If time is money, and you’re not sure where your employees are or when they’re there, you could be losing money. This NARI lesson comes from Joey Willhite, CR, CRPM, who is the operations manager at Bellweather Design-Build in Philadelphia. He conducted a webinar on the topic of Best Practices for Time and Cost Tracking. The webinar, which can be found at NARI.org, formed the basis of this article.

Begin with the Basics

Willhite begins by laying out the basics: “[A time clock] is an essential part of your business. If you can grasp how much time your staff is spending doing things in your business, it’s going to be just as important as any of the tools you use to build your projects,” he says.

Willhite recommends a system that allows users to track their time, as well as location, and what they were working on. For example: 8 a.m. to 10 a.m., Smith House: Installing wooden cabinetry. He suggests Buildertrend, TSheets (QuickBooks) or Toggl software.

It is especially important, Willhite stresses, that workers are able to log their hours from their smartphones to make it as convenient as possible. By having an app on their phone, there is one less thing to keep track of, and the app can provide the most accurate moment-by-moment recounting of the day.

Why Use a Digital Time Clock?

Like most employers, the time clock’s primary function is to keep track of employee’ hours for payroll as well as staff compliance and accountability purposes. “If you’re promising your clients that your carpenter or your project manager is going to show up to site at 8 a.m. every morning, you want to hold your staff accountable to that. If every day your carpenter is showing up at 8:15… you want to be able to track that.”

But more than that, it’s to track the efficiency of workers and use that information to dig into why something is taking longer than expected, Willhite says. “It doesn’t mean you’re going to have to come down hard on [workers] for going overtime, but you can start to dig into the ‘why.’ Why were you not able to meet this expectation? Did you run into some problems on the job? Are you just not using your time efficiently?”

This information is invaluable, and it becomes another reason why using a digital time clock is important. Instead of sifting through paper timecards and calculating and organizing that information yourself, the digital nature of the time clock allows for easy search and navigation, as well as automatic features such as hourly salary calculations.

“We’ve trained our staff to not only clock-in and clock-out or record a shift…. we also require them to submit a daily jobsite log, which means they’re going in and they’re typing up some notes about what they did that day,” explains Willhite, adding that they also require site photos. “So along with their time clock, they’re also submitting a report about how things went on the job that’s automatically being sent to their manager.”

Turning Time into Money

Keeping track of how time is being used might start out as tedious, but once you’re aware of where the time is going, it can really point out some glaring inefficiencies. “If the scope changes on one of your projects, then that means you’ll probably need more time, which means that you’ll probably need more money,” Willhite emphasizes.

For example, if a contractor is paying a carpenter $50 an hour and they budgeted four hours, that’s $200. If the carpenter takes eight hours, that’s $200 more than was budgeted for. There are two main types of expenses: direct costs and overhead.

“If we’re talking about taking the cost of things that are happening on our jobsites, we’re doing thing on the direct costs side of things,” Willhite says. Plumbers, tilers, installers, and sales commissions—anything and everything that is job related—should be captured in direct costs.

Indirect costs, or overhead, are the costs of doing business and keeping the lights on. “This is your utilities, your internet, your marketing, and benefits to your staff,” or costs that business owners will continue to have to pay even when they don’t have jobs. It’s important to keep track of both types, so you don’t accidentally undersell the work on a project and then not understand why you aren’t making money.

Managing the Slippage

“The goal is to continually be improving your processes, so you can get it right on the next job, and you’re not continuing to lose money or missing costs,” Willhite explains. “When you look at a job performance, most of the time you’re looking at a profit and loss statement by class or customer.”

This is known as the income statement for that job: the income collected against the expenses, leaving the gross profit at the end. Taking all of these profit and loss statements and looking at them as a whole is known as a global PNL, or global profit and loss statement.

“Slippage is the difference between the budget and the actual [costs],” Willhite says. “If you’re not tracking your time, and you’re not collecting these expenses and keeping them organized, you’re never going to be able to find out where your slippage is.” QR

The full webinar is available for you to watch, compliments of NARI. Please click here to view it.

This month’s NARI quiz can be found at https://NARIchangeorders.questionpro.com. To receive continuing education credit for this NARI University lesson, take a quiz on this content then email Heidi Riedl at heidi@solabrands.com. NARI will notify you of any CEUs earned.

Related Posts

Leave a Comment

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More