About cost codes and divisions

Cost codes are an important part of the job costing system. They allow you to separate costs into different categories and compare budgeted costs to actual cost for a job. Each cost code is assigned to a division, which provides a way to group cost codes for subtotaling on reports. Sage 100 Contractor organizes job costs in order of detail by job and phases, cost codes, and cost types.

A common mistake when creating a cost code list for general contractors is building a long list that contains too much detail. It is unnecessary to include trades that the contractor does not perform or subcontract. Unless a general contractor performs the work, one cost code is usually sufficient. For example, a general contractor rarely needs separate cost codes for rough electrical, electrical trim, electrical fixtures, and alarm. Including such trades only creates an unwieldy cost code list, which leads to errors in data entry.

The cost code list for most single-trade subcontractors can be very short; a dozen codes are usually sufficient. Some contractors, though, may need more cost codes. Mechanical subcontractors, for example, may need approximately twenty codes to break down both plumbing and HVAC work.

Divisions are used to group cost codes. Because Sage 100 Contractor uses divisions to subtotal costs for cost-based reports, many contractors create divisions based on the Construction Specifications Institute (CSI) divisions. However, you do not have to rely on the CSI structure for divisions and can create your own.