Job Cost Trivia: The Origin of the Job Status Report
Insights by Michael Ronk | Sr. Accountant | Key2Act
E. Robert Kent of Poole & Kent Corporation back during the building boom of the Eisenhower Administration era created a Job Status Report for project managers and management at Poole & Kent. Mr. Kent used this report not only to review projects monthly with PMs during his tenure at the Company but also promoted its use for mechanical and facility services contractors outside his firm before and after retirement. Below is the basic format of the Job Status Report advocated by Mr. Kent for use within and outside his Company (the numbers used are rounded to the nearest thousand and data specific to this presentation):
If studied, the body of this report consists of the following three main sections:
As designed, this one-page form job thus provides the critical information project managers are responsible for on a job or jobs: (1) managing costs against estimates and forecasts against actual costs to date and as projected (under the COST ELEMENT section); (2) managing the contract and change orders with the owner and/or owner’s representative (as part of CONTRACT VALUE); and (3) managing job profitability, contract billings and cash (in OTHER STATISTICS).
Several additional points specific to the Job Status Report above as it illustrated with numerical data:
The cost elements Equipment and Subcontractors are forecasted at amounts less than Estimated. As illustrated, Equipment and Subcontract contracts are assumed to be “bought out,” at which point those costs are established and can be forecasted at the contracted for. On the other hand, Labor and Material shown in the example are forecasted at amounts higher than those estimated to illustrate that Labor and Material carry greater risk than the other cost elements and to point out if Labor goes over the estimate, Material may as well.
There is a line item in the Contract Value section for Approved Change Orders, though not another for Unapproved. To make a point, no change orders are approved as of the date of the Report and accordingly would not be until approved (signed) by the owner or owner’s representative and assurance of payment. “Make all surprises be pleasant surprises,” as Mr. Kent would say.
Revenue earned (the line item Less Earned to Date) in the Report is based on the formula: Revised Contract Amount minus Total Forecasted Costs divided by Actual Cost to Date (POC), not the Billed to Date amount – an important concept established in the 1950’s (a subject beyond the scope of this article, however).
Billed to Date in the example exceeds Earned to Date, a desired “overbilling” position that project managers should strive for on a project and all projects whenever possible.
Though there’s a cash shortage in this example, monitoring the project’s cash position is a crucial component on a job and one project managers and management need to watch “like a hawk,” given the fact that construction companies are not only in the contracting business but also in the financing business.
The Job Status Report envisioned by E. Robert Kent has been a great gift to the mechanical and facilities services construction industries. At Key2Act too, the Job Status Report in the Key2Act Signature Job Cost module models itself after the same Report designed by E. Robert Kent. Key2Act’s version advances the original Report in some ways – that is, Signature Job Cost uses the employment of some technologies not available during the Eisenhower era, including but not limited to the capability of drilling-down to originating data right from the face of the Report – however, that original Job Cost Report bears its imprint on Key2Act’s Signature Job Cost.
Project management requires “eternal vigilance.”
- E. Robert Kent
The references in this article to E. Robert Kent are based upon the author’s personal recollections of discussions with him as a consultant. Mr. Kent passed away in 2000.
About the Author:
Michael Ronk | Sr. Accountant | Key2Act
47 Years in the construction industry on the financial side of the business, public and private, in audit and tax, as corporate and senior controller and CFO. Now semi-retired.
CPA, MS in Accounting – UW Madison, author of several accounting books