The Importance of Construction Time Tracking

Do you run a construction company?  Tracking employee time can be consuming, complex, and critical to your bottom line.  Capturing labor hours and issuing paychecks is only half the task.

Time tracking means keeping track of how many hours are spent on a particular project and/or task. Those various cost codes (CSI codes) are used to create buckets of funds for each trade or task. Capturing that time for that task allows you to compare reality to what was estimated.  Not only is effective tracking essential to job costing a project and estimating future work, but also for labor law compliance and potential workers compensation audit.

Mistakes in time tracking in an industry like construction can lead to enormous payroll errors. In the case of public projects, mistakes result in compliance failures with prevailing wage and tax laws. Legal actions and penalties are possible.  The good news:  a variety of new automated tech tools let contractors track more effectively than ever, even in large projects at multiple locations.  The days of a timecard have been replaced with geofenced apps that can drill down to who’s working where and when all with satellite precision.  A few tips to avoid time-tracking snafus:

Stay abreast of classifications

Publicly funded projects are required to pay prevailing wage rates and follow appropriate wage laws. Work and worker qualifications are key.

For example, if you classify a worker as a laborer when the person is doing electrical work, that’s a misclassification that violates the law. You may be paying the wrong hourly rate, which includes benefits and tax withholdings.   

What if a worker moves from task to task on the job?  Every various action must be assigned and reported based on that wage determination.  On a busy job site, managing and tracking these details in real time is a headache… but required. Make sure your workers understand the importance of tracking both their hours and their changing roles in the field.

Stay aware of wage rates

Every classification of laborer and mechanic has a designated hourly wage and fringe benefit rate.  These rates apply to federally funded projects and come from wage surveys conducted by the U.S. Department of Labor. Some states, counties, and cities have similar laws in place and publish their own prevailing wage determinations for state-funded or municipal projects.

Alabama does not have a prevailing wage law to govern wage rates on government projects or service contracts.  Instead, employers should follow the federal Davis-Bacon act which sets prevailing wages for four categories: building, residential, highway and heavy construction.     Make sure your administrative team knows where to track the most up to date prevailing wages for your jurisdiction.   A good resource is:  Rates may change year to year, so make sure you’re on top of the latest designation.     

Standardize your processes

Create a checklist to streamline payroll workflow by including every step required to complete the payroll cycle.  That list should include a timeline for submitting hours, along with steps to verify time and double (triple!) checking work classifications and wage determinations. Without a smart system in place, mistakes are harder to correct and much easier to make.

Even if you use a certified payroll software for reporting, maintain a separate checklist detailing the tasks required for compliance.  Make sure your accounting staff checks off these tasks along the way as they’re completed. 

Be zealous with record keeping

If you routinely work on government-funded projects, following stringent reporting requirements is critical to compliance. Keep records systematically and avoid panicked deadlines that often lead to mistakes. 

Sometimes, despite their best efforts, construction businesses are investigated for prevailing wage issues. If that happens, you’ll want to produce a clear digital/paper trail indicating that you have sound time-tracking and payroll procedures in place. In other words, those checklists will come in handy.

Make training a priority

Train, train, repeat.  Ensuring your employees are trained in the details will minimize mistakes and compliance headaches. 

Make sure field workers understand the importance of tracking on-site as their roles and tasks change. Do they realize misclassifications can impact their pay? Does your administrative staff know how to find and verify wage determinations?  Make sure resources are quickly available and up to date. Make sure new team members are trained and offer refresher training to stay on top of changing laws and policies.    

Continuing education is a smart tactic. Share articles and updates on prevailing wages and labor laws, schedule time for your employees to watch webinars, and send regular reminders to everyone about best practices.

Automate time tracking

Your profitability relies on accuracy.  “Guesstimating” doesn’t protect your bottom line, and shouldn’t be an approach to tracking labor time.  Competitive future bids rely on a clear snapshot of what it takes to complete the job. 

Traditional manual methods aren’t the most reliable, as it’s easy to forget to clock in and out on a timesheet.  The old-school approach let an employee track their own spread sheet for the week. Ink gets smudged, memory fades, and accuracy is sacrificed for poor handwriting.   The good news? Digital time tracking and cloud-based mobile applications keep workers and office personnel data-connected.  Jobsite data is transmitted in real time, letting accounting staff see time punches, activities performed, and project locations.  Most of these apps offer advanced features such as geofencing, labor cost data collection, and employee accountability by using GPS to determine where clock in and out occurred.  

Reap the benefits

Payroll mistakes can affect morale, undermine profits, and create legal and tax problems. With a proactive strategy, you’ll tighten processes and reap the benefit of a more engaged workforce and fewer dollars wasted to mistakes or compliance penalties.   We work with clients across a wide variety of industries in payroll processes and management – call us if we can help.

Forrest Hieronymus