed. You find out you have lost margin at the point where nothing can be done about it.
The other problem with spreadsheets is that they are disconnected from finance. The project manager has one view of the job. The finance team has another. Reconciling the two takes time and the answer is never quite the same from both sides.
How Business Central Tracks Project Costs in Real Time
Business Central’s Jobs module gives you a live view of every project, with actual costs tracked against your budget as they are posted.
You set up the job with a budget broken down by task, phase, or resource type. Labour, materials, subcontractors, and expenses are all budgeted separately so you can see where the money is expected to go before the project starts.
As the project runs, costs post against the job in real time.
Labour
Labour is is recorded through timesheet entries. Your team logs hours against the specific job and task they are working on. The system calculates the cost based on the resource rate you have defined. Management can see total hours and cost at any point without asking anyone to update a spreadsheet.
Materials
Materials post to the job when they are issued from stock or when a purchase order is receipted. If a component is ordered specifically for a job, the cost lands on the job automatically when the goods arrive. Nothing gets missed because someone forgot to allocate it.
Subcontractor costs
Subcontractor costs are posted when the purchase invoice is approved. Because the invoice is matched to a purchase order that was raised against the job, the cost is already allocated before the invoice reaches finance.
Expenses
Expenses can be posted directly to the job by the people incurring them. Travel, accommodation, and sundry costs are captured as they happen rather than reconstructed from receipts at the end of the month.
At any point during the project, you can pull up the job card and see exactly where you stand. Budget versus actual. Hours used versus hours planned. Cost to complete versus cost at completion. The information is live, not a week old.
Spotting Problems While You Can Still Fix Them
The real value of live job costing is not the report at the end. It is the ability to see a problem developing and do something about it.
If labour is running over budget at the halfway point of a project, Business Central shows you that now, not when the project closes. You have time to investigate, adjust the plan, have a conversation with the client about a variation, or make a decision about how to recover the situation.
If a subcontractor invoice comes in significantly higher than the purchase order, the three-way matching process in Business Central flags it before it is approved for payment. You can challenge it before the cost is committed.
If materials are being drawn from stock faster than planned, the job card shows the variance. You can investigate whether the specification has changed, whether there has been waste or rework, or whether the original estimate was simply wrong.
These are all conversations that are easier to have during the project than after it.
Fixed-Price and Time-and-Materials Projects
Business Central handles both billing models without needing separate tools or workarounds.
For fixed-price projects, you set the contract value on the job and track actual costs against it. Your margin is visible throughout. If costs are running ahead of plan, you can see the impact on margin in real time and take action before it becomes a loss.
For time-and-materials projects, Business Central invoices based on what has been recorded against the job. Hours, materials, and expenses are billable as incurred. Because everything posts to the job as it happens, your invoices are accurate and complete without anyone having to compile them manually.
Some projects use a combination of both. A fixed-price element for the core delivery and time-and-materials for additional scope. Business Central handles that too, within the same job record.
WIP Reporting for Finance
For businesses running projects that span accounting periods, Work in Progress reporting is where finance and project management meet.
WIP is the value of work you have completed but not yet invoiced. Without accurate WIP reporting, your monthly financials do not reflect the true position of the business. Revenue is understated. Costs look wrong. Management is making decisions based on numbers that do not tell the full story.
Business Central calculates WIP automatically based on the costs posted to open jobs and the revenue recognised to date. Your finance team gets accurate monthly figures without waiting for project managers to submit updates or manually calculating the position from spreadsheets.
For UK businesses reporting to investors, lenders, or a board, accurate WIP reporting is not a nice to have. It is a basic requirement of running the numbers properly.
Who This Is For
Who This Is For
If your business quotes for project work and consistently finds that actual costs come in higher than expected, the problem is almost certainly visibility, not estimating.
This is particularly relevant for:
- Manufacturing and engineering businesses running installation, commissioning, or capital project work where labour and materials overruns are common
- Life sciences businesses managing validation or implementation projects where scope changes and subcontractor costs are hard to track
- Distribution businesses running customer-specific projects or system implementations
- Any UK business where the gap between quoted margin and actual margin is a recurring conversation at board level
Business Central gives you the visibility to manage that gap before it becomes a loss.
FAQs
For anything not covered here, get in touch directly. We’re happy to answer questions specific to your business and your ERP requirements.
Business Central’s Jobs module lets you set a budget by task, resource, and cost type. As labour, materials, and other costs are posted to the job, actual costs are tracked against the budget in real time. You can see the variance at any point during the project.
Yes. You set the billing type at the job level. Fixed-price jobs track costs against a set contract value. Time-and-materials jobs invoice based on what has been recorded against the job. Both models are supported within the same system.
WIP, or Work in Progress, is the value of work completed but not yet invoiced. Business Central calculates WIP automatically for open jobs, giving your finance team accurate monthly figures without manual calculation.
Team members log hours against specific jobs and tasks through timesheet entries in Business Central. The system calculates the cost based on the defined resource rate. Management can see total hours and cost in real time without waiting for manual updates.
Yes. Because actual costs post to the job in real time, you can see budget variances as they develop. Management can review the job card at any point and take action before the project closes.
Subcontractor costs are posted to the job when the purchase invoice is approved against the relevant purchase order. Three-way matching flags invoices that do not match the original order before they are approved for payment.
Yes. You can invoice directly from the job card in Business Central. For time-and-materials projects, billable costs are pulled through automatically. For fixed-price projects, you invoice based on the agreed contract value or milestone schedule.
