CONSTRUCTION LABOR BURN RATE: DEFINITION, CALCULATION, AND APPLICATION.
Labor burn rate is the weekly dollar cost of labor on a project compared to the projected weekly cost from the estimate. It's not hours. It's dollars. A crew working the right number of hours at higher-than-estimated wage rates has an on-target hour count and an over-budget burn rate, and tracking burn rate catches that immediately. Tracking hours alone misses it until the payroll run shows the cost. The weekly burn rate comparison is the fastest financial control instrument available on a labor-intensive project.
The reason this one is worth the effort is that it needs no new data. The timecards already come in every Friday, and the estimate already carries a labor number and a schedule in weeks. Divide one by the other and you have the target. Multiply the week's hours by the burden rate and you have the actual. Two numbers, one comparison, and a PM who can see Monday morning that the job is running hot on labor if nothing changes. Hours by themselves wouldn't have told him until the payroll register posted.
WHAT IT MEANS.
Labor burn rate is the dollar value of labor being deployed per week on a project, fully burdened, compared against the projected weekly requirement from the estimate.
WHY HOURS ALONE DO NOT CATCH IT.
Hours look on target while the dollars run over
Tracking labor hours tells you how many hours were worked. Labor burn rate tells you how much those hours cost. When the crew mix changes, more journeymen and fewer helpers, the hour count can sit right on the estimate while the cost runs straight past it. Hours by themselves can't see that, and it's one of the most common ways a labor budget goes over with nobody doing anything wrong in the field.
The cost turns up at the payroll run, which is weeks late
Without a weekly burn rate, the first hard signal that labor is over budget is the payroll register or the month-end close. By then another two or three weeks at the same rate have already been spent, because nothing in between told the PM to change anything. The information was in the timecards the whole time, it just never got converted into dollars until accounting did it.
There's no projected weekly target to compare against
Most projects carry a total labor budget and a schedule, and nobody ever divides one by the other. Estimated total labor cost divided by estimated project weeks is the projected weekly burn rate, and without it the actual weekly cost is a number with nothing to sit beside. On a phased project the target has to be set by phase, because crew density in phase 1 is usually higher than in phase 2.
WHAT IT LOOKS LIKE IN DOLLARS.
Projected weekly burn rate is total estimated labor cost for the project divided by the estimated construction duration in weeks. Actual weekly burn rate is the week's timecard hours, classified by project and cost code, multiplied by the burden rate, so it's fully burdened: base wages plus payroll taxes, workers comp, health insurance, and retirement contributions. The comparison between those two numbers is the entire instrument.
Current burn rate times remaining project weeks equals projected remaining labor cost. Add cost to date and you have the projected final labor cost. That's the figure that feeds the monthly cost-to-complete, and it's available long before a full overrun has been spent.
Plus or minus 10 to 15% from projected is normal week-to-week variation from weather, crew scheduling, material timing, and inspection holds. A single week 20% over projected burn rate could still be normal. Three consecutive weeks at 115% or above is a trend that produces a cost overrun, which is why the flag goes up at the third consecutive over-budget week.
THE WEEKLY PROCESS THAT KEEPS LABOR COST VISIBLE.
Every Friday, the week's timecard hours get entered and classified by project and cost code, then multiplied by the burden rate. The burn rate for that week is visible Monday morning. Nothing further down this list works without the Friday step.
Estimated total labor cost divided by estimated project weeks is the target, and it goes into the system at project start rather than being worked out after the fact. Actual weekly burn rate gets compared to that target every week. On phased work the target is set per phase, because phase-level targets are more accurate than one project-level average.
One week 20% over could be normal variation from weather or crew scheduling, so nobody panics on a single reading. Three consecutive weeks at 115% or more is a trend that produces a cost overrun. The flag goes up at the third consecutive over-budget week.
Current burn rate applied to the remaining weeks produces a revised labor cost forecast. When that revision increases the projected final cost materially, the monthly cost-to-complete is updated and reviewed in the job review meeting. A cost-to-complete that ignores the burn rate the crew is really running is a guess with a spreadsheet around it.
A PM who sees their project's burn rate against the projected rate every week has a financial frame for crew decisions. Overtime requests, crew size changes, and productivity conversations all get easier when the PM can see that at this burn rate the project finishes $18,000 over on labor. Without that number, the PM is making crew calls with no financial context at all.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing, no payroll, and no add-ons.
Pricing
| Last 12 months revenue | Monthly fee |
|---|---|
| Up to $1M | $1,900 to $2,900 |
| $1M to $3.5M | $2,600 to $3,900 |
| $3.5M to $6.5M | $3,800 to $5,700 |
| $6.5M to $9.5M | $5,100 to $7,100 |
| $9.5M to $12.5M | $6,100 to $8,500 |
| $12.5M to $15.5M | $7,400 to $11,000 |
| $15.5M to $18.5M | $9,400 to $13,500 |
| $18.5M+ | Quoted individually |
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions rather than a report.
Your bookkeeper keeps doing the books.
You stop touching the books.
Everything in Core, and we run the bookkeeping and the controllership as well. Nobody in your office is answering coding questions or chasing a reconciliation at month end.
We do the books. No payroll.
Every job shows its margin while it's still running.
Everything in Executive, plus the job costing and WIP platform set up, loaded with your cost codes, and managed for you every month. You never have to learn it.
We do the job costing.
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