With 61% of the construction projects behind schedule, it’s no surprise that many projects experience budget overruns. The more a project is delayed, the more it will cost. So, what can you do to avoid this?
One of the most basic things is to keep track of project time and labor costs. Tracking material and labor cost helps ensure the project stays within budget. Meanwhile, timekeeping is essential to prevent delays and loss of contractor reputation.
In this article, we go deeper into the importance of these two elements.
What is time tracking?
Time tracking is the process of monitoring the number of hours spent on a specific construction task or the whole project. Construction managers use cost codes or CSI codes to create funds for every task or trade, depending on how much time it takes.
Why is time tracking important?
Construction time tracking is important for many reasons. Here are some of them.
Construction managers use the time taken on every construction task to determine a project’s progress. Time tracking helps them ensure a project stays on schedule.
They can also use time tracking to identify delays before they become an issue. For example, if a certain task is taking too much time, it’s evident that the subsequent tasks will also be delayed.
Likewise, if that task takes longer than anticipated in every project, the project managers can allocate more time to it in future projects to create an accurate timeline.
Construction time tracking also helps allocate resources to different aspects, such as materials, equipment, and labor. If you know how much time a task takes, you can assign it the right amount of resources.
It helps prevent shortages and overallocation. For example, if a project manager knows building a roof will take two weeks, they can make sure the necessary materials and labor are available.
Construction projects have deadlines and contractual obligations. Time tracking helps construction project managers comply with these obligations. They can predetermine if a project will meet the deadline and take necessary measures to tackle deviations and delays.
Time tracking also gives insight into project productivity and contractor performance. By tracking how much time your workforce took to complete a project or task, you can determine how productive they were.
You can use this data to identify areas for improvement. It can also help you determine which workers you should rehire for subsequent projects and which contractors you should work with in the future.
What are labor costs?
Labor costs include all the money you spend on labor for a construction project. It includes:
- Wages and salaries
- Overtime pay
- Benefits and Insurance
- Payroll taxes
- Training and certification costs
- Subcontractor fees
- Per-diem expenses, such as travel, lodging, and food
- Union dues
- Incentives and bonuses
Why is it important to track labor costs?
Tracking labor costs is not only important for budgeting and cost control. It also has other benefits. Here are some of them.
By tracking labor costs, construction project managers can estimate a project’s cost. The labor costs account for 40% to 50% of total construction cost. So, having a good measure of the labor cost can help you determine the total project cost.
Construction project managers can use labor costs to determine their labor productivity. It can help them measure labor performance against certain benchmarks and industry standards.
For instance, if a project has higher labor costs than the industry average, there are likely workflow inefficiencies in it. Or, the workforce may not be adequately trained to perform the task in the average time it takes.
Project bid estimation
Project contractors use labor costs to bid on a construction project. If the contractor knows how much labor will cost, they can use that information to make an accurate bid.
It keeps them from bidding over the market price and losing potential projects, and bidding below the actual project cost to lose money.
Construction projects are prone to unforeseen circumstances, such as risks, price hikes, and delays. Labor cost tracking can give project managers real-time insight into their workforce’s status and performance.
For example, if the project labor is higher than anticipated in the first few project tasks, the trend will likely continue in the future too. Construction project managers can use this information to allocate resources properly and minimize any risk of cost overruns.
How to track time and labor costs on construction sites?
Time and labor cost calculation on a construction site may be manual or software-based. Manual tracking can be done using the following:
Time clock systems
You can implement a time clock system that laborers use to clock in and out of work. Provide unique swipe cards or identification codes to your workers so that you can track them.
It will help you track hours by calculating how much time construction workers spend on the site. Then, you can multiply the number of hours by the hourly wage of each construction worker type to determine labor costs.
Daily log sheets
Another method is to provide daily log sheets to your workers. The log sheet should have slots for information, such as:
- Labor classification
- Hours worked
- Hourly wage
- Equipment used
- Additional costs (such as per-diem) incurred
Use the log sheet data to calculate the time worked and costs incurred by your labor daily.
Since manual calculations and tracking systems are prone to error, software and mobile apps are becoming popular. Employee time tracking tools have built-in features to store, analyze, and utilize real-time construction data.
You can also integrate these apps with your project management tools for real-time labor cost analysis.
Tracking construction project time and labor costs is important for proper resource allocation, performance analysis, and cost control. You can do this in many ways, from manual procedures to advanced mobile applications and software. Regardless of the method, ensure your labor knows how to use the time and cost tracking systems.