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Overview: What are Labor Expenses?

Understand what labor expenses are, why they matter for construction job costing, and how ConstructionOnline records them within OnCost™ Purchasing

A labor expense is a record of the cost of labor performed on a project—the dollars owed or paid for work done, captured alongside the project's other costs. Labor is one of the largest components of a construction budget, and job costs are only complete when labor is accounted for next to materials, subcontracts, and other expenses. 

Labor cost doesn't all arrive the same way. Some comes from a company's own crews, whose hours are tracked directly; some comes from subcontracted labor, an outside payroll system, or a variety of other places throughout the job. Wherever it originates, it needs a consistent place to live in the project's financials. 

Tracking Labor alongside other Project Costs

In construction accounting, accurate job costing depends on capturing every cost against the project it belongs to. When labor is tracked in one place and materials or subcontractor costs in another, the project's true cost isn't assembled until after the fact—oftentimes in a siloed spreadsheet that may never leave the accounting office. Recording labor as an expense within the same system that manages purchase orders, bills, receipts, and payments keeps the full cost picture in one single ledger, so profitability can be seen as the work progresses—rather than reconstructed at the end. 

Labor Expenses in ConstructionOnline

Labor Expenses in ConstructionOnline™ are part of OnCost Purchasing, alongside Purchase Orders, Bills, Expenses, Receipts, and Payments. A Labor Expense records one or more labor cost line items against a project and behaves like other Purchasing records—meaning it can be linked to the project estimate, tracked by status or resource, and shared with the project team. 

As part of OnCost Purchasing in ConstructionOnline, Labor Expenses are available for any active ConstructionOnline subscription with access to OnCost Purchasing, whether included at the Team, Business, or Enterprise levels or as a Per-Company Add-On. 

Creating Labor Expenses

  1. Generate a Labor Expense from logged Time Tracking shifts. ConstructionOnline utilizes Pay Rates and tracked hours to automatically calculate labor costs in real-time, and this data can be used directly to create expense records, documenting actual project labor costs. See Create a Labor Expense from a Time Shift.
  2. Enter a Labor Expense manually. When the labor isn't tracked directly through Time Tracking—whether it's a subcontractor fulfilling a work order, records coming from an outside payroll system, or something else—enter those costs in ConstructionOnline to ensure a single source of truth for all costs related to the project. See Create a Labor Expense from Scratch. 

Managing Labor Expenses

  • Update details, line items, payments, and attachments any time after creation. See Edit a Labor Expense. 
  • Associate labor cost line items with specific estimate line items so all costs roll into the budget. See Link Labor Expenses to an Estimate. 
  • Create professional records and share project costs with convenient options for printing, emailing, and downloading Labor Expenses.
  • Just like with other Purchasing records in ConstructionOnline, Labor Expenses can be used to generate associated Bills or marked as "Paid" to record payment in full. 

Where Labor Expenses Appear

  • On the Labor Expenses tab within OnCost Purchasing, at both the Company and Project levels.
  • In the project Estimate, where linked labor cost is reflected in the Labor Expense Cost column and related totals. See View Labor Expenses in the Estimate. 
  • In Invoicing, where line items marked Billable can be selected for inclusion on client invoices. 

Labor Expenses Key Terminology

  • Labor Expense: A Purchasing record documenting the cost of labor on a project, consisting of one or more line items.
  • Line Item: An individual labor cost entry on a Labor Expense, with a Name, Billable Status, and Total.
  • Billable: Whether a line item is included when the project’s client is invoiced.
  • Line Item Formatting: When generating from shifts, how the included shift cost is grouped into line items — as a single line, by Cost Code, or by employee.
  • Mark as Paid: An option that automatically creates a payment in full for the Labor Expense when it is saved.
  • Link to Estimate: The association between a Labor Expense line item and a specific Category, Subcategory, or Line Item in the Estimate.

HAVE MORE QUESTIONS?

  • If you need additional assistance, chat with a ConstructionOnline Specialist by clicking the orange Chat icon in the bottom left corner or visit the UDA Support Page for more options.