Labor Cost Control

The complexity of a labor control system increases in direct proportion to the size of a project and the variables that must be monitored. A comprehensive system must delineate variances resulting from differences in budgeted and actual productivity, labor rates, overtime, and quantity of work performed. The system should produce a weekly report that highlights significant variances. In addition, internal controls are necessary to ensure the accuracy of the reports and to permit the tracing of a given cost figure back to its source. On projects involving significant equipment resources, it is desirable to monitor the combined cost of labor and equipment, since these may be combined in a variety of ways to accomplish a given operation. Finally, it is important to emphasize that a labor control system is effective only when it is utilized as a decision-making tool. This often requires teaching project managers how to make the best use of control reports, and to employ this knowledge in taking effective corrective action.