Why Construction Companies Struggle With Labor Costs — And How Time Tracking Helps

The majority of the cost in the construction industry comes down to labor. Moreover, it amounts to around 40%-60% of the total cost of the project. 

Hence, this surpasses all other costs like equipment and materials. However, various construction companies still use various inefficient conventional methods to keep track.

They often use paper timesheets, phone calls to the foreman, or rough estimations submitted at the end of the week by the workers. 

Hence, these things often provide an inaccurate tracking of the total work hours. Hence, this turns the job costing into something very unreliable. 

In these types of situations, businesses mostly make decisions based on guesswork instead of relying on rational historical data.

As a result, the projects often go over budget. Thus, people often find it difficult to explain overspending.

Moreover, this happens due to the expenditure on the extra hours. Moreover, this is not about lacking technology. However, some industries have been terribly rigid in their practices.

Moreover, this is like a problem related to habit. The construction industry has been very slow to change its habits. 

Hence, several businesses within the industry often face a construction labor shortage. In this article, we will learn how to deal with the construction labor shortage.

What Are The Major Causes And Solutions For The Time Sheet Problem?

Here are some of the major reasons and solutions for the construction labor shortage in the construction industry.

1. The Paper Timesheet Problem

The conventional method for keeping track of working hours on a construction site is inefficient. 

Here is the most commonly followed SOP on a typical construction site.

• The workers start their shift once they arrive in the morning.
• A foreman writes down who was on site and for how long. 
• The foreman sends these records to the administrator in the office.
• The administrator enters all the numbers into the payroll system and the spreadsheet.

Moreover, all the steps in the chain of process introduce a new set of irregularities and errors. 

• The foreman often rounds hours up or down.
• People in charge often do not notice the workers who arrive late. 
• The workers often lump separate times together. Hence, the time spent on one thing gets merged with the other.
• Tracking becomes further more difficult when a worker splits their time between more than two sites.

A 2023 report from the Construction Industry Institute found that inaccurate time reporting on job sites leads to payroll overruns of 3% to 5% on average. 

For a firm running $5 million in annual labor costs, that is $150,000 to $250,000 in avoidable waste — money that comes directly out of already thin margins.

2. What Construction Time Tracking Software Actually Does?

The term “construction time tracking software” can mean different things depending on the size of the operation. 

Moreover, the construction time tracking software is a modern way to keep track of the working hours of laborers at a construction site. Hence, this helps to resolve the problems related to construction labor shortage.

However, the term has multiple meanings.

• For large general contractors, it might refer to enterprise workforce management systems with GPS tracking, geofencing, and biometric clock-ins.

• On the other hand, small to mid-sized contractors usually consider it as something much simpler.

• This can often refer to a system where the digital tool replaces paper timesheets with an app or web-based system where hours are logged against specific jobs, tasks, or cost codes.

The core value is the same regardless of scale. Construction time tracking software connects every recorded hour to a specific project, phase, and worker. 

This makes it possible to answer questions that paper timesheets cannot: 

• How many hours did the electrical crew spend on the second floor last week?
•  Is the framing phase running ahead of or behind the estimate?
•  Which subcontractor is consistently exceeding their allocated hours?

These are not abstract management questions. They are the questions that determine whether a project finishes within budget or eats into the firm’s profit.

3. Where It Fits In Day-To-Day Operations

One of the reasons construction has been slow to adopt digital time tracking is a legitimate concern: the tools needed to work on a job site, not just in an office. 

Workers wear gloves, carry tools, and do not sit at desks. Any system that requires navigating a complicated app or logging into a desktop portal during the workday is going to fail.

The tools that succeed in construction tend to be the ones that keep the input process minimal.

4. What The Data Makes Possible

Once a construction firm has a few months of clean time data, the benefits go well beyond payroll accuracy.

Better bidding. Most contractors estimate labor hours for new bids based on experience and rules of thumb. 

This works reasonably well for experienced estimators, but it introduces bias and inconsistency. 

5. Choosing The Right Tool For A Construction Firm

The market for construction time tracking software ranges from purpose-built platforms like Busybusy and ClockShark.

The developers have designed these websites specifically for field crews. Hence, they aim to use general-purpose time trackers like actiTIME, Toggl, and Clockify.

 The construction companies use these platforms to configure construction workflows.

Purpose-built tools tend to offer features like GPS clock-in, geofencing, and photo attachments for daily logs. 

These are useful for firms managing multiple active sites and large field crews where location verification matters.

6. The Resistance — And How To Get Past It

Construction workers and site supervisors are not opposed to technology. Most of them use smartphones every day. 

The resistance to digital time tracking usually comes from two places. First, there is a trust issue. 

Workers worry that digital tracking is a way to monitor them more closely, catch them taking breaks, or find excuses to cut hours. 

This concern needs to be addressed directly. The goal is accurate payroll and better project planning, not surveillance. 

If workers see that accurate tracking actually protects them from having their hours shortened or disputed, adoption improves.

Second, there is a change management issue. Any new process on a job site competes with established routines. 

Things To Remember About  Construction Labor Shortage

The foreman who has been filling out paper timesheets for 20 years does not want to learn a new system during a busy week. 

The solution is to start small, pilot the tool on one project with one crew, work out the issues, and then expand. 

Trying to roll out construction time tracking software across every site on day one is a recipe for frustration.