LABOR IS YOUR BIGGEST
VARIABLE COST.
ARE YOU TRACKING IT RIGHT?
For most commercial subcontractors, labor is 25–45% of project cost. But most track it wrong — hours only, not fully burdened dollars, and not broken down by phase. When you track labor at $28/hour but the fully burdened cost is $52/hour, every labor estimate is wrong by nearly 100%. That gap goes directly against gross margin.
Labor is the only project cost you can actually influence in real time. Materials are bought. Subs are contracted. Equipment is deployed. But labor — crew size, crew composition, productivity rate — can be adjusted on a live job if you have the right data. The problem is most subcontractors get labor cost data 30–45 days after the fact, when the job is half done and the decision is irreversible.
THE NUMBER THAT'S
ALMOST ALWAYS WRONG.
Fully burdened labor includes: base wage, payroll taxes (7.65% employer FICA), workers compensation insurance (varies widely by trade — 8–40% for heavy civil and concrete), health insurance employer contribution, 401k employer match, and any other employer-paid benefits. For a concrete laborer at $28/hour base, the fully burdened cost is often $48–55/hour.
The most common mistake: Estimating labor at base wage plus a flat 35% burden factor, then discovering mid-project that workers comp ran at 28% instead of 15%. The underestimation hits every labor hour on every project.
WHY TOTAL LABOR COST
ISN'T ENOUGH.
Lumping Labor Kills Visibility
If you track all labor for a project in one line, you can't see which phases ran over. A civil project might run labor on survey, excavation, pipe, backfill, and restoration — five completely different productivity rates and crew compositions. Lumping them together means a $40K overrun on pipe is hidden by savings on excavation until closeout.
Phase-Level Labor Tracking
Track labor by phase from day one. Every timecard coded to a phase. Estimated hours and burden rates set at estimating time. Actual vs estimated visible by phase by week. A PM who can see that pipe installation is at 80% of budget and 60% complete has 20% of budget left to finish the remaining 40% of scope — and can act on it.
Hours AND Dollars — Both
Track both hours and fully burdened dollars by phase. Hours tell you productivity rate — are you getting the production you estimated? Dollars tell you cost — is the crew mix what you planned? A phase that runs on budget in hours but over budget in dollars means you sent foremen when the estimate assumed laborers.
WHAT FIXING LABOR
TRACKING DOES TO MARGIN.
A $4.9M concrete subcontractor was netting $161K annually — 3.3% net. They had good crews and fair bids. The problem was labor cost was tracked at a blended rate that was understated by 22%. Every job was priced wrong from the estimate. Once fully burdened labor was correctly calculated and phase tracking was implemented, net profit went to $1,112,000 in the following year. Same revenue. Same crews. See the case study →
