Three Job-Costing Headaches That Technology Can Solve

Posted on 18th Nov 2021

Accurate time tracking is critical to managing labor costs in order to achieve profitability for construction businesses, separating successful businesses from the rest of the pack.

If labor costs aren’t allocated to the right project or task, or the quantity of completed work is wrong, it’s difficult to control the project’s budget. Accuracy has a direct impact on a project’s profits or losses.

Effective job costing and time tracking are only as good as the data that’s collected. Fortunately, today’s real-time cloud-based solutions can streamline these processes, as well as connect other key data points of the business. By integrating accounting, payroll, job costing, time tracking, asset management, and ERP programs, the right solution allows greater visibility across the board, and enables better decision-making in the process.

Following are three headache-inducing scenarios that contractors and supervisors commonly face while dealing with job costing and time tracking systems, along with insights on how up-leveling can decrease stress, mitigate human errors and help increase project profits.

Headache No. 1: Tracking labor hours and constantly changing tasks. Tracking the labor hours and productivity of a team hinges on each member accurately maintaining a paper or spreadsheet-based timecard. But not only do these take precious time to fill out, they are more likely to have inconsistencies. Oftentimes, these timecards are filled out days or even weeks later, after the work was done. Also, the team members could inadvertently type or write in inactive cost codes, omit hours or overestimate the time spent onsite or working on a specific task.

Real-time, cloud-based time tracking eliminates this issue by achieving true job costing for construction projects. Instead of waiting to fill out paper timesheets or a spreadsheet, each team member opens a cloud-based app on their phone, authenticates with a PIN, selects the project they are working on, chooses the task they will be performing, and selects the piece of equipment they will be using to perform their work for the day. After they confirm their entries, the app takes a selfie of the employee and confirms their physical location. The face-recognition capability of the app compares the employee’s selfie photo to their profile photo, and flags any issues with a mismatch alert.

A time tracking solution with face recognition makes job costs more accurate, because contractors know the right person is assigning labor hours to the proper project with complete accuracy. When a time-tracking app integrates with an enterprise resource planning or payroll system, the job cost data is available and approved in the cloud. Then the information is ultimately pushed into the corresponding data fields for processing and reporting. When the team switches from task to task, such as mixing cement to pouring the cement, each team member simply chooses the next task without the need to clock out of the previous task. Each task change takes less than three seconds to complete. The employee only needs to clock out when they’re done working for the day.

The best way to get the most accurate job costs is to collect job cost data as it happens. Employees can still capture job costs and clock in and out as it happens, even when there isn’t internet access or adequate cellular data service. 

Real-time tracking gives contractors the best data for accurate job cost reports, and captures real-time progress on projects, revealing issues at the earliest possible moment. This gives contractors the best opportunity to protect the project’s bottom line.

Headache No. 2: Dealing with data that's not in sync between applications. Contractors have used technology for years to increase the accuracy of job costing. Some still use paper. Others use spreadsheets or other stand-alone software. There could be moderate improvements from moving to spreadsheets over handwritten collection methods, but most spreadsheets contain computation or entry errors. Many companies collect data on paper, add that data into spreadsheets, then enter it again into software.

There are still many possible points of error and gaps that waste time and cause accuracy challenges. A simple data collection or entry error can lead to costly assumptions. By comparison, a modern integrated system, with controls, allows all of job cost data to stay in sync. Guardrails like these help contractors improve their job costing efforts, so that the projections they make will closely align with the work that will ultimately be done.

When ERP and payroll systems are integrated in real time with the time-tracking app, it creates an interconnected system where the project cost structure is the same. This ensures that the way you collect the data from the field matches the data structure for job cost reports in the ERP for accurate job cost reporting and payroll processing. Also, if there are new tasks added to the project midstream because of a change order, the ERP integration will automatically add the task to the time-tracking app for the field employee to select the new task. Additionally, more advanced integrations would only show the project-specific cost codes, to safeguard employees from selecting the wrong cost code.

The time-tracking solution mirrors the project cost structure in the ERP, so that supervisors are aware of how their project labor budget is being affected, while also being able to catch pending budget overruns early enough to make timely decisions to help keep their project on budget.

Here’s a hypothetical example: A concrete sidewalk crew shows up to work. When they clock in, a new cost code from the ERP was added to the time-tracking app from yesterday’s change order, such as the addition of a rebar mat to the sidewalk. The supervisor lets the employee know about it, and the employee can select the new task. There’s no possibility of mistyping or using a code for a different project, on a different day or a different rate. As the team completes their tasks, the time-tracking app and the ERP system continually share data, giving the supervisor continuous updates on their labor and production totals. Most importantly, it allows supervisors to compare the estimated budget to their actual costs, so they stay on time and within budget, and ensure that all labor is billable and accounted for, while still accounting for mid-project changes or additions.

Headache No. 3: Coping with inefficient manual processes. Moving data from one place to another on paper, spreadsheets, or in a program is incredibly time-consuming. Supervisors want their teams to spend their time working on a job, not wasting administrative time. Today, 26.4% percent of all construction companies state that none of their software solutions communicate with one another. That’s where integrated solutions come in, helping workers complete simple tasks with speed and accuracy.

In a cloud-based system with live field data collection, job cost reports are created from the most up-to-date data, showing the current status of every task on every project. Having this information gives contractors clarity into project status changes as they occur, and allows them to make rapid decisions when adjustments need to be made.

Another example. Using paper timecards, a payroll clerk must manually enter the payroll information into the payroll system, then an accounting clerk or project manager has to type in the number of hours per cost code and assign them to the right project. Then they need to enter the production quantities per cost code into the ERP or estimating software or spreadsheet. The payroll clerk can spend up to five minutes on data entry per employee, and the accounting clerk or project manager would spend at least that amount of time entering the job cost data into the ERP. A real-time time-tracking app instantly records their time entries, production units completed and job cost allocations, and integrates that data into payroll and the ERP system.

A scaffolding company’s employees spent four to five hours per day manually entering payroll data and making sure their employees’ time was coded to the right project. They also had to scan and organize the paperwork for digital storage. When they moved to a cloud-based time tracking app and collected labor and job costs in real time, they reduced manual processes to one hour a day, resulting in a 78% increase in productivity.

Every construction project has its set of moving parts, and can spread a supervisor’s attention thin. Whether it’s streamlining time tracking, improving job costing or transferring vital data from one department to another, a real-time cloud-based solution eliminates unforced errors, makes bids more competitive, and relieves unnecessary headaches along the way.

By: Mike Merrill