If your company lives and dies by the profits from project-based work, you likely already understand the importance of keeping meticulous records on how much projects cost. The more granular you get with that data, the more efficient—and profitable—your business can be.
Unfortunately, there are countless factors that impact the final price of a project, and keeping track of it all can seem impossible. But with a well-planned strategy (and efficient job costing software), you can turn that ‘impossible’ hurdle into a data-generating advantage for your business. Here’s how labor tracking can help you gain valuable information that will have positive impacts on your bottom line.
Track Labor Costs
This one seems like a no-brainer, but it’s also one of the most important factors. Labor costs make up the largest percentage of most companies’ operating expenses, and yet there are so many businesses out there that don’t store, or review, data on employee time and attendance.
Obviously paying for labor is a cost of doing business, but that doesn’t mean you can’t be smarter about how you’re spending money on it. Modern technology has made tracking labor hours easier than ever, especially with mobile time clock apps that can be used anywhere, anytime.
With this data in hand, you’ll be better equipped to scale your workforce to your workload, which means you’re not paying for employees you don’t need and you’re not overworking employees with too many projects.
Break Down Jobs Into Smaller Parts
Assigning an overall price to a project works great when presenting proposals to prospective clients. But for internal use, you should also have an idea of how much time individual aspects of those projects are costing you.
Tracking time and costs for smaller steps in a project might seem unnecessarily detailed, but with project cost tracking you’re able to offer incredibly accurate price estimates that can help you win bids.
By collecting data on individual tasks, you’ll be better able to find glitches in the process and see which areas are costing you the most. This will help you better plan labor needs, schedule subcontractors more efficiently, and devise solutions for any trouble areas.
Identify Hidden Costs
Perhaps one of the most overlooked items of any business’s budget is hidden costs: items that can cost the company significant amounts of money but are hard to account for directly. The reason these costs are hidden is that they are usually intangible, such as excess work hours spent on something that could be easily automated or just performed differently.
Job cost tracking helps you determine where hidden costs are coming from, giving you the information necessary to streamline your operation and cut back on unnecessary costs.
Analyze the Data
Once you start tracking labor time and you have data on how the work is getting done, the next step is analyzing it for trends and insight. From time card reports to instant payroll data, you should have all the information you need to make better decisions about the direction of your company. You just have to look for it.