To know what your labour actually costs per job, you need three things: hours recorded against each job, a loaded labour rate for each person or role, and a report that multiplies the two every week instead of once a month. Most construction businesses already have the hours in a timesheet or payroll system. What's missing is the connection between those hours and the job cost report.
Quick question: can you tell me right now how much labour you've spent on each active job this week? Not at the end of the month. Right now.
The visibility gap
Many construction businesses can't answer that question. They know total payroll, but they can't split it by job until well after the work is done. "Job 4217 labour cost this week?" It's a question mark.
That gap matters because labour is one of the costs you can actually do something about while a job is running. If a stage is taking more hours than the estimate allowed, you want to know while there's still time to change the crew, raise a variation or talk to the client. Finding out at month-end, or when the job closes, turns a problem you could have managed into a loss you just record.
The data already exists
If your timesheets record against jobs, using tools such as Deputy, Baracon, ClockShark or similar, that data already exists. So does your payroll data in Xero or MYOB. The issue is that the hours sit in one place, the pay rates in another and the job budgets in a third, often a spreadsheet.
A simple report or dashboard that pulls timesheet hours by job and multiplies them by your loaded labour rates gives you labour cost per job as the week goes on. No more waiting for month-end. No more surprises when the job cost report finally lands.
What a "loaded" labour rate means
The hourly wage is only part of what a worker costs you. A loaded rate also includes the on-costs that come with every paid hour, such as:
- Superannuation
- Workers' compensation insurance
- Payroll tax, if it applies to your business
- Leave entitlements and public holidays
- Allowances, tool costs and vehicle costs, if you allocate them to labour
Work these out with your accountant or bookkeeper, by person or by role. If you cost jobs using the base wage only, every job will look more profitable than it really is.
Practical steps to get labour cost by job
- Check how hours are recorded. Every timesheet entry needs a job number, and ideally a cost code or stage. If staff can clock on without picking a job, fix that first.
- Agree on job and cost codes. Use the same codes in your timesheet app, your accounting system and your estimates, so hours can be matched to budgets.
- Set your loaded rates. Keep them in one place, review them when award rates or on-costs change, and decide who maintains them.
- Connect timesheets to job costing. Link the timesheet system to your job cost reporting so hours flow across automatically instead of being retyped. See our page on construction financial visibility for how this fits with WIP and cash flow.
- Report weekly against budget. Show labour cost to date against the estimate for each job, with the jobs going over budget at the top.
- Act on it. A report only helps if someone looks at it. Put it on the agenda for the weekly project or operations meeting.
For businesses that want this on a screen rather than in a spreadsheet, construction KPI dashboards can show labour against budget for every active job in one view.
Frequently asked questions
Can't we just use payroll reports to see labour by job?
Payroll systems can sometimes split wages by job if hours are coded correctly, but they usually show base pay and only update when payroll runs. A job cost report built from timesheets and loaded rates gives you a fuller cost and a more current picture.
How accurate does the timesheet data need to be?
Accurate enough that hours land on the right job and stage. It doesn't need to be perfect to start. A weekly view that's roughly right is far more useful than a perfect one that arrives a month late, and accuracy improves once crews see the numbers being used.
What about subcontractor labour?
Subcontractors are usually costed through their invoices or purchase orders rather than timesheets. Include them in the same job cost report so you see the total labour picture, not just your own staff.
Do we need new software to do this?
Not necessarily. Many businesses already have a timesheet app and an accounting system that can provide the data. The work is usually in connecting them and agreeing on job codes, not in buying something new.
If you'd like to see labour cost by job each week instead of each month, book a free initial chat and we'll look at what your current systems can already give you.