How do I make sure everyone’s hours are recorded properly?
The only way to make sure hours are recorded properly is to use a simple, consistent system, enforce daily recording, and link labour hours directly to specific jobs and cost codes. Without this, your job costing, margins, and cashflow will always be unreliable — no matter how good your turnover looks.
That’s the short answer. The longer (and more useful) one is below.
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Why accurate hours matter more than you think
In construction, labour is usually your single biggest cost. Yet it’s also the cost most businesses track the worst.
We regularly see companies where:
- Turnover looks healthy
- Bank balance feels tight
- Profits don’t match expectations
Nine times out of ten, labour hours are the blind spot.
If hours aren’t recorded accurately:
- Job margins are meaningless
- Site profitability can’t be trusted
- Forecasting future cashflow becomes guesswork
- Disputes over pay, overtime, and variations increase
At Thomas Emlyn Ltd, this is one of the first issues we address when clients move into our Virtual Finance Officeservice — because without clean labour data, everything else sits on shaky ground.
What “recorded properly” actually means
Recording hours properly doesn’t mean “we’ve got a spreadsheet somewhere”.
It means:
- Hours are recorded daily, not weekly or monthly
- Every hour is linked to:
- A job
- A task or cost code
- Overtime, travel time, and non-productive time are clearly separated
- The data feeds directly into:
- Payroll
- Job costing
- Management accounts
If you can’t confidently answer “How many labour hours went into Job X last month?” — you don’t have proper records.
The most common ways construction firms get this wrong
1. Relying on memory at the end of the week
Friday afternoon timesheets are fiction.
People forget:
- Which site they were on
- How long they actually spent
- Whether a day included snagging, rework, or waiting around
This leads to rounded numbers, not accurate data — and those small inaccuracies compound quickly.
2. Using paper timesheets or WhatsApp messages
Paper sheets go missing.
WhatsApp messages aren’t auditable.
Photos of handwritten notes don’t scale.
From a financial control and HMRC perspective, this creates risk — especially if you’re ever challenged on payroll, CIS, or job costs.
3. No link between hours and job costing
We often see payroll run correctly, but hours posted to one generic “labour” account.
That tells you:
- Total wage cost ❌
But not: - Which jobs made or lost money ❌
Without job-linked hours, margin analysis is guesswork.
How should construction hours be recorded in practice?
1. Use a digital system (and keep it simple)
The best system is the one your team will actually use.
Common options we see working well:
- Clock-in / clock-out apps
- Simple mobile timesheet tools
- Job-based time tracking integrated with payroll or accounting software
What matters most is:
- Mobile-friendly
- Fast to complete
- Mandatory, not optional
At Thomas Emlyn Ltd, we often help clients choose and implement systems that integrate cleanly with Xero, ensuring labour data flows straight into job costing.
2. Record hours daily — no exceptions
Daily recording should be non-negotiable.
Best practice:
- Record hours before leaving site
- Supervisors review submissions daily or weekly
- Missing timesheets = payroll delays
This isn’t about control — it’s about accuracy.
3. Separate productive and non-productive time
Not all hours are equal.
You should distinguish between:
- Productive site work
- Travel time
- Waiting for materials
- Rework or snagging
- Training or toolbox talks
Why? Because this is where hidden margin leaks live.
One client we worked with discovered over 18% of paid hours weren’t chargeable once this was separated — a massive insight that led to better pricing and scheduling.
How accurate hours improve margins and cashflow
Once hours are recorded properly, the impact is immediate:
- Job margins become real, not theoretical
- Underpriced work is identified early
- Variations are backed up with data
- Labour forecasts improve cashflow planning
- Hiring decisions are based on facts, not pressure
This is why labour tracking is a core pillar of our Virtual Finance Director service — it feeds directly into pricing, strategy, and growth decisions.
What directors should be reviewing each month
At a minimum, directors should review:
- Labour hours per job vs estimate
- Cost per labour hour by role
- Overtime trends
- Non-productive hours as a % of total time
If you’re not seeing this regularly, you’re managing blind.
A real-world example (anonymised)
A £3.5m turnover contractor came to us convinced their problem was material price increases.
After cleaning up timesheets and job coding:
- Labour overruns were averaging 12–15% per job
- Overtime was being used to cover poor scheduling
- Two “good” clients were actually loss-making
Within six months:
- Gross margin improved by 4.2%
- Cashflow stabilised
- Pricing confidence increased
Nothing changed operationally — only the quality of data.
FAQs
Do timesheets need to be kept for HMRC purposes?
Yes. HMRC expects accurate payroll records, including hours worked, especially where overtime or variable pay is involved. Poor records increase risk during PAYE or CIS reviews.
Is job-based time tracking worth it for small firms?
Absolutely. Even firms with 5–10 staff see immediate benefits. Without it, you can’t tell which jobs fund your growth — and which drain cash.
Should subcontractors record hours as well?
If you’re paying day rates, yes. While CIS focuses on payments, hours data helps with job costing, productivity analysis, and future pricing decisions.
How does this link to improving profit margins in construction?
Labour accuracy directly affects pricing, tender reviews, and operational decisions. Without it, margins are assumptions — not facts.
Can Thomas Emlyn Ltd help set this up?
Yes. Through our Virtual Finance Office and Virtual Finance Director services, we help construction businesses design systems that actually work in the real world — not just on paper.
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Thomas Emlyn regularly discusses labour control, job costing, and construction finance systems through industry conversations, advisory work, and partnerships with software providers serving UK construction firms.
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Thomas Emlyn Ltd
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