Quoted vs Actual Job Cost: Find the Jobs That Lose Money

A job leaves the shop, the invoice goes out, and the quote is filed. Whether the job made the margin it was quoted at is a question most small machine shops never ask, or ask only when the year-end accounts disappoint. By then the losing jobs are mixed in with the good ones, and nobody knows which part numbers, which customers or which machines took the money.

Comparing quoted cost with actual cost, job by job and block by block, is how you find them while they are still recent enough to fix. This guide shows a simple method, a worked example in EUR, and how to turn the gap into better quotes instead of a report nobody reads.

Why quoted and actual cost drift apart

Every quote is a model: estimated setup hours, estimated cycle times, an expected scrap rate, a supplier price. The job on the floor is the real thing. They diverge for four kinds of reasons, and each needs a different fix:

• The estimate was wrong. The cycle time model is optimistic, a setup is always longer than the standard, programming of a new part type takes more than assumed. Fix: correct the standard for the next quote.
• The execution was off. A tool broke, a fixture had to be redone, two parts were scrapped. Fix: the process, not the quote, unless it happens on every job of that kind, in which case the quote must carry it; see estimating scrap and rework cost.
• The scope changed. A new drawing revision, an extra inspection report, a split delivery. Fix: bill it, or re-quote before you start.
• External costs moved. Material price, a supplier's minimum, transport. Fix: update prices and minimums in your cost data.

Without a comparison you cannot tell these apart, and the most common reaction, "add 10% to everything", overprices the jobs that were fine and still underprices the ones that were not.

What you need to compare

You do not need an MES to start. You need the quoted cost broken down by block, and the actual figures for the same blocks:

1. The quoted cost sheet: material, programming, setup and cycle per operation, secondary operations, inspection, subcontracted work, tooling, packaging. If your quote is one number, start there: a quote without a breakdown cannot be checked. How to calculate job cost shows the sheet line by line.
2. Actual hours per operation from job cards or timesheets: setup and run time separately, per machine.
3. Pieces started and pieces delivered, to count scrap.
4. Supplier invoices for material and subcontracted work, transport included.

Price the actual hours at the same rates used in the quote. The point is to measure the quantities that changed, not to re-argue the rates.

Worked example: the shaft that was quoted at 20% and made 4%

A batch of 50 turned and milled C45 shafts, quoted at a cost of €1,594.50 and sold at €39.86 per piece, €1,993 in total, for a 20% margin. The job card and invoices give the actual figures:

Block	Quoted	Actual	Variance	%
Material and sawing	€208.00	€216.32	+€8.32	+4.0%
CAM programming	€150.00	€210.00	+€60.00	+40.0%
Lathe setup	€112.50	€187.50	+€75.00	+66.7%
Turning cycle	€406.00	€507.00	+€101.00	+24.9%
Milling setup and cycle	€346.50	€371.20	+€24.70	+7.1%
Deburring and inspection	€123.50	€134.50	+€11.00	+8.9%
Zinc plating, subcontract	€198.00	€231.00	+€33.00	+16.7%
Tooling and packaging	€50.00	€51.20	+€1.20	+2.4%
Total	€1,594.50	€1,908.72	+€314.22	+19.7%

The planned margin was €398.50 (20%). The actual margin is €1,993 − €1,908.72 = €84.28, 4.2%. The job did not lose money, but it earned about a fifth of what it was quoted to earn.

Reading the table:

• Programming and the two lathe lines explain €236, three quarters of the overrun. Programming took 3.5 hours instead of 2.5, setup 2.5 hours instead of 1.5, and the turning cycle ran at 7.8 minutes instead of 6.5.
• The cycle overrun has two parts. About €81 comes from 1.3 extra minutes on each of the 50 pieces: that is an estimate error, and the cycle standard for this kind of shaft should change. About €20 comes from turning two extra pieces to replace two scrapped ones: that is execution.
• The plating overrun is transport. The batch was split into two deliveries, €90 of transport instead of €60, plus handling. A split delivery requested by the customer is a scope change and could have been billed.
• Milling, deburring, inspection, tooling are within 10%. No action needed.

The conclusion is specific: raise the lathe setup and cycle standards for this part family, quote the programming of a new part type at 3.5 hours, and put transport per delivery on the quote. "Add 10% to everything" would have raised the price of the milling work that was already right and still not covered the lathe.

A routine that takes an hour a month

1. Choose the jobs. Every job above a value you set, plus every repeat part number, plus a random sample of the rest.
2. Set thresholds before you look. A reasonable start: review any job whose actual total is more than 10% above quoted, and any block more than 20% off.
3. Classify each variance as estimate, execution, scope or external. Only estimate errors change the quoting standards.
4. Change the standard once, in one place: the machine rate, the setup time of a part family, a supplier's minimum. Then re-quote the next order of that part with the corrected values.
5. Track the trend. The share of jobs within threshold should rise from month to month. If it does not, the standards are not being updated, or the jobs are not being measured the same way twice.

A job that loses money once is a data point. A part number or a customer that loses money every time is a pricing decision; see discounting discipline in the machine shop before you accept the next order at the same price.

FAQ: quoted versus actual job cost

What is the difference between quoted cost and actual cost of a job? Quoted cost is what you estimated before the job: hours, material, subcontracted work and consumables priced at your rates. Actual cost is the same list measured after the job, from job cards, piece counts and supplier invoices. The difference, block by block, shows where the estimate or the execution went wrong.

How do you find loss-making jobs in a machine shop? Compare quoted and actual cost on every significant job and every repeat part number, using the same rates for both. Flag jobs whose actual total exceeds quoted by more than about 10% or whose actual margin falls below your floor, then look for the block that caused it.

How often should a machine shop compare quoted and actual cost? Monthly is enough for most small shops, provided each job is measured soon after it closes, while the people who ran it still remember why a setup took longer.

Should every variance change the quote? No. Only estimate errors should change the quoting standards. Execution problems belong to the process, scope changes should be billed or re-quoted, and external price changes belong in your material and supplier data.

The quoted side with QuoteBuddy

A comparison needs a quote that can be taken apart. QuoteBuddy produces the quoted side of it: every estimate lists each operation with its setup and cycle time and its cost at the hourly rate of your machine, plus material, programming and outsourced processes with your uplift, for each quantity you quoted. That breakdown is the baseline the actual figures are compared against. QuoteBuddy does not record actual hours: those still come from your job cards, timesheets or production system.

When the comparison shows a systematic gap, the fix goes back into the estimate: change your machine rates once in your settings, or change an operation's time on the next estimate and lock it, so the corrected value stays when the drawing is read again. To start with a quote you can take apart, try QuoteBuddy free for 30 days: unlimited quotes, no credit card. For contract manufacturers who quote and re-quote the same part numbers, see quoting software for contract manufacturers.