Xero Projects Cloud Accounting Training Course Case Study: Projects and Job Tracking
This case study demonstrates how, by using popular cloud accounting program Xero, you can tightly control the ways a business might incur additional costs during a typical small building project.
Garden shed-on-slab example
Let’s consider the simple task of erecting a 3m x 3m garden shed. As long as the shed fits within certain parameters, like height, distance from boundary and so forth, it will be exempt from council Development Applications (DA’s). In this way, any handyperson (and even the not so handy) can generally erect one.
Looks simple but can take days and several tradespeople
A typical backyard garden shed may look simple enough to build, according to websites from the shed manufacturers and hardware retailers like Bunnings. However, they’re a little complex for the average homeowner. We’ll demonstrate the steps and typical scenarios that tradespeople go through. We will keep track of the income and costs using Job Tracking and Projects in our cloud accounting courses.
The following steps will be involved in the backyard shed erection:
- Measure size and slope of land
- Estimate how deep the land needs to be dug
- Work out how much reinforcement is needed
- How many bags of cement are needed?
- What type of cement mixer?
- Tools needed to complete the project
- Time for completion
- How many tradespeople are needed and when are they available?
- Whether the shed is onsite or does it need to be collected and delivered?
- Is there power to the site?
- What is the weather going to be like?
Many tradespeople will have many of the items required as stock items. In our scenario we assume that the builder has 10 bags of cement.
Expenses and trips to Bunnings or Mitre 10
If you’ve ever had a handyman or tradesperson come to work at your house, you may have experienced that sometimes they won’t always have the tools, equipment or parts with them. Also, sometimes these tools and equipment can break.
Trips back and forth to the hardware cost the builder or handyman by way of an unplanned cost. This cost is paid using cash, credit card and/or sometimes on an account. How do you keep track of these expenses?
Another spanner in the works can be lack of power to the work site. Or sometimes the builder may need to wait for some of the parts to arrive, or they will need to organise to go and collect them.
In our training course scenario, the tradesperson will need to use his vehicle and two other people to collect the garage shed from Cardiff (in Newcastle) as the home owner didn’t want to pay the shed company $200 to have it delivered.
The $600 cost of the shed is tiny compared to the labour and slab
So now you understand more about what’s involved in a simple building job, let’s do the transactions so you can understand why it’s so important to keep a tight control of time and costs.
Key elements in this case study are:
- Some of the products needed are in stock, but more will need to be bought to complete the job
- It takes two hours for the grass to be dug up and put aside
- A trip needs to be made to the hardware shop for wood and nails for the formwork
- The formwork takes two hours to build
- One of the tradespeople has to go to Bunnings again to get the reinforcement and plastic sheeting
- It rains so they must leave the project for the day, after assembling the formwork
- They come back two days later (after completing another indoors job) and fill the formwork with concrete, bringing 10 bags of concrete from the depot and collecting another 10 bags from Mitre 10 on the way
- They fill the concrete and smooth it over then leave for the day
- Next Monday morning they go to the shed retailer and collect the shed to deliver it to the site (two hours in total after confirming that it has been paid and they have the right one – with the two sliding doors)
- They arrive at site and realise that their tools have no power; they need to ask the neighbour for use of their power and an extension cord
- They assemble the main outside frame but realise they need a third person and call for one of their workmates who is working 25 minutes away
- The 3rd worker is onsite for 30 minutes and the shed is fully assembled with roof and all.