Why Contractors Keep Losing Money on Labor (And How to Stop It)

Labor is the largest variable cost on a construction project—and one of the hardest to control. Between tight schedules, shifting crews, and unexpected out-of-scope work, even experienced contractors struggle to track labor costs in real time. And when labor costs spiral out of control, so does your margin.

Rhumbix has released a new guide that tackles this exact problem head-on: How to Control Labor Costs in Construction (2025). This guide reveals the hidden ways labor cost overruns creep into your project and offers clear steps to fix it using real-time data from the field.

Here’s why you need it—and why your current process might be quietly draining your bottom line.

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The Pain is Real: Construction Labor Cost Overruns

Labor cost overruns rarely happen because of one catastrophic error. More often, it’s a slow leak:

• Hours are recorded late or inaccurately
• Cost codes are misapplied or misunderstood
• Time & Material work gets missed or misclassified
• Manual entry causes payroll delays and compliance risks
• The office doesn’t know what’s really happening in the field—until it’s too late

In a business where margins are thin and delays are expensive, these inefficiencies add up fast. One misclassified shift or a missed change order can wipe out days of profit. Even worse, they erode trust with clients and create friction between field and office teams.

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Why Paper and Spreadsheets Aren’t Cutting It For Tracking Labor Costs

Many contractors are still relying on outdated tools to manage labor—paper timecards, whiteboards, or Excel spreadsheets.

The problem? These tools are reactive. They only give you a snapshot of what already happened, not what’s happening right now. By the time labor data reaches payroll or project management, the job has already moved on, and you’re stuck playing catch-up.

That lag time leads to payroll errors, billing disputes, and poor job costing. Worse, it blinds you from identifying problems early—when you still have time to fix them.

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How Digital Timekeeping Changes the Game

In the Control Labor Costs Guide, Rhumbix breaks down how digital timekeeping transforms the way contractors manage field labor. Instead of collecting time data days or weeks after work happens, Rhumbix captures accurate labor hours directly from the field, in real time.

That means:

• Field teams submit time from their phones or tablets
• Hours are coded automatically to the right project and cost code
• Foremen tag out-of-scope T&M work as it happens
• The office can view and approve labor daily, instead of retroactively
  

This isn’t just faster. It’s smarter. With daily labor visibility, you can respond to issues immediately—before they cost you thousands.

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Real-Time Data = Real-Time Decision Making

The guide outlines several key labor metrics that smart contractors use to stay on budget:

• Actual hours vs. budgeted hours
• Unapproved or overtime hours
• Percent of labor tied to out-of-scope work
• Labor cost per unit (e.g., per linear foot or square foot)
  

With tools like Rhumbix, these metrics are no longer buried in spreadsheets or buried in lagging reports—they’re available daily in your dashboards. If productivity drops on a crew for three days straight, your PMs can catch it and course-correct now, not after the project is done.

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Labor Costs Case Study: Thomas Cavanagh Construction

In the guide, Thomas Cavanagh Construction shares how Rhumbix helped them eliminate manual workflows and improve visibility between the field and the office.

Before Rhumbix, they relied on hand-collected data that delayed decision-making and clouded job costing accuracy. After adopting Rhumbix Timekeeping and Production Tracking, they moved from monthly reports to near real-time tracking—reducing errors and enabling faster, more informed decisions.

“With Rhumbix, we know how much we’re spending on labor every day—not two weeks later.”
– Thomas Cavanagh Construction Team

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Contractors Can’t Afford Guesswork

With labor shortages, material price volatility, and increased scrutiny on compliance, there’s no room for guesswork. If you’re not tracking labor in real time, you’re giving away margin and exposing your business to unnecessary risk.

Whether you’re bidding on your next project or trying to close out the current one, labor visibility matters more than ever. The contractors who win tomorrow are investing in solutions that help them see—and act on—what’s happening today.

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Download the Guide and Take Control of Labor Costs

Want to see exactly how leading contractors are tackling labor costs with real-time data and digital workflows?

Download the full 2025 Guide: How to Control Labor Costs in Construction from Rhumbix now:

Click here.

Inside, you’ll get:

• Proven strategies for cutting payroll errors
• Tips for improving job costing accuracy
• Best practices for field-office communication
• Metrics that help you track productivity and reduce waste

Don’t wait until the numbers tell you it’s too late. Get proactive. Get the guide. Stay profitable.