Effective material tracking, integrated with time tracking, captures every billable dollar while reducing waste, preventing theft, and streamlining T&M billing.
Here’s how to get it right.
What is Material Tracking in Construction?
Material tracking is the process of monitoring construction materials from procurement through installation—documenting quantities, costs, locations, and usage at every step.
Comprehensive tracking includes:
- Procurement documentation: Purchase orders, pricing, delivery schedules
- Delivery verification: Receipts, photos, quantity confirmation
- Inventory management: Location tracking, availability status, reorder triggers
- Usage logging: What materials went where, when, and on what task
- Cost allocation: Tying material costs to specific jobs, phases, or change orders
When integrated with time tracking, this data becomes the foundation for accurate T&M billing, labor hours plus materials plus markup, documented and defensible.
The True Cost of Poor Material Tracking
Waste
- 13% of delivered materials go directly to landfill unused
- Up to 30% of all delivered materials become waste
- Global construction waste projected at 2.2 billion tons annually
Theft
- $300 million to $1 billion stolen from construction sites annually
- Less than 25% of stolen materials are ever recovered
- Tool theft adds to these losses (not included in the estimate above)
Invoice Errors
- 27% of vendor invoices contain errors
- Without verification, these errors erode profit margins directly
- Three-way reconciliation catches mistakes before payment
Productivity Loss
- Construction productivity grows only 1% annually (vs. 3.6% for manufacturing)
- Crews lose productive time searching for materials
- Idle workers waiting for materials that weren’t tracked or ordered correctly
Material Tracking Technologies
Barcodes
Traditional barcodes are cheap and ubiquitous but require line-of-sight scanning. Best for controlled indoor environments like tool cribs and storage rooms.
QR Codes
QR codes store 200x more data than barcodes and can be scanned with any smartphone. Cost-effective and robust in outdoor environments. Good balance of capability and simplicity.
RFID Tags
Radio-frequency identification doesn’t require line of sight and can scan 100+ tags simultaneously. Works in harsh environments—the recommended technology for construction.
Downsides: higher cost, interference from metal and liquids, requires specialized readers.
GPS Tracking
Real-time location tracking for high-value equipment, vehicles, and field assets. Essential for theft prevention and fleet management.
IoT Sensors
Internet of Things devices provide real-time monitoring of waste bin levels, storage conditions, and inventory quantities. Enable predictive ordering and automated alerts.
Recommendation
Use a hybrid approach: QR codes for everyday material tracking, RFID for high-value items, GPS for vehicles and major equipment.
Integrating Time and Material Tracking
Time tracking and material tracking work together to enable accurate T&M billing:
How T&M Billing Works
- Labor: Hours worked × loaded labor rate (wages + overhead + profit)
- Materials: Actual material costs + markup (typically 15-35%)
- Equipment: Rental rates for equipment used
Integration Benefits
- Single system captures both labor and materials for each task
- Automated markup calculation based on contract terms
- Photo documentation linked to time and material entries
- Digital signatures for immediate approval
- Seamless flow from field tracking to change order creation
The Digital Workflow
Digital T&M tracking eliminates paper tickets—avoiding late submissions, lost documentation, and illegible handwriting. Data flows from field to office in real-time, enabling faster approvals and payments.
Contractors using digital T&M tracking report 50%+ reduction in change order processing time and significantly increased reimbursement rates.
Best Practices for Material Tracking
1. Create a Single Source of Truth
All stakeholders, field crews, procurement, accounting—should work from the same system. Eliminate competing spreadsheets and paper records that create confusion and errors.
2. Standardize Naming Conventions
Develop consistent naming conventions so everyone knows exactly what’s being tracked. This prevents duplicate entries and search errors.
3. Track in Real-Time
Inventory levels should update immediately when materials are received or used. Real-time data prevents last-minute purchase orders, wasted trips, and idle crews.
4. Use Tracking Identifiers
Deploy barcodes, RFID, or QR codes on materials. Physical tags enable fast, accurate tracking without manual data entry.
5. Centralize Storage
Use dedicated storage containers on each site with visible signs for material categories. Organization improves productivity and reduces time searching for materials.
6. Document Everything
Track materials from procurement through installation. Digital records, photos, and notes create complete audit trails that protect you in disputes.
Inventory Reconciliation
Three-Way Reconciliation
Compare every invoice against both the purchase order AND the delivery receipt before paying. With 27% of vendor invoices containing errors, this catches mistakes before they erode margins.
Regular Physical Counts
Periodic physical inventory counts uncover theft, damage, and recording errors that digital systems miss.
Delivery Documentation
- Capture time-stamped photos of every delivery
- Verify quantities against purchase orders immediately
- Document any discrepancies before signing
- Create designated receiving zones with clear signage
Reducing Waste Through Better Tracking
Up to 90% waste reduction is achievable through source reduction, reuse, and recycling partnerships.
Source Minimization
The most effective strategy is preventing waste from being generated. Accurate tracking enables precise ordering—reducing over-ordering and excess materials.
BIM for Material Estimation
Building Information Modeling enables accurate material estimates based on actual design quantities. Drywall waste alone can be reduced up to 15% through precise measurement and pre-cutting.
Just-in-Time Purchasing
Order materials closer to when needed. This minimizes storage time, reduces damage risk, and prevents over-ordering.
Track Delivered vs. Used
Continuously monitor how much was delivered versus how much was actually used. This data identifies waste patterns and improves future project estimates.
IoT Waste Monitoring
Sensors on waste bins track fill levels in real-time, optimizing collection schedules and reducing transport costs.
Theft Prevention
With $300 million to $1 billion in annual construction site theft and less than 25% recovery rates, prevention is essential:
- Fence and lock entire job sites when possible
- Use RFID and GPS to monitor material movement
- Create digital audit trails for all material transfers
- Establish clear accountability protocols for on-site materials
Frequently Asked Questions
What is material tracking in construction?
Material tracking is monitoring construction materials from procurement through installation—documenting quantities, costs, locations, and usage. When integrated with time tracking, it enables accurate T&M billing.
What percentage of project costs are materials?
Materials typically represent 50-70% of total construction project costs. Some sources cite as high as 65-80% depending on project type.
What is the typical markup on construction materials?
T&M material markup typically ranges from 15-35%. Commercial projects often use 15-20%, while residential may range 25-50%. The markup covers overhead, purchasing management, risk, and profit.
What technology is best for construction material tracking?
RFID is generally recommended for construction because it doesn’t require line-of-sight scanning and works in harsh environments. A hybrid approach combining QR codes for everyday tracking with RFID for high-value items often works best.
How much material waste occurs in construction?
Approximately 13% of materials delivered to construction sites go directly to landfill unused. Up to 30% of all delivered materials eventually become waste.
Key Takeaways
- Materials are 50-70% of project costs—tracking them isn’t optional
- 13% of materials go directly to landfill unused—better tracking reduces waste
- 27% of invoices contain errors—three-way reconciliation catches them
- $300M-$1B annual theft—RFID, GPS, and accountability protocols prevent it
- Integrate time and material tracking—a unified system enables accurate T&M billing
- Digital workflows cut processing time 50%+—eliminate paper tickets
- Use hybrid technology—QR codes for everyday tracking, RFID for high-value items
- Create a single source of truth—everyone works from the same data
Every material that can’t be accounted for is profit lost. Every hour worked without documentation is revenue at risk. Time and material tracking, done right, captures every billable dollar while reducing the waste that drains profitability.
