Why are we still frustrated as hell about how hard it is to measure and manage our labor costs?

There are several factors contributing to this problem:

  • We’ve got highly distributed teams
  • Crew members are going in a lot of different directions throughout the day (picking up materials, visiting different sites, etc.)
  • It’s getting harder to find and keep good people
  • We often don’t have the luxury of parking a supervisor on every project

But technology has failed at helping us solve this problem so far. That’s because the tools available typically fall into one or more of the following buckets:

  • They’re too complex and expensive
  • They rely too much on manual data entry, which is error-prone and delays the availability of the information needed
  • There is often no proof or audit trail to give us confidence in the data reported from the field
  • They’re not designed like the easy to use consumer-friendly mobile apps (think Facebook) that our field employees use in their personal lives

So, how DO we get our arms around managing labor costs? I see a pathway where we can leverage the right kinds of tools to overcome these challenges.

4 Things You Can Do To Make Your Labor Force More Profitable

1. Reduce payroll costs caused by avoidable mistakes

Employees arrive at 7:15 but report their start as 7:00. 30-minute breaks turn into an hour. People can’t remember their exact hours and end up guessing at the end of the week.

Those seemingly minor mistakes add up to lots of wasted payroll expenses, and it gets even worse when you add in overtime costs.

All it takes is a $20/hour employee to be off an hour each week. Once you factor in overtime, you’re looking at $2,000 per year per employee in lost profits from those avoidable mistakes.

You can eliminate these mistakes by taking 3 simple steps:

Reporting time data on at least a daily basis

You can create a simple Google form, have them text their start and stop times, or have a trusted employee collect paper time reports onsite. You can even use a purpose-built app to collect time from mobile phones. 

Including a GPS audit trail of self-reported hours

The only way to have complete confidence your payroll is accurate is to use software that gives you a complete GPS audit trail of entry time, exit time, exact addresses visited, and mileage driven throughout the day for each employee. 

And remember, geofencing alone doesn’t cut it here. Geofencing only shows you entry and exit times from your established projects but fails to provide information about where your employees go when they leave those projects and are still on the clock.

Automatically calculate workers’ comp and overtime rules to pass to your payroll provider

Once you’ve collected more accurate time reporting from employees, you’ll want to reduce the errors that can occur with manual data entry. 

The same technology that gives you confidence in the time submitted can help you automatically calculate overtime and workers’ compensation before passing the data directly to your payroll provider.

2. Improve client reimbursements

Without precise accounting of how much is spent on labor, it’s difficult to prove the work when you invoice your clients.

All it takes is one dispute with a client to understand how valuable it is to have an audit trail showing who did what, when, and where.

By looking for a tool that calculates your employee hours into actual labor costs at the client, project, and task level, you’ll be able to instantly generate reports to share with your clients and prove the work you’ve done.

3. More easily make real-time adjustments to your labor force to keep project profits on track

Think about your common workflows throughout the day: Is there manual entry of data? How many people are involved? Is it always the same?

The challenge is that projects change in real-time, and keeping them profitable means making decisions about how you’re running them just as fast. You need up-to-date data and you need it quickly.

The answer to keeping your project profits on track:

  • Feeding your entire team with labor cost data in real-time
  • Flexibility in viewing it from projects to tasks to employees
  • Calculated in actual dollar amounts, including unique pay rates and overtime

4. More efficiently schedule work by consolidating field communications

After you have confidence in measuring your team’s work, the next area of opportunity is improving how you manage it. And for me, that starts with consolidating your communication about work into one place.

Fragmented communication – like text messages, phone calls, and paper – makes it nearly impossible to make sure everyone is up to speed on what is going on. 

Data shows workers spend up to 30% of their time trying to figure out what to do. Imagine the profit gains if you can reduce that wasted time.

Start By Capturing The Low Hanging Fruit

There’s a lot that goes into successfully managing any construction business, and you wear a lot of hats to keep things going. But by taking some of these simple steps, you can unlock profits that are within reach. 

I was so frustrated by some of these issues that I ended up doing what any good builder does: I decided to build something myself to solve it. You can learn more about it here.

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