The Crucial Role of Hour Tracking in Successful Project Management

In the competitive field of home service contracting, understanding the importance of tracking hours after an estimate has been signed is crucial. In many industries, labor can constitute up to 80% of the total profit of a job, so underestimating hours can eat into your profits significantly more than underestimating materials.

A painting project estimate typically takes into account the condition of the area that requires coating, the material needed for repairs, and the labor time needed for surface preparation and final coating. A project like this may require 200 hours of labor at $75/hour, plus $1000 for materials. The project total shows a whopping $16,000, most of which is labor. A customer, seeing the scant amount of materials ordered, might balk when asked to ‘Please sign here.’ Surely $15,000 of labor isn’t necessary for a job that applies only $1,000 in material?!

Oh, but it does. 

Understanding the weight of labor in estimating quickly makes apparent the fact that advanced labor tracking in project management is pivotal to reduce cost and increase profit margin. Planning and tracking labor effectively requires good capacity management and proactive estimate adjustment, like understanding when to hire a new crew or subcontract some of your work, and providing accurate start dates so the project isn’t delayed.

Little things sometimes get in the way, and only the most rigorous labor planning can prevent a big threat to your bottom line. Consider a scenario where a project estimated at 200 hours takes 250 hours due to the inexperience of a new crew. Two things happen: your profit margin decreases, and the project completion date gets pushed back, affecting client expectations.

Continuous tracking of labor hours throughout a project is critical. Your awareness of hours begins at the time of the estimate. Comparing budgeted hours for the project versus actual hours helps you understand your crew's capabilities and adjust future project estimates. Estimating the correct amount of hours budgeted to a project can help manage client expectations and give you a clear picture of business profitability.

Need help estimating hours and materials accurately, while keeping track of actual hours clocked against your projects? Check out Estimate Rocket’s estimating and time-tracking tools that help you streamline every job, every time!