Job cost accounting by contract and task order
The government's requirement is that cost be identified by contract, and by contract line item where the contract calls for it, through routine posting of the books at least monthly. Your requirement is knowing which contracts make money. The same structure serves both.
The hierarchy
Vehicle / prime contract IDIQ, GWAC, schedule, or single award
└─ Task order own funded value, ceiling, PoP, type
└─ CLIN where the contract requires line-item cost
└─ Cost element labor, travel, materials, subcontract, ODC
└─ Labor cat for T&M billing and category compliance
Set this up before the first charge posts. Restructuring job cost after a year of activity means remapping every transaction, and the incurred cost submission will need both structures.
What every job carries
| Attribute | Why it is there |
|---|---|
| Contract type | Drives billing method, revenue recognition, and whether the job appears in the incurred cost submission. |
| Funded value | The ceiling on what you can be paid. Drives the limitation of cost and limitation of funds notices. |
| Total estimated value | Distinguishes the funding ceiling from the contract ceiling. |
| Period of performance | Cost incurred outside it is generally not billable. |
| Fee type and rate | Fixed fee, award fee, or none. |
| Rate treatment | Which pools apply and whether any are capped by the contract. |
| Prime or sub | Determines flow-down obligations and who you invoice. |
The three-way tie
At every close, three things have to agree: the job cost report, the general ledger, and cumulative billings. Prove it with a short reconciliation rather than assuming it:
- Total direct cost on the job cost report equals total direct cost in the general ledger. Any difference is unposted or misposted, not a timing difference.
- Labor dollars in job cost equal labor distribution, which equals payroll, which equals the general ledger.
- Cumulative cost billed to date on each contract equals cumulative cost incurred less anything intentionally unbilled, with the reason recorded.
- Indirect applied in job cost equals indirect allocated in the general ledger.
That is the state DFARS 252.242-7006 is describing when it asks for interim determination of cost through routine posting.
What to look at every month
- Burn against funding on every cost-type and T&M task order, with a projected date of exhaustion.
- Fully burdened cost vs. billable value by contract. On FFP and T&M this is your actual margin; nobody else will tell you.
- Unbilled balance by contract, aged. Unbilled cost is cash you have already spent.
- Hours by labor category vs. the categories on the contract for T&M work.
- Cost posted outside period of performance — small numbers that turn into disallowances.
Frequently asked
How detailed does job cost need to be?
At minimum, by contract. By contract line item where the contract requires line-item cost. Most contractors find task order level is the practical floor, because funding, ceilings, and periods of performance all live there.
Should we job-cost firm-fixed-price contracts?
Yes. No auditor will ask, but without cost by contract you cannot tell which fixed-price work is profitable. Companies routinely discover a third of their FFP portfolio is losing money once they start measuring.
What causes job cost and the general ledger to disagree?
Usually a job cost report maintained outside the books, timing differences in indirect allocation, or charges posted to the general ledger without a job code. Each is a finding waiting to happen, and each is easier to fix in the month it occurs.
How do we handle cost incurred before award or option exercise?
It is generally not billable to the contract unless the contract authorizes precontract cost. Track it separately so it is visible, and never let it drift onto the job by default.
Related
Contract types and what they do to your books
FFP, T&M, cost-reimbursement, and IDIQ — what each one changes about revenue, billing, risk, and the records you have to keep.
Read →Billing and invoicing government contracts
How to bill each contract type, what a public voucher has to show, and how to shorten the gap between incurring cost and collecting on it.
Read →Building a GovCon chart of accounts
A chart of accounts that segregates direct, indirect, and unallowable costs by construction — so compliance is a byproduct of posting, not a cleanup project.
Read →