TRACKING LABOR PRODUCTIVITY IN CONSTRUCTION: UNITS PER HOUR, COST PER UNIT, EARNED VS BURNED.
Labor productivity tracking is the bridge between what happens in the field and what posts to the financial statements. A crew running at 65 CY/hour against an 80 CY/hour estimate is an operational problem. A job closing 18% over on labor cost is a financial problem. They're the same problem, but the operational read is visible three weeks earlier. Three weeks is the difference between catching a labor trend while 60% of the scope remains and finding it at closeout when 5% remains.
Three measurements do the work here and each one answers a different question. Units per hour tells you whether the crew is producing at the rate the bid assumed. Cost per unit turns that into dollars, which is the language a banker, a GC, and an estimator all understand. Earned hours against burned hours tells you how much of the scope still ahead of you is already in trouble. All three come off the same daily log, and that log takes a foreman about three minutes at the end of the day.
WHAT IT MEANS.
Units per hour is actual output divided by actual hours worked, compared to the estimated units per hour from the bid.
WHY LABOR GOES WRONG BEFORE ANYONE SEES IT.
The financial read of the problem is three weeks late
A crew running at 65 CY/hour against an 80 CY/hour estimate is an operational problem that anybody with the daily counts can see this week. A job closing 18% over on labor cost is the same problem wearing a financial coat, and it takes three more weeks to show. Three weeks is the difference between catching a labor trend while 60% of the scope is still ahead of you and finding it at closeout with 5% left.
Cost per unit gets measured too late to correct
Caught at 500 CY on a 2,000 CY pour, 25% of the way through, there are 1,500 CY remaining to correct the trend on. Caught at 1,800 CY, there are 200 CY remaining and the overrun is essentially locked in. The measurement is the same either way, so the whole value of it's in how early it gets taken.
An efficiency ratio below 1.0 compounds across everything left
A ratio of 0.85 means that for every hour of estimated labor, 1.18 actual hours are being consumed. That 18% inefficiency compounds across the remaining scope rather than staying where it started. At 40% physical completion with an 0.85 efficiency ratio, the projected final labor cost is approximately 18% above the estimate, and the remaining 60% of the job is what decides whether that projection holds.
WHAT IT LOOKS LIKE IN DOLLARS.
Units per hour is actual output divided by actual hours worked, compared to the estimated units per hour from the bid. A grading crew estimated at 80 CY/hour running at 65 CY/hour is 19% below target. A concrete crew estimated at 22 CY/placement hour running at 26 CY/hour is 18% above target.
Fully burdened labor cost divided by units produced equals cost per unit, compared to the estimated cost per unit from the bid. A concrete contractor estimated at $19/CY running at $24/CY is incurring 26% more labor cost per yard than estimated. On a 2,000 CY pour, that's $10,000 in excess labor cost.
Earned hours is the labor hours the project should have taken based on physical completion and estimated labor rates. Burned hours is the actual hours worked. Earned hours divided by burned hours is the labor efficiency ratio, so a ratio above 1.0 means the crew is performing faster than estimated and below 1.0 means they're slower.
HOW TO IMPLEMENT LABOR PRODUCTIVITY TRACKING IN 30 DAYS.
Units produced today by work type, and hours worked today by work type. It takes 3 minutes at the end of the day. That's the entire data collection system, and nothing further up the chain works without it.
Units placed that week divided by hours worked that week, compared to the estimated rate. The PM sees this Monday morning rather than at month end. A rate that slipped last week becomes a conversation this week.
Actual labor cost from closed books divided by actual units placed, compared to the estimated cost per unit from the bid. It sits inside the monthly cost-to-complete rather than beside it. That's what makes the projected final cost defensible.
At the end of each quarter, actual labor productivity by work type gets compared to the productivity the estimates assumed. The bid template is then updated with the performance the crews are really holding. The estimate improves with every quarter of tracking, which is the part that pays for the whole exercise.
Foremen who see their production numbers daily and know what the target is perform differently from foremen who don't. Context, delivered early enough to act on. A foreman who knows the crew placed 68 CY/hour yesterday against an 80 CY/hour target already knows where they need to improve before the PM brings it up, which is why the daily log is a feedback tool rather than a surveillance tool.
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.
FREQUENTLY ASKED.
