Work Orders vs Job Costing: What You Need First

The Fundamental Difference

Work order tracking answers: "Where is this job right now?"

Job costing answers: "Is this job profitable?"

Both use similar data (jobs, operations, time), but they serve different purposes. Work order tracking is about visibility and scheduling. Job costing is about financial performance.

Many systems do both—but understanding the distinction helps you prioritize implementation and understand what value you get from each.

What Work Order Tracking Does

Work order tracking tells you the status and location of every job in your shop:

• Status: Is the job waiting, in progress, on hold, or complete?
• Location: Which work center or machine is it at?
• Progress: How much is done vs. how much remains?
• Timeline: When did it start? When will it finish?
• Assignment: Who's working on it?

Value of Work Order Tracking

Work order tracking creates operational visibility. It replaces whiteboards, clipboards, and "walk the floor" status checks. When a customer calls asking about their order, you can answer immediately instead of going to find out.

Good work order tracking also enables scheduling—you can't schedule work you can't see. And it provides data for throughput analysis: how long do jobs actually take? Where do they get stuck?

What Job Costing Does

Job costing tells you the financial performance of each job:

• Labor cost: How many hours at what rate?
• Material cost: What materials were consumed?
• Overhead allocation: How much overhead should this job absorb?
• Margin: Revenue minus all costs—is this job profitable?
• Variance: How does actual compare to quoted?

Value of Job Costing

Job costing creates financial visibility at the job level. It answers questions your P&L can't: Which jobs make money? Which customers are profitable? Are our quotes accurate?

Job costing data also improves future quoting. When you know how much similar jobs actually cost, you can quote the next one more accurately.

Which to Implement First?

Implement Work Order Tracking First If:

• You frequently don't know where jobs are in your shop
• Customers call for status and you can't answer without checking
• Jobs fall through the cracks and get forgotten
• Scheduling is reactive—you firefight instead of plan
• Your biggest pain is operational chaos, not financial uncertainty

Work order tracking provides the foundation of visibility. You can't cost jobs accurately if you can't track where they are and what's happening to them.

Implement Job Costing First If:

• You already have reasonable job visibility (even if manual)
• You suspect some jobs lose money but don't know which
• Quoting feels like guesswork
• Your P&L shows thin margins despite being busy
• Your biggest pain is financial—you work hard but don't get ahead

If you can track jobs adequately today (even with whiteboards), adding cost tracking gives you the financial insight to make better decisions.

How They Connect

In practice, work order tracking and job costing use much of the same infrastructure:

Shared Data

• Jobs: Both track the same jobs
• Operations: Both track work done on each job
• Time: Work order tracking captures when work happens; job costing values that time

The Bridge: Time Tracking

Time tracking is where work order tracking and job costing meet. When a worker clocks into a job:

• Work order tracking sees the status change (job now in progress)
• Job costing sees the labor hours accumulating

A system that captures time at the job level serves both purposes. This is why most manufacturing software bundles work order management and job costing together—the data capture is the same.

Practical Advice

If you're starting from scratch, implement work order tracking first. Get basic visibility in place. Then add cost tracking once you have a stable foundation for capturing job activity.

If you already have decent job visibility, skip straight to adding cost capture. Turn your status updates into financial insights.

Either way, don't treat them as separate projects. Choose software that does both so you're not maintaining duplicate systems or re-implementing data capture twice.