What Are Construction Cost Codes?

Overview

Cost codes are numbers assigned to various jobs within a construction project. They're meant to help you track construction costs in greater detail.

If you've never seen a cost code before, here are a couple:

• 02-315 - Excavation
• 03-350 - Concrete Finishing
• 08-800 - Glazing

The first two digits of the code indicate the "division," or basic category of construction. For example, concrete work is categorized under the "03" prefix. (Sometimes the code is written without the hyphen, but it still has the same meaning.)

Cost Codes in Payroll

A standard payroll would use an employee's total hours to calculate their pay. In construction, however, each worker may be involved in several different tasks each week–maybe even several in a day. The different types of work they do must be calculated individually, and that's where cost codes come in.

A construction worker's timesheet can indicate which time code the work was done under. For example, a contractor may finish up a drywall job (cost code: 09-250), and then switch to installing a fence (code: 02-820). If you have an accounting software made for the construction industry, you can specify different pay rates for each cost code. These rates will be automatically applied when time sheets are entered into the system.

After specifying the cost code, pay rate is automatically entered. (A-Systems JobView)

Format

In large construction projects, many parties can be involved. Having a standard set of cost costs helps ensure everone is on the same page, and that information remains accurate. In 1963, The Construction Specifications Institute (CSI) created a standard set of codes, known as MasterFormat®. The original list of codes covered the folling 16 construction divisions:

• General Requirement
• Site Construction
• Concrete
• Masonry
• Metals
• Wood & Plastics
• Thermal and Moisture Protection
• Doors and Windows
• Finishes
• Specialties
• Equipment
• Furnishings
• Special Construction
• Conveying Systems
• Mechanical / Plumbing
• Electrical

In 2004, in order to keep up with the increasing complexity of construction projects, the original 16 divisions were expanded to 50. Some of the new divisions include Fire Suppression, HVAC, Communications, and Electronic Safety & Security. Mechanical Support and Plumbing were also split into their own divisions.

Other Changes

Another change was the switch from 5 digit codes to 6 digit codes. This allows a new level of detail to be added to existing codes.

(It is important to note that cost codes can be written differently, although the numbers remain the same. Some companies prefer the Division-Code format, as in 04-2200. Others prefer breaking the code out into levels, like so: 04 22 00. The meaning is the same.)

In some cases, even more specificity is required within a cost code. MasterFormat® 2004 allows for the addition of two more digits. The following codes illustrate the difference:

• 04 22 00 (two levels) - Concrete Unit Masonry
• 04 22 23 (three levels) - Architectural Concrete Unit Masonry
• 04 22 23.13 (four levels) - Exposed Aggregate Concrete Unit Masonry.

This 6-digit format, along with the fourth "level" for more specificity, are standard codes. If needed, however, companies can add their own fifth level. This would just be for their own data, and would not be recognized as a standard for other companies. For example, the US Government uses the fifth level to specify which agency is using the code. In this cost code: 31 62 19.00 40, the "40" specifies NASA.

To view the most up-to-date version of MasterFormat®, visit the official CSI Website.