In the construction, an industry with notoriously low benefit margins, the profitability depends on the ability to understand and control the costs to keep your books in black. With the labor costs of the construction that constitute a 20-35% estimated of the total expenses of the project, according to the firm of Gordian consultancy, these costs are a crucial element in the profitability of your company. If these costs are not monitored and monitored, it may lead to the benefits and let you ask where the margin was at the end of the project.
On the other hand, understanding your true labor costs allows you to create competitive offers and more accurate estimates about future projects. In addition, a precise and real -time view of labor costs against the budget of your project allows you to detect possible expenses early, prevent the profits from fading and help to ensure that your company will continue to successfully.
What are the work costs of construction?
It is easy to think of labor costs only as the time rate of the people who carry the tool belt, but the costs of the construction labor go beyond the time wages paid to the people who work physically on the site. To get a clear image, it is important to understand the difference between direct and indirect work costs.
- Direct Labor Costs The expenses are directly related to workers who are actively involved in the physical construction process, including salaries, wages, bonuses, benefits, training and certifications for all employees who do practical construction work, such as carpenters, electricians, masons and plumbers.
- Indirect labor costsThey are also known as labor costs of support, they are the expenses associated with workers who support construction activities, but they may not be directly involved in physical work, such as project managers, captains, superintendents, administrative staff, computer science, accounting, HR, etc. Indirect employment costs also include expenses for safety officers and quality guarantee staff.
Control construction costs
Although labor costs vary widely depending on various factors, including labor shortages, seasonality, project location, government regulations, inflation and many more, strategies for the effective management of labor costs are widely applicable, regardless of the place where your business operates. Here are some key ways of controlling labor costs to keep your business profitable:
- Capture the hours of work accurately: The use of field and mobile software tools for time entry, including regular hours, overtime and breaks, can help to ensure that all direct work costs are precisely monitored to prevent or not pay for workers and subcontractors. Later, assigning them to specific projects and cost codes allows you to track the time data against the progress of the project to better measure the efficiency of the worker.
- Form well your labor strategy: You would not want a passenger electrician to pay $ 100 per hour to download materials from a truck all day, right? The same applies to your work force. Take time to identify the strengths and experience of your crew and focus on the assignment of tasks based on skills to align the appropriate experience to adapt the demands of the project.
- Analyze field work in real time: With updated work and progress data in the field, you can generate precise and timely labor cost reports to understand work expense and compare real costs with initial estimates. This helps you identify possible work expenses and eliminate unwanted budget surprises at the end of work.
- Build long -term roads: It is almost always easier and easier to keep existing employees than to find and hire new ones. Between lost productivity, hiring and board, hiring can cost thousands of dollars per specialized worker. By providing the opportunities, training and ways for long -term professional progression, you can develop the experience you need for the future, avoiding the unnecessary costs caused by the hiring of experienced labor.
Connect labor, labor cost and ERP to keep —yevable
If you want to truly get the control over your work costs, have an easy way to pick up time in the field on a mobile device and real -time visibility with a connected solution can allow you to make better decisions about work costs.
Connected labor and labor costs solutions draw data from fieldwork and compare estimates with real WIP reports, follow real -time work costs, generate comprehensive automated reports and see precise breakdown of project work expenses whenever you need them.
In addition, by connecting the cost of work to the Business Resource Planning (ERP), you can see how the changes in labor costs will affect the budget of your project, allowing you to make informed decisions and supervise the financial health of your real -time projects to maintain your healthy profitability in all projects.
While many elements affect the work costs of construction, precisely capturing working hours, delegating tasks based on the skill, analyzing the progress of the project, and investing in the progression of the career of employees can help reduce these costs while building a stronger and more faithful labor.
For more information on how a construction suite connected for purposes can help you control labor costs and to maintain profitability, visit Trimble.com.
