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Do you ever stop to ask yourself, "Where does the time go?" When trying to recall events, when do you start and stop the clock? If I spend thirty grueling minutes in a dentist's chair, it has the same subjective, temporal feeling tome as a weekend at the beach. Given our human fallibility and our perception of time, how am I to gauge things when it comes to my construction business? Things like:
• What was done? When was it done? And for whom?
• How did the duration of the tasks I anticipated compare to the actuality?
• How do I verify all of my employee's time in regards to payroll, bonuses, taxes, etc.?
• How do I account for my non-billable time?
When these things have a deep economic impaction my general contracting company and my wallet, should I relegate them to the fuzzy trappings of my mind. I think not!
When it came to the management of time for our company, I needed a method to gather reliable information and a system for measuring performance. The following details are an account of where the quest has led us to-date, a pursuit that by no means is complete.
I started with some basic questions as to what components would be necessary. The answers led to the timecard in Figure 1. Here is how I set up the card for my business—see what could be adapted to fit yours:
Employee Name and Date Range
The first thing I started on was a date range. It seemed natural for the time card to coincide with our payroll schedule. We pay our employees every week, and hold back one week. They get their checks on Friday for the previous week. You will see then that our timecard heading starts with Friday and runs through Thursday. If I ever decide to move to a biweekly schedule, I will simply create a two-sided timecard like the one shown.
I don't use specific daily dates in the time card, just a "Week Ending" box. This saves me from having to create a new timecard for each workweek. I only have to write in the employee's name, Thursday's date in Week Ending, and it's done. This is much faster than going into a computer-saved version of the card and altering it for each employee.
Hours Worked and Job Site
Under each day there are column headings of H and Job. These stand for the hours worked and the job site where the hours were logged. We encourage employees to use fractional hours when filling out the timecard. Some employees will break things down to the quarter hour, and some to the half. I don't ride them too hard on this subject. I want them to be aware of their time during the day, but I don't want them losing valuable production time by clocking in and out of tasks. Cumulative totals give me a pretty good average anyway. Most guys glance at their watch during the course of the day, noting what they were doing at the time, then fill out the timecard at the end of the day after we have cleaned up the job site. They even will compare recollections between themselves if there happens to be more than one guy on a particular job. This end of the day routine provides a good setting for assessing your time. It isn't so frequent that it bogs down production, yet things are still relatively fresh in your mind. It also introduces new hires to the process. It only takes a minute or two.
When I show up to collect timecards on Friday, sometimes an employee will go to his truck and fill out the whole week right then and there. I frown upon this, but if all we were doing that week is roof framing, then I'm not going to come down too hard on him. If, however, he was bouncing around between jobs or tasks, then I certainly remind him to stick to the end-of-day routine. If I'm not working on the job myself, I try to at least visit every job, every day (sometimes three). This way, I have a general sense of whether the timecards are accurate. I enter general notes about the weather and work progress on my desk calendar for later comparison.
Tasks and Codes
We are licensed for commercial and residential work, but most of the time we're doing home building and remodeling. There are a few things we'll sub out, but there's still much that we do in-house. Sometimes this is because it's our forte (framing, trim, and siding), and sometimes it's just to keep the job moving (plumbing, electrical and drywall on abasement remodel). On the timecard, you'll see a list of 29 tasks with a code number for each. My tasks represent items that we frequently are involved in, albeit some more than others. In a specialty trade such as hardwood flooring, I wouldn't need such a broad grouping. Then, I might opt for more detail within tasks. The idea is to generate relative detail that pertains to your specific business structure.
Next to each task is a code number. You'll notice that the numbers are not in ascending order. They jump around. These code numbers were adapted from Home Tech's estimating manuals. I currently estimate using these. I once used MacNail Estimating and the CSI code structure. The timecards from that period used CSI as well. You could use either of those, or Master Format,Worker's Comp. or some structure you created yourself. The point is to have the task codes mirror your estimating and accounting systems. This makes transferring information that much easier.
