How To Reduce Labor Costs in Construction Projects? 8 Practical Tips

Labor may amount to 20% to 40% of a project’s costs. That’s a huge range—and a significant burden. Unfortunately, labor costs are frequently complicated and difficult to manage. How do you know whether your employees are at their most productive? How can you even make sure that they’re at the right site? 

Many companies are still working with pen and paper records, text-based scheduling systems, and manually entered labor reports. When you don’t have the right tools, everything becomes more difficult—and more expensive. 

Today, let’s look at how to reduce labor costs in construction through easy, practical tips that you can implement today.

1. Get an App To Track Your Employee Hours

Regular time, overtime, break time all must be accurately tracked before you can improve labor costs and compliance. Invest in time tracking software to accurately track your employee hours so you don’t need to chase employees down for their time cards ever again.

A GPS time tracking app doesn’t just record employee hours, but it can also attribute the hours by project and by the site. Once you have that information in hand, you can dig deeper into your productivity and your costs.

2. Invest in the Right Pieces of Technology, Not Just Any Technology

Don’t get “shiny new toy” syndrome. Every platform, app, and widget will promise to make your life easier. Some of them will, but some of them won’t.

For most contractors, the “right” technology is easy to use and straightforward. If you have a small contracting business, an expensive “enterprise resource management” suite with all the bells and whistles is just going to bog you down.

Reduce your administrative time and your labor burden by investing in tools that will improve and automate your workflow without weighing you down, including GPS time tracking, payroll integration, and real-time scheduling.

3. Deploy Your Team Members More Effectively

Don’t have your team running from one part of the city to the other, if you can avoid it. Every hour they spend commuting is an hour that they aren’t working. Schedule employees efficiently so they spend the least amount of time possible traveling.

With real-time GPS mapping, you can pull up your current employee locations and deploy them to new sites effectively. Need to send someone to get a quick estimate for a client? Open Workyard and within seconds you’ll know which employee is closest. 

4. Track Your Labor Costs in Real-Time

Once you transition to a time tracking app, you can start reviewing your labor costs in real-time. Don’t just look at where your money is going—look at which projects and which employees are costing you the most. Use a real-time labor tracking app to tell when you’re about to go over budget or when a project is taking much longer than it should. 

Sometimes, it’s unavoidable; the job just takes more time. But your real-time labor tracking app will also provide an audit trail, so you can bill overages to clients as your contracts allow.

5. Build Job Cost Reports To Analyze Your Spending

Run project cost reports and job costing reports to identify areas in which your company may be over-spending. Throughout a project, you can compare your job cost reports with your quotes to determine whether you’re still on target. After a project, you can analyze the differences between your job cost reports and your quotes to make your future quotes more accurate. 

6. Negotiate Better Rates With Your Contractors

When was the last time you asked your contractors for a quote? Have you been getting bids for each project, or do you have a few “go-to” contractors that you frequently employ?

Over time, you may build relationships with suppliers and contractors and continue paying them the same rate that you started with (or higher). But as a proven customer, you have room to negotiate. Take the time to periodically connect with your contractors to verify that you’re getting the best possible deal.

7. Bill What You Can to Your Clients

When you can, let customers know in advance that there may be additional labor costs, material costs may go up, or complications may arise. 

Whether it’s supply chain issues or weather variability, there are certain elements that you can’t control. Any labor quote is really a labor estimate and there are no guarantees or fixed prices.

8. Keep Your Employees Happy

Turnover is extremely expensive. When an employee leaves, another employee has to be trained. They need to be brought up to speed on all the current projects, and they may not be at their most productive for weeks.

Employees tend to be happiest when they find it easier to do their job. Use seamless, easy-to-use tools to get them up to speed with the right equipment and to support health and safety objectives.

Reduce Your Labor Costs With Workyard

Workyard can immediately start saving your organization money by recording your employee hours accurately. A minute here and a minute there adds up. Not only will Workyard account for every on-site and off-site hour, but it will also categorize work hours by the project to make it easier to analyze reports, complete payroll, and file for reimbursements.

Labor is likely already costing your company a lot, both in terms of time and money. It’s worth it to take the time to explore new options for reducing your labor costs. Try out a free trial of Workyard to see how much Workyard can save you.