Before we try to answer the question, let’s briefly define the terminology.

Cost Codes are specific types of work being done on a project. Examples of cost codes would be footings, CIP walls, and slabs on ground. These generally resemble the CSI Master Format. The differences between companies using them will be in the amount of detail that they are trying to collect for these specific types of work. Generally, I have found the detail is too complex for the field.

Phases are segments, areas, floors, buildings, etc. The best way to describe them is from the drawings and the descriptions that the architect used.  Phases are only used when you what to break down the cost codes to match the schedule and analyze the cost in greater detail.  In some accounting systems phases are called cost codes!  This makes job cost and production measuring discussions difficult.

Cost classes are the types of cost.  Examples are labor, material, subcontractor, etc.  In some accounting systems cost classes are really cost codes!

To simplify this, we will define the terms as follows in this blog:

Phases: areas, floors, buildings, etc. (schedule, sequencing)

Cost Codes: footings, CIP walls, slab on grade, etc. (production measuring, skill)

Cost Classes: labor, material, subcontractor, etc. (Cost)

 The diagram below illustrates this (click for a larger version).

This chart is based on my accounting system and is like many other accounting systems, but this format is not common to all accounting systems in the industry. Because of the differences, trying to standardize production measuring and skill assessment would be impossible. Accounting systems are designed for cost collecting and reporting not production measuring.  Forward communication is not designed as a function of accounting systems. Accounting systems provide a great rear-view mirror for costs but until recently most accounting systems didn't even recognize a quantity of measure associated to a cost code.

Production measuring requires a standardization in terminology. Each cost code needs to be defined based on the tasks required, skills needed, safety needed, quality expected, and then it must be measured and evaluated daily. The questions then are:

Does anyone measure cost codes by a unit of measure like I have described above?

Should we “standardize” the terminology for our industry?

If so, who should do it?

When looking at the chart above, specifically the cost codes.  Could the skills required to accomplish each cost code be measured and defined daily with production measuring? Any comments would be appreciated.

To conclude, a cost code is a specific type of work. Generally they closely follow CSI, but not always.  I propose that the word “cost” be replaced with “work” and we make sure that a unit of measure for each work code is established and communicated daily so that all employees take an active part in reaching realistic expectations.