My timecard is all tasks, but you could create a couple of line items for specialty equipment you might like to track, such as your sanding equipment. Code numbers for these might be some numerical variant that will mesh with your code system.
Form
The whole timecard is done on a standard 8 1/2-by-11-inch sheet of paper. I created mine on Microsoft Word. You could use Excel or a similar spreadsheet program, or you might even block out something by hand with a ruler and graph paper. I then run copies through our office copier for each week. I could take them to our local printer or office supply to run off en masse and get the cost per sheet down, however our card changes slightly. We run different colored paper through every other week, purple, green, blue, etc., altering from that back to standard white. This helps us distinguish the weeks when the cards start accumulating in our office file. We might even place some stickers on particular days to note their significance: hearts on Valentine's Day, a turkey on Thanksgiving, pumpkin on Halloween, etc. You might decide to flag employee birthdays or upcoming special occasions. The changes make each period a little fresher and help to avoid the monotony of the same form every week.
Circulation
We've been using some variant of this timecard for about nine or 10 years now. When we first introduced it, our crew size was only two or three employees. It wasn't difficult to master. I often worked alongside them on the jobs. We would all go through the end-of-day routine of filling them out. After one or two weeks, everyone had the hang of it.
Every Friday I deliver paychecks. I fold the new week's timecard into thirds as if it might be going into an envelope. I then write the employee's name on the back and insert his paycheck. It's kind of a subliminal message about the importance of the card. It's carrying the paycheck!When I hand them their new timecard and pay, they turn in the current week. My guys are no different than most employees. Sometimes, they don't have their cards with them. I don't hold their pay if they don't turn in their card; I simply pick it up Monday instead. Remember, I'm on the job, in some fashion, most every day.
You might imagine what some of these cards look like when they come in: crumpled, coffee stained, tattered, notes and phone numbers on the back. Some write neatly in pen, others are scribbled in boldly with carpenter's pencil. Sometimes, client's name, street address, or section of the county we work in identifies the same job. I'm not interested in beauty prizes, just accurate time.
As long as we have accurate numbers and accounts to invoice, I'm not too fussy about the rest. I do keep trying to stress accuracy, though. Once, we had a company meeting regarding the accumulation of just 10 minutes per day. Ten minutes times our bill rate, times five to six employees, times 250 days per year adds up to quite a chunk of money!
Compiling Information
My daughter Amber is my office manager. She takes care of the bookkeeping and generally straightens the office mess I generate every morning. It's Amber's job to transcribe the timecard information into data we can enter into our accounting system. We use MYOB accounting software, a Macintosh program similar to QuickBooks Pro. I suppose you could track the information manually, but I wouldn't want to try. The variety of reports and information you can generate from an inexpensive accounting program is priceless. Just make sure your software has a "Time Billing" module.
Amber starts by running totals on each card. She brings each daily total to the bottom of the page and each task total to the extreme right. She then adds these both horizontally and vertically as across check. From here, Amber goes to our accounting software's Time Billing function, where she has a similar list of activities as those on the timecard. She then enters totals by employee and client. She also enters each employee's total hours into the "Payroll" function of the software and cuts the paychecks.
Once the information is in the program, I can run a variety of reports. I can tabulate the information in date ranges with totals by task, customer, employee or hourly productivity. I can also view cumulative payroll information such as employee earnings and tax liabilities—all in a matter of minutes. Try doing that manually!
In the Time Billing module, employees all have a rate assigned to their billable hours. You can set this rate as their gross hourly wage or their wage plus burden. You might even set an inclusive rate that amortizes your overhead and profit. It's entirely up to you. Our bill rate is the employee's wage and burden. I can then keep an eye on our overhead and profit separately when comparing revenues with hard cost on each "Job Cost Card"(more on that later).
You can even create a list of non-billable activities for tasks you would like to track but that are not directly job related or billable in some fashion. My hours are sometimes the worst to categorize. This resulted in the recent idea for a second,modified timecard of non-billable activities. (See Figure 2.) Time can be tracked just as it is for production items. It simply isn't invoiced.
It takes Amber about 45 minutes toone hour per week to do time accounting for six to seven employees. It's a small price to pay for the wealth of information generated and the handy reports I can have at a moment's notice.
Uses for Timecard Data
Amber invoices each client's account for the time we spent that pay period. If we are working a fixed cost contract, this is merely an accounting function. The resulting invoice is then deducted from the client's retainer account. When this account gets low, it alerts us to invoice for the next construction draw. Our construction draws usually precede the construction, not in arrears of it. Invoice timing is essential to a smooth construction process. The few times we work aCost Plus contract, the timecards serve as documentation of actual expenses.
Time billing invoices are used to update the customer's Job Cost Card. This is an Excel spreadsheet that compares my estimate with actual job costs. Labor, material and subs are manually imported weekly and alert us to overruns early in the process. If there is action I can take to change the outcome, I can then implement it in time. Otherwise, I can kick myself in the butt for the balance of the job and try to make it up on future estimates.
Every year we are audited for our Workmen's Comp exposure. If we simply lumped all our time into our highest governing class of Carpentry - 1&2 Family Dwellings, Code 5645, our rate here in Tennessee would be 16.36 percent. By documenting our actual exposure we are able to reduce our yearly premium. All of our time isn't spent doing general carpentry. We also have significant hours in Concrete Work (Rate 6.74 percent), Trim Carpentry (Rate 8.76 percent) and Painting (Rate 9.46 percent), among others. The lower percentages in these classes save us thousands of dollars on our yearly premium for essentially the same total hours.
At Christmas, we give our employees a bonus that's commensurate with the hours they worked during the year. This encourages them to report for work every day and stick out the year. The hours are banked every week and recapped on their pay slips. At Christmas, the hours are multiplied by 15cents. This usually results in a couple of hundred dollars just for good attendance.
By far, the most useful aspect of tracking your time is in determining the rates that your business will charge for its services. I make mistakes, too! Tracking time helps prevent me from making the same ones over and over.
At job closure, or the end of a project's phase, I can perform a post mortem on how our estimate compared with reality. The averaged costs in estimating manuals and software are great, but there's nothing like having your own personal database of numbers. We all have different financial goals when it comes to wages and overhead. By doing this postmortem, I can generate or confirm our pricing.
The broad categories of the timecard aren't going to tell me exactly where to look for the source of a variance, only that there is one. I then discuss the subject with crew members and review notes on my desk calendar to determine the nature of delays. Then, I update unit costs appropriately.
Overhead is often difficult to calculate. Soft costs such as phones, office supplies and advertising are easy enough to figure, but how do you know if you're being compensated adequately, as the business owner, for the non-billable hours you invest in your company? By tracking your non-billable time as well as the production hours, you can gauge how much you invest in your business and in what capacity. First and foremost, the purpose is to ensure you are compensated sufficiently, and secondly when it comes time to replace yourself in some capacity,you'll have some data as to the requirements of the position.
The post mortem also allows me to see in an impartial way which employees are better suited to a task. If I know which employees are faster at an activity, I can allocate my employee resources more efficiently.
If there is a special item I might want to track, such as extra client work, I have the employees note it specifically on the timecard. I can then invoice the change order for the proper amount.
The history is also valuable for performance reviews or bonuses.
Well, there it is—a simple tool with powerful results. Systems don't have to be complex. The easiest solutions are often the best. Our timecard was simple to create and is easy to maintain. It provides us with information essential to the well being of our business. We have amassed a history to help chart our way. Estimating is risky enough. Wouldn't you really rather be doing it with your own personal numbers? Start tracking your own hours. After all…isn't it about time?