Tracking crew time by cost code: job costing, productivity and change orders
Updated · 3 min read
Labor is one of the largest and most variable costs on a construction project. The American Society of Civil Engineers' standard on productivity calls it the component with the greatest variability, and lost productivity is a leading cause of overruns. Yet many contractors only find out how labor went when the job is finished, because hours were recorded per person per day and never against the work they were spent on.
Recording hours against cost codes, the same codes your estimate uses, turns timesheets into a running picture of the job. This guide covers how to set that up and what it lets you do.
What a cost code is for
A cost code is a line of the budget: concrete forming, rebar placement, drywall hanging, rough-in electrical. The estimate gives each code a quantity, a number of labor hours and a cost. When the crew's hours are recorded against the same codes, you can compare what each part of the job was expected to take with what it is actually taking, while there is still time to do something about it.
Keep the field list short
The most common failure is a list of 200 codes that nobody in the field can navigate. Crews pick the first code that looks close, or the same one every day, and the data becomes noise. Better:
- 10 to 20 codes per job in the field, matched to the estimate, with plain names a foreman recognizes.
- One code for unplanned or extra work, so it stands out instead of hiding inside base scope.
- Roll up in the office. Detailed accounting codes can sit above the field list; the foreman does not need to see them.
If the field cannot code hours reliably, let them clock in without a code and have the foreman or office allocate hours the same day. Late allocation is better than wrong allocation.
Measure productivity with earned hours
Hours alone do not tell you whether a crew is ahead or behind. You need the work done too. The usual method is earned hours:
- Earned hours = installed quantity × (budgeted hours ÷ budgeted quantity). If the estimate allows 200 hours for 4,000 square feet of formwork and the crew has set 1,500 square feet, they have earned 75 hours.
- Productivity index = earned hours ÷ actual hours. If they used 90 hours to earn 75, the index is 0.83: they are running about 17% behind the estimate on that code.
Two things make this work: hours recorded against the same codes as the estimate, and quantities reported regularly (weekly at least) for the main codes. A daily log that records quantities installed by cost code gives you both in one place.
Back up change orders and T&M tickets
Extra work is where labor records earn their keep. Most contracts that pay for changed work on a cost basis expect the contractor to keep an itemized accounting with supporting data, labor included. A dispute over a change order is usually won or lost on whether you can show who worked on it, on which days and for how long.
- Give each change or T&M ticket its own code as soon as the work starts, before the price is agreed.
- Have the foreman record crew, hours and equipment on the ticket the same day, and get the owner's representative to sign it while the work is fresh.
- Keep the time record and the ticket linked, so the hours on the invoice match the hours on payroll.
Prevailing wage jobs need hours by classification
On Davis-Bacon and state prevailing-wage work, certified payroll has to show the hours each worker spent in each wage classification. A worker who spends the morning as an operator and the afternoon as a laborer can be paid each rate only if the records show the time in each one accurately. Recording classification alongside cost code at clock-in avoids reconstructing it at the end of the week. See Certified payroll explained.
Make the numbers trustworthy
- Approve daily. The foreman reviews the crew's hours and codes at the end of each day, while they remember. A weekly review finds mistakes too late to fix from memory.
- One source of truth. Payroll and job costing should come from the same approved hours, so labor cost reconciles between the two.
- Report back. Show foremen their productivity by code each week. Codes get chosen more carefully when people see what the numbers are used for.