How to Track Labor Costs Weekly: A Comprehensive Guide for Contractors

Common Misconceptions of Hiring a Construction Consultant: Busted!

If you're a labor-intensive contractor and you haven't started tracking your labor costs yet, you're missing out on a significant opportunity to boost your profits. Accurate labor cost tracking is crucial for effective project management and financial health. I'm Jerry Aliberti, owner of Proercel, and in this guide, I'll walk you through the steps to track your labor costs on a weekly basis.

Why Track Labor Costs Weekly?

For labor-intensive contractors, the majority of your budget is consumed by labor. Tracking labor costs on a weekly basis rather than monthly or after project completion offers several advantages:

- Real-time Data: Quickly adjust and make decisions based on current project status.

- Lower Risk of Budget Overruns: Identify issues before they escalate into significant problems.

- Accountability: Improve accountability among your employees and subcontractors.

Step 1: Daily Labor Tracking by Scope Item

The first step to tracking your labor costs weekly is breaking it down by day. Here's how to do it:

1. Daily Reporting: Your foreman should list all the items of work and the employees involved in each task on a daily basis.

2. Hours Worked: Record the hours each employee works per item. This should include straight hours and overtime hours separately.

3. Match with Payroll: At the end of each week, ensure that the hours reported by the foreman match the actual payroll.

Creating a Standard Template

To streamline the process, create a standard template worksheet for your foreman. The template should include:

- List of Work Items: All tasks that are part of the project.

- Employee Names and Roles: The foreman should list all the employees and their roles for easier tracking.

- Straight and Overtime Hours: Separate columns for straight hours and overtime hours worked by each employee.

- Daily Totals: A column for the total hours worked each day.

Step 2: Weekly Quantity Tracking per Scope Item

After you've collected daily labor data, the next step is to track the quantities installed per scope item on a weekly basis.

1. Weekly Summarization: At the end of the week, summarize the daily data for each item of work.

2. Quantity Installed: For each item of work, record how much quantity was installed. This could be in units like linear feet, square feet, or cubic yards.

Step 3: Extend Labor Cost per Employee per Item

Once you have the weekly summary of hours worked and quantities installed, it's time to calculate the labor cost per employee for each item.

1. Match Hours to Payroll: Ensure that the recorded hours match the payroll hours for accuracy.

2. Hourly Costs: Assign the hourly cost to each employee. This will vary based on their role and skill level.

3. Labor Cost Calculation: Extend the hours worked by each employee for each item of work, and multiply by their respective hourly cost.

Step 4: Develop Your Weekly Cost Tracking Spreadsheet

This is where you compile all the data into a comprehensive spreadsheet. Here’s how to structure it:

1. Scope of Work: List all the items of work in the first column.

2. Units: Specify the unit of measurement for each scope item (linear foot, square foot, cubic yard, etc.).

3. Total Project Quantity: Get this data from your estimators. This is the estimated total quantity for each item of work.

4. Total Extended Labor Cost: The estimated total labor cost for each scope item. This should not include taxes, insurance, or overhead.

5. Estimated Unit Cost: Calculate this by dividing the total extended labor cost by the total project quantity. This gives you a per-unit labor cost.

Weekly Columns for Recorded Data

For each week, add columns to record:

- Total Labor Cost: The total labor cost for that week for each scope item.

- Total Quantities Installed: The total quantities installed for that week for each scope item.

Cumulative Columns for Project Overview

At the end of the spreadsheet, add cumulative columns to give you a project overview:

- Total Quantities Installed to Date: Summarize the total quantities installed each week.

- Total Labor Used to Date: Summarize the total labor cost each week.

- Average Unit Cost to Date: Calculate the average unit cost by dividing the cumulative labor cost by the cumulative quantities installed.

- Percent Complete: Track the percent complete for both labor and quantities installed.

Step 5: Regular Monitoring and Adjustments

It's essential to monitor and adjust your labor tracking on a regular basis:

- Weekly Reviews: Review the spreadsheet with your team weekly to discuss performance and make necessary adjustments.

- Operational Meetings: Use the data in your weekly or bi-weekly operational meetings to ensure everyone is aligned.

Tips for Successful Labor Cost Tracking

1. Start Slow: Begin your projects with slightly less labor to build a buffer. It’s easier to manage increases rather than mitigating overruns.

2. Utilize Software: Consider investing in software if your projects are extensive. However, the familiarity of Excel can be advantageous in the initial phases.

3. Be Organized: Consistently maintain organization within your tracking system. A well-organized system reduces errors and simplifies analysis.

4. Involve Estimators: Collaborate with your estimators to ensure the accuracy of quantities and costs. Their input is critical in setting up the initial data.

5. Encourage Accountability: Make sure your foremen and supervisors understand the importance of accuracy in their reporting.



Tracking labor costs on a weekly basis may seem complex initially, but it’s a crucial practice for any labor-intensive contractor aiming for profitability and efficiency. By adopting this system, you’re not only ensuring financial health but also promoting better project management and accountability among your team.

The key is to stay consistent and make the necessary adjustments as you gather more data weekly. Remember, the goal is to identify issues early and make timely decisions that keep your projects on track.

If you have any questions or need further guidance, don't hesitate to reach out.

There you have it! This comprehensive guide should help your readers implement effective labor cost tracking systems, boosting their profitability and project efficiency.