Direct labor represents the single biggest cost within a typical contractor services business. For example, labor comprises over 90% of all costs in the average disaster restoration operation. Ironically, small contractor services business owners rank labor as the most difficult cost to control. Estimates never seem to reconcile with the budget and the budget invariably never matches actual.
“Chronicle makes the labor monster conquerable” states Bob Roberts of Rancho Cucamonga, CA. Bob has driven labor costs down from a high of 28% of revenue to a low today of 15%. Bob’s experience with using Chronicle to control labor costs is not unusual. Bill Barbee of Catersville, GA attributes a decline from 30% to 22% to the implementation of Chronicle, as well, and he is just getting started.
The common thread here is Chronicle. Both businesses were operating at very low levels of labor productivity. The owners believed the incentive system they had in place was unworkable, as there was no easy way to monitor actual performance, and to match actual labor dollars with the budget on one job or from job to job. As Bob Roberts explains, “Chronicle made it possible to manage a bonus program that was based on achieving the budget every time. We use Chronicle to set the budget and only pay monthly bonuses based on that number”. Chronicle tracks actual labor hours by staff member for each job and each activity. The system also maintains a cumulative tally of each field associate’s net performance across all jobs worked. The system tracks both productive and unproductive jobs, never letting bonuses outstrip allocated labor percentages.
Phil Fitzpatrick of Escondido, CA comments, “sure we could track budgets and estimates in Excel® or one of the many estimating tools available. We could also use a time tracking software exclusively designed to track actual labor hours. What we have in Chronicle is a system that has the unique capability to track both actual and budgeted labor costs and provide a cumulative picture of each associate’s performance against the budget”. The cumulative tracking of each staff member’s performance makes it possible to monitor inconsistencies in performance from one job to the next.