Start with source records and a declared basis
Records to gather
- Task list, estimated delivery hours and the internal labour-cost basis. (not complete)
- Material quantities, current unit costs, freight, waste and consumables where relevant. (not complete)
- Subcontractor proposals and job-specific equipment or access costs. (not complete)
- The overhead allocation method and the costs it already contains. (not complete)
- One stated tax and currency basis for every compared amount. (not complete)
- Scope assumptions, exclusions and the trigger for a change quote. (not complete)
Capture each cost component once
| Component | Quantity or driver | Source | Double-count check |
|---|---|---|---|
| Labour | Task hours × internal cost per hour | Time estimate and labour-cost record | Does the hourly cost already include overhead? |
| Materials | Units × cost per unit | Supplier or inventory record | Are freight or waste already in unit cost? |
| Subcontractors | Quoted quantity or fixed amount | Subcontractor proposal | Is the amount also inside a bundled task cost? |
| Equipment and access | Usage, hire or job-specific amount | Hire, usage or access record | Is it shared overhead or direct to this job? |
| Allocated overhead | Stated allocation driver | Period overhead record | Is it already recovered through labour or another line? |
Protected cost = labour + materials + subcontractors + equipment + allocated overhead + uncertainty allowance
- Cost components
- Non-duplicated job costs on one declared basis (currency) — business records and labelled estimates
- Uncertainty allowance
- Explicit amount for an identified estimation uncertainty (currency) — labelled user assumption
- Protected cost
- Cost base used for the selected pricing scenario (currency) — calculated scenario
Markup on cost and margin on price use different denominators. Label the method instead of using an unexplained percentage.
Worked quote-cost reconciliation
The example uses user-labelled assumptions in generic currency units and is not a market price.
| Line | User assumption | Amount |
|---|---|---|
| Labour | 32 hours × 75 internal cost | 2,400 |
| Materials | Recorded quantities | 900 |
| Subcontractor | Current proposal | 600 |
| Allocated overhead | Stated job allocation | 400 |
| Base cost | Sum of non-duplicated cost lines | 4,300 |
| Uncertainty allowance | User assumption of 300 | 300 |
| Protected cost | 4,300 + 300 | 4,600 |
Separate cost recovery from customer presentation
- Reconcile the protected cost from source records and labelled assumptions.
- Select and label the pricing method rather than mixing markup and margin.
- Stress-test hours, quantities and costs that could reasonably change.
- Show scope, exclusions, revisions, timing and the change-approval trigger.
- Present tax and payment amounts on the basis required for the customer context.
- Keep the estimate categories for the actual job-cost review.
Related tools
- Job Costing & Margin Planner
Compare quoted and actual job economics and identify overruns
- Project Quote Builder
Turn scoped task rows and project costs into a transparent fixed quote
- Subcontractor Markup Planner
Price subcontracted delivery
Frequently asked questions
- Is a markup on materials the same as margin on the quote?
- No. Markup divides an added amount by cost; margin divides profit by selling price. Reconcile the completed quote against the total protected cost.
- Is an unused uncertainty allowance automatically profit?
- Not as a planning assumption. It protects a named uncertainty. Review actual delivery, the agreed price and all relevant costs before interpreting the outcome.
- Can a previous supplier price be used without review?
- Only as a clearly dated assumption. Use current records for the actual quote where possible and record the source and review point.
Calculation methods used in this guide
- Job Costing & Margin Planner methodology — Margin101: Cost-category, estimate and actual reconciliation contract.
- Project Quote Builder methodology — Margin101: Protected-cost, scope and project-scenario boundaries.
- Subcontractor Markup Planner methodology — Margin101: Subcontractor cost, coordination, non-duplicative risk protection and client-price evaluation.