What are the benefits of using time tracking for construction and real estate businesses?
Time tracking is one of the most positive business practices you can start. Whether in the office or the field, it enables businesses to understand the work rhythms of their employees. It also makes both project progress and resource allocation crystal clear if you implement positive time tracking habits.
In the field of real estate and construction, it is very important to stay on track both time and resource-wise. Staying within the budget can get difficult, as initial assessments can be lacking once the works start. Simply put, you and your employees can’t predict or control the weather conditions, or the state of the property you’re working on. That is why companies in this industry often have to renegotiate their contracts during and after the job.
A time tracking software solution shows all activities are done by your contractors and agents, as well as the time the tasks took. In other words, it justifies any additional expenses and deadline moving. This allows employers to create itemized invoices that account for all work a single project requires.
Yet, there are more time tracking benefits than accurate billing. Our platform can also give employers valuable insights into their business’s development and progress through different quantitative indicators. Key performance indicators, or KPIs for short, present the current and historical state of any business. This includes both the trends among the employees and clients. That way the employers can plan their next steps in managing their workers and reconsider the way they negotiate contracts in the first place.
Which values should a contracting business track?
Time per employee
Tracking time per contractor, construction worker, agent, etc., is one of the biggest benefits of time tracking. This practice will allow any employer to gain valuable insights into the average workday of their employees. Here are some of the benefits of tracking time per employee:
- Identifying the hardest-working contractors and low performers
- Discovering whether the workers are working during the entirety of their work hours
- Identifying unproductive practices and finding a way to eliminate them
- Tracking different leaves as well as overtime
- Observing the effectiveness and productivity of all personnel
Time per task
Time tracking can result in an in-depth understanding of the way your employees manage their tasks. This understanding allows you to make more accurate time and cost estimates in the future. Additionally, you will be able to compare how much time each employee takes for the same type of task. If there are some major discrepancies, you should take the time to see whether the employees need additional training or help from more experienced coworkers.
Finally, you will be able to recognize oversights made while determining the workflow and task delegation. Time tracking can help you find the solution to your troubles, whether it requires hiring more contractors, adding or removing steps in the business processes, or outsourcing.
Time per client
As you know, clients can sometimes be demanding and difficult to handle in this line of work. The success of your business can largely depend on the way you manage your collaborations. Gaining a deeper understanding of your contracts and everything they entail is the first step to negotiating more favorable jobs in the future.
Here are some ways tracking time per client can improve your business:
- Identifying top and low-performing clients
- Tracking the profit you make from every client
- Allocating costs and assessing the profit
- Adjusting your fees for different types of work
- Negotiating more favorable contracts in the present and future
Time per project
Tracking time per project enables businesses to determine their efficiency and profitability. It is very important to know how much time a construction team dedicates to actual work on the project and what time is invested into other tasks, like supplying the material and equipment. It is also important to know how much profit is coming from either of these activities.
How to track time efficiently?
Simple is better
Even the most capable construction teams are very busy on a daily basis. That means they can’t take a lot of time to track their hours. Even though more complex systems offer more options and features, they are often very complex. You can apply this statement to the initial administrative setup as well.
Additionally, a field team needs a fully optimized mobile application to successfully log time. As you can imagine, a simple, quick, and intuitive app will allow your team to seamlessly integrate time tracking into their usual workflow.
Ways to track
There are multiple methods of time tracking, and different platforms offer various options. The three main options are:
- Automatic timers
- Stricter trackers that take screenshots or track mouse movement and keystrokes
The industry itself doesn’t allow for the last option, as construction work can’t be tracked via computers. This leaves you with automatic time trackers and timesheet solutions. Both of these have their benefits and flaws. when it comes to timesheets, there is always the possibility of misrepresenting data, but this method shows more trust and raises morale. On the other hand, automatic timers are more precise, but employees can easily forget about them.
Recurring tasks and time tracking
One of time tracking software’s biggest advantages is the possibility to create recurring tasks. This makes tracking time even quicker, as it can be done with only a couple of clicks. On the other hand, the management will be able to filter through different types of tasks and avoid confusion and tedious searching through a multitude of similar entries.
Billable rates management
Knowing exactly how your projects are progressing is only one of the benefits of time tracking. Assessing and determining different billing rates is another advantage of the process.
Any business must calculate the expected billable rate for every client or employee. However, the work doesn’t stop there. Determining the realistic billable rate is even more important since you can track your company’s profitability only once both of these values are known.
You can calculate the realistic rate if you divide the total profit from a project by billable hours the project took per employee. Of course, you won’t know the total profit until the entire project is completed and invoiced.
Time tracking software can apply a contractor’s or subcontractor’s default billable rate as the employee tracks their time. You can also allow the employees to enter their own rates. Lastly, you can implement a billable hours chart, which is a great time—saving option.
Cost rates contain the employee hourly rate (based on the salary) and the general expenses hourly rate. Time tracking platforms calculate cost rates for different projects and clients automatically by accounting for these rates.
Timesheets are one of the time tracking software’s major features. They are crucial when it comes to working hours confirmation, tracking time off and breaks as well as overtime. A timesheet is necessary for salary payment in some countries.
There are many timesheet templates and pre-made models you can use (daily, weekly etc.). However, if your business model requires an accurate timesheet for full-time equivalents, you should either create your own template or find one that contains the following fields:
- Details of the work being done
- Total hours
- Structure of billable and non-billable hours
- Activities per client and project
- Hourly billing rates
Time reporting and insights
If you are using your preferred timesheet tracking solution exclusively to keep an eye on your employees, you are missing out on many opportunities this type of software offers. While following your short-term goals is a good strategy, you should also utilize all the reporting features you can.
Time trackers can deliver different reports which can make the decision-making process simpler for any construction or real estate company. They will point the management in the direction they need to take to become more profitable and make other positive business decisions.
Identifying problematic practices and understanding the ways they affect your company are the first steps to resolving these issues. There are multiple ways to fix bad business practices, including hiring more subcontractors or allocating more experienced team members to mentor their younger peers.
We gave Time Analytics a powerful reporting feature that offers many different ways to track your company’s current and past situation. This is possible since both real-time and historic reports are available.
Billing and invoices
Creating itemized bills that account for all expenses is another option Time Analytics offers. It is important to create these detailed invoices, as they are necessary to justify your fees. Since the bills are based on constructors’ and subcontractors’ timesheets, there is no room for mistakes and inaccuracies.
How to track costs by client and project?
The short answer? By using a great time tracking solution. A good platform will automatically account for the price of a working hour, as well as all expenses, direct and indirect, and allocate them per project. You can calculate the total cost rate by calculating the sum of the pay rate and the overhead cost rate. Time analytics has a system that defines the employee cost rate by default, which makes this calculation automatic and straightforward. Through it, you can see the costs of each task, project, and client without manual allocation.
Most important KPIs for a construction or real estate business
Here are some of the most important key performance indicators and ways to use them
Average company billing rate
This KPI represents the average earnings your company receives through its engagement with clients. This indicator is important since it shows whether you are meeting your planned goals or not. You can find this out by comparing your expected billable rate to the average.
Client and project costs
This KPI is the result of adding up all expenses allocated to a project or client. As time tracking is necessary to determine expenses, it is needed for this metric. Cost per client is important, as it can help you budget costs in the upcoming budgeting cycle.
Utilization of time
This indicator is represented by the proportion between billable and non-billable hours. As construction and real estate businesses don’t only focus on their primary tasks, it is important to know how much time your teams spend making you money and how much time goes into non-billable hours.
Billable rates – employees
This metric explains how much you are charging your client per specific contractor or subcontractor. It is a good way to determine your top performers. You can compare the realistic monthly billing rates to total cost rates to assess your employees accurately.
Billable rates – project
This KPI determines whether a project is profitable or not. You can calculate it by dividing the total income coming from a project by the total hours that went into the project. This metric can point you to more favorable rates for similar projects in the future.
Billable rates – client
This indicator points out the average billable rate by the client. It is calculated by dividing total revenue coming from a client by the hours spent on that client. Again, you can use it to adjust fees in the future.
Utilization of billing rates
It is important to know whether you are making the profit you are expecting. You can calculate it by dividing the profit you’ve made by the estimated value.
Structure of work tasks
Establishing an effective workflow that allows you to be more productive is much easier once you understand how long each task takes and how different tasks affect each other.
The need for overtime is a result of two different cases. Firstly, the specific team may be understaffed, or there are other reasons (task difficulty and scope, lack of experience, etc.) that are slowing the project down. However, overtime can also come from unproductive business practices. In that case, you should find a solution that will suit both you and your team.
Time tracking systems are a necessity in construction and real estate businesses. Positive time tracking practices can propel the company and its teams forward. Yet, you need to remember that these platforms aren’t made to punish or micromanage your employees. Instead, you should try to make time tracking a positive experience for everyone involved.
The point of this practice is to bring benefits to any company and the individuals within it. Thus, you will need to be mindful about the implementation of these systems, and make them more convenient to use for your employees. Equal work distribution and a raise in productivity without being overworked can be great incentives for your contractors and subcontractors.
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