Real-Time Labor Costs Improve Your Bottom Line

Real Time ReportingAny contractor knows that successful project management hinges on labor. That’s not to say that smart material purchases and inventory control don’t also play a role in job profitability. However, unproductive labor will always kill profit, which is why knowing your real-time labor costs can improve your bottom line.

Traditionally, labor costs have been notoriously difficult to track because of the time lapse between what was happening in the field versus what your office records reflected. It wasn’t that long ago when, if a project manager wanted to know the job progress, he had to look at the last payroll processed – which could be a week old or more. While this was good information for the time, it certainly wasn’t accurate.

Thankfully, technology has revolutionized how contractors manage labor – and the overall job. Today, project managers can get real-time labor costs that tie into their construction accounting software, like ComputerEase.

In the construction industry – where customer expectations are high, profit margins are slim and the pace is faster than ever – you need labor costs on a daily basis to make informed decisions. Today, you don’t have to wait until the paperwork is turned in; you have technology to help you.

Field-to-OfficeTimesheets, daily logs, change orders and job costs can all be captured from the field so you know what’s happening at all times. Mobile devices with internet access can transmit data from the field directly to your accounting system in the home office, eliminating the double-entry problem.

When a real-time field-to-office solution is set up, you can manage a job from anywhere. Imagine a workplace where your crew is out in the field during the day, and by night you know who worked on what job, what tasks they performed and even what equipment was used. It really is that simple when you have the right system in place.

Learn more about our real-time solution, FieldEase.

6 Ways Construction Jobs Lose Money to Unproductive Labor

Kenwood Town CenterTo appreciate how construction firms can make a greater profit on projects, you first need to recognize that one of the most common way to lose money is with unproductive labor. Downtime, overtime and reworking a project will kill profits – and oftentimes, morale.

However, when management and the field work together to reduce costs, you can beat the labor budget and complete the project on time or ahead of schedule. Not only does this make the project more profitable, it also makes everyone proud to be a part of such a successful project.

Here are the six most common ways construction projects get hit by unproductive labor:

1. Sloppy documentation – If a job isn’t well documented and organized, things get missed. Schedules get jammed, materials and equipment aren’t delivered when they are needed, and crews are standing around. All of this results in lost production, unproductive labor – and lost profits.

2. No job schedule – Job schedules change, but you still need a plan to manage the job. The easiest way to lose money on a job is to fly by the seat of your pants and be in reaction mode. Map out the job from start to finish, and then fine-tune the plan in small increments (about once every 2 weeks). This strategy is fluid enough to adjust, yet solid enough to keep the project on schedule.

Construction Site in the Snow3. Weather – You can’t control Mother Nature, but you should be documenting weather-related issues and delays in your daily log. You also need to communicate these hold-ups with others who need to know so the schedule is adjusted accordingly.

4. Miscommunication – In the construction industry, it is important to have good external communications with architects, owners, general contractors and subs, but good communication skills always start internally. If your staff isn’t communicating with each other, mistakes happen. Everyone should understand the common goal of making the projects as profitable as possible and appreciate how their role benefits the overall health of the company.

5. Inaccurate job cost history – A crucial element of developing a solid estimate is knowing production rates and the cost of labor. How much is your fully-burdened labor rate? How many feet of pipe can you run per hour? Don’t guess. You should have access to past history from your job costing report. When you don’t use historical data to estimate, the bid you won can quickly turn into a company loss.

6. Resources not available – The quickest route to unproductive labor is to have guys standing around because equipment or materials aren’t available. To make sure you have the right resources at the job when they’re needed, you need to manage the project with organizational skills, good communication and an accurate job schedule.

So how do construction jobs make money?

By addressing all these common mistakes – which all revolve around having an accurate job costing report. When you have an accurate picture of the job, you know:

  • Work in progress and where your resources are being used compared to where you allocated them.
  • Project costs to calculate if your project is on target with the estimate.
  • Labor analysis to determine if your labor hours are on target with the estimate.
  • Unit productivity so you can see if you are completing the work at the pace you estimated.

When you have solid construction accounting software in place, the ways in which construction jobs lose money become more visible – which means you can adjust and fix any issues quicker. You are more organized, which makes you better equipped to schedule jobs. This leads to better communication and more productive labor. The only thing that job costing still can’t control is the weather.

Find more job costing tips in our webinar, “How to Optimize Your Profits through Job Costing.”

How to Evaluate Field-to-Office Software

Field-to-Office Communication

More and more contractors are recognizing the need for a fully integrated business management suite that allows for strong collaboration with owners, subs, suppliers, and field personnel. Without a constant link between your job sites and your office, data can get delayed or even lost in the shuffle. With that in mind, project management and accounting software companies are focusing heavily on providing cloud solutions for contractors. But with so many options, how do you determine what solution is best for your company? There are many factors to consider, but one feature is becoming increasingly important.

So far, most remote applications have relied on the “push-pull” method of synchronizing data. For example, a project manager will enter a change order in the field and the data will be sent back to the home office, where it needs to be manually entered or imported into the accounting system. This method has certainly been more convenient than a lengthy phone call or a trip back to the office, but new technology is beginning to make it obsolete. The future of field-to-office communication is real-time, live interaction.

This is one of the key factors you should look for. Your software provider should have plans to implement this technology in the near future if they haven’t already. If not, you may be using a package that has no motivation to improve in the future. If you want to stay competitive, your goal should be to find software that will evolve based on your needs. Be sure to ask your software provider about real-time collaboration.