Construction job costing is a complex process that takes a number of factors into account for each and every construction project. In other words, it looks at the granular costs of a project and gets down to the “brass tacks” to reduce overall expenses. These micro-costs add up to a tidy sum, and when unaccounted for, can significantly affect cash flow and profit margins.
Time tracking is one of the key areas where construction job costing may miss out on a few details. As a result, it’s vitally important for construction companies to integrate timesheet tracking software into their project management workflow. Let’s take a look at the close relationship between timesheet tracking and construction job costing, and why the two should be inseparable, always.
What is a construction job costing?
Construction job costing looks at each individual job and calculates overhead, materials, and labor. It’s essentially a finely detailed breakdown of all possible or anticipated expenses, including time tracking for sub-contractors and their teams. Job costing is very specific and requires significantly greater scrutiny than project costing, as the former means taking each worker’s hour into account.
What’s more, construction job costing is exceedingly more complex than other types of job costing, due to a mix of stakeholders, often abrupt changes in the project timeline, dynamic pricing of raw materials, and labor costs. But most important of all, is the need to closely monitor and track the hours logged in by workers, to ensure zero time tracking theft, and to assess real-time labor costs. Because job costing can be an arduous task, construction companies often need the assistance of an advanced financial management software.
What’s inside construction job costing?
- Material costs – concrete, steel, timber, and other raw materials, plus it even gets down to specifics, such as nuts, bolts and screws
- Labor costs – each worker’s daily or hourly rate, and the amount of time required to complete the job/task
- Overhead costs – marketing, administrative, etc.
Tracking all of these expenses down to their specifics, helps construction company owners and managers to track project progress, efficiency, budget, and cashflow. While there are multiple ways to track these expenses, one of the toughest hurdles, is missed hours and inaccurate labor costs. This is where timesheet tracking software comes into play.
Benefits of timesheet tracking
Manually tracking workers’ hour is an impossible feat, especially in large-large real estate projects. If done manually, it can be an arduous, error-prone task. A timesheet tracking module integrated into an ERP system ensures that the entire process is streamlined and synced with the overall construction project management workflow. Here are just a few of the many benefits of timesheet tracking:
- A fast, easy, and efficient way for workers to record their time for specific tasks, keep track of projects and reduce overruns
- Timely approvals help workers to get paid quickly, which boosts their morale
- Enhances transparency, productivity and efficiency
- Eliminates time tracking theft, inaccuracies, and human errors
Here’s how a dedicated construction ERP with timesheet tracking can help “build” a project, from the ground, up:
- Track labor performance. Typically, construction workers are contract-based and therefore, may not be permanently associated with a specific project. Timesheet tracking tools ensure objectivity, and can help identify various patterns in how different workers manage their time.
- Capture work hours in a transparent manner. Construction requires workers and managers to work in the field. They may not be able to track their time as would if they were situated in an office. An ERP’s mobile capabilities enable workers to access the time tracking system from any mobile device or tablet, from any site location, at any time, ensuring that all hours are accurately reported, accounted for, and that’s they are compensated fairly.
- Identify delays and cost overruns. Time tracking software helps managers quickly identify if workers are not prompt or if they are not adhering to schedules. With efficient time tracking, you have proven, credible and actual accounts of workers’ hours, to ensure a seamless, gap-free work schedule. This, in turn, helps reduce manpower costs and related expenses.
- Streamline payroll. The construction industry is a dynamic and complex network of vendors, contract workers, full-time employees, and others. Managing payroll of these varied entities can be cumbersome and time-consuming, at best. Efficient timesheet tracking accurately identifies and monitors time worked, and ensure that everyone is paid on time, and on budget.
Where timesheet tracking and construction job costing meet
Construction job costing is prone to errors and miscalculations. As most of the factors associated with the construction industry are dynamic in nature, companies must have the necessary tools to ensure accurate project planning, budget forecasting, and effectively manage and track employees’ work hours.
Although financial management software can tackle most of the challenges of manual construction job costing, it’s simply not enough to get the “job” done. When powered by a dedicated construction ERP software with integrated time tracking tools, companies can rest assured that every hour on the clock will help them increase productivity, efficiency and their bottom line.
To learn more about ERP-enabled time tracking software solutions, contact us today to schedule a call with one of our ERP experts.