Construction is still heavily reliant on paper timesheets to track employees' time and attendance and to process payroll. Our research shows that 60% of firms use it despite the availability of digital alternatives.
The costs of using paper timesheets for a construction contractor can be enormous, and not just because of the money wasted on ink and paper. It's the hidden costs that destroy the already tiny bottom lines.
So, why does construction still use paper timesheets? What are the hidden costs? And what is the solution?
Why construction companies still use paper timesheets
The construction industry is famously lagging behind all the others in digital terms. So, the continued reliance on paper timesheets is not surprising, especially when you learn that 39% of 'normal' businesses still use them. It makes sense that a higher percentage of construction companies would use pen and paper.
But why do contractors stick with paper timesheets instead of technology when the risks of paper fly off the scale and technology comes with plenty of benefits?
Here are some of the common defences we have heard:
- “It costs too much to install and run an entirely new time and attendance system"
- “It's too risky to install and then train our workforce to use it”
- “It takes too much time to get the accounts department up to speed and use it with our finance system”
On the surface, these seem like fair objections.
But when you dig a little deeper, they quickly fall apart.
Managing the workforce with paper costs too much, increases risk, wastes too much time and has many other detrimental effects. Let's now look into the numerous downsides to sticking with paper timesheets.
Paper timesheets cost too much time
When speaking about the costs of paper timesheets, it's easy to think only in financial terms. But time is one of the highest costs to any business and using paper to manage activities like time and attendance and site safety conformance eats an enormous amount of it.
- Distribute. Somebody needs to pick up or print off the timesheets that construction workