- 3 tips to compare actual hours to time estimates in construction
3 tips to compare actual hours to time estimates in construction
Delivering construction projects on time and within budget can be difficult when you can’t accurately forecast how long it will take to complete certain tasks and variable expenses. While there are fixed costs that you can control, unpredictable costs, like labor time can easily take projects over budget.
There are a number of ways to accurately predict and measure how long a project or task will take. In this post, we provide 3 tips to help you compare actual time spent on construction tasks to your time estimates to help you to help you stay profitable.
1. Know your costs
As a Project Manager, the two most important cost items you must stay on top of are material costs and labor costs. If you’re not on top of measuring labor costs, you won’t be able to compare the actual time your team spent to complete tasks to the time you estimated in your quote.
Material costs include amounts paid for construction materials (bricks, concrete, sand, lumber, etc.) used to build or restore the structure. Naturally, materials must be procured and transported to the job site, so logistics costs should also be factored into a construction project's material costs.
Labor costs include compensations to employees and contractors, paid time off, training costs as well as time leakages (anywhere you’re losing or wasting time and you’re not aware of it) and other forms of incorrectly reported working hours, either accidentally or more worryingly, deliberately.
It’s worth noting that every renovation project is different, but typically material costs make up somewhere between 40% and 50% of the overall cost, whereas labor related costs represent anything between 50% and 60% of the overall cost. In more labor heavy renovation projects, labor costs make up +70% of the overall cost.
There are, however, big differences between the two. Depending on your diligence as a Project Manager, these can make or break the project financially.
As a Project Manager, your control over construction material cost is normally manageable as material costs are less variable than labor costs. While price increases need to be considered, these costs are generally easy to budget for, and unless the build is riddled with surprises and custom designs, calculating how much material is required will provide an accurate cost estimate.
However, estimating time and the resulting labor costs can sometimes be challenging. This is particularly true in renovation projects where the extent of hidden or unexpected damages are revealed only at the time of demolition.
2. Focus on the things you have control over
Unlike many other businesses, construction companies are required to accept large upfront capital expenditures and generally only invoice for these when a particular task or phase is completed.
The longer a task or phase takes to be completed, the more likely it is that you have to make out-of-pocket payments for both the required construction material and labor costs, days, or even weeks prior to the customer agreeing to pay you. This could spell the death of your company.
In order to be able to accurately compare time estimates and increase profitability, we recommend these 5 tips:
1. Break down tasks
To avoid a sudden death, always aim at breaking down your renovation projects into tasks that can be started and completed within the same calendar week. Make sure everything you or your building crew do to complete a task is documented accurately.
2. Factor in travel time
Travel times to and from the construction site (e.g. traveling between sites or picking up supplies) should be captured and associated travel expenses documented accurately - even if you chose to not charge the customer for these.
3. Include off site tasks
Tasks completed offsite, for example prep-work done in a workshop must also be captured and documented accurately and brought into the project.
4. Consider cleanup time
All cleaning related work that is part of the project must also be captured and documented. The rule-of-thumb should be that “if you make a mess at the customer’s expense, you clean it up at the customer’s expense”. This should apply to all onsite and offsite tasks.
5. Account for administrative time
Time spent on preparing project reports, following up with customers and any other ad hoc administrative tasks you perform to effectively manage your projects should be tracked and billed. Revenue leakage can easily occur when you don’t keep track of the time spent on these tasks.
The time you spend on analyzing data to inform future projects and improve your business should be excluded from billable time to your clients but it’s important to gather these insights and begin to understand the efficiency of your projects to improve operations, avoid delays and increase profitability.
For example, you might learn from analyzing your time reports that it took 50% less time to clad the front facade of the house when compared to the back facade - now you can dive deeper and assess if there was an error in time-tracking, a material mistake, or if your team found a way to perform their task more efficiently etc.
3. Regularly check-in with your crew and follow up on your own time estimate accuracy
If you’re an experienced Project Manager with years of experience in the field, you probably have a knack for providing accurate time estimates to customers. From your proficiency , you’ve learned how to build in contingency fees to account for unforeseen events and potential delays.
Although your estimates ensure your invoices have a level of accuracy and you’re not losing out on revenue, if you're looking to improve your business, you need to know exactly why you finished on time and within budget if you want to repeat your success.
With data and digital solutions on your side, it’s no longer enough to simply “hit” a time estimate. If you want to succeed long term, you must have more accurate ways of capturing the exact time it took for a specific worker to complete a pre-defined task.
We recommend that tasks are always assigned to specific individuals and that tasks should be broken down in such a way that they can start and complete within the same calendar week. This provides everyone involved in the project a sense of urgency but also a sense of progress.
Every task assigned to a worker should be followed up when 50% of the time estimate is spent. The main objective is not to create a negative atmosphere of the construction site, but rather obtain an accurate understanding of when the task is expected to be completed.
Tasks that are projected to be completed sooner than expected should be flagged early to allow for new tasks to be assigned. At the same token, tasks that are projected to be completed later than expected must be flagged early and necessary actions taken.
Although following up on man-hours on a task-level is important, it’s only so on a very tactical level. As a Project Manager, you should aspire to always learn from previous projects and only by capturing both task specific time estimates and actual time spent, you will have the data at hand to become a better Project Manager.
By examining the aggregate time spent by named workers on tasks and by comparing these to other projects, you can begin to acquire useful insights on which workers are more productive (and thus more valuable to your business) and to increase your ability to make accurate time estimates to clients and gain an upper hand when negotiating with subcontractors.
Buildbite’s advanced time-tracking features help anyone in the field to accurately track time from the ease of a mobile app. Project Managers can create time-tracking reports to analyze performance and identify time leakages enabling them to be proactive and transparent in their communication and improve future billing estimates. Try it out for yourself with our 30-day free trial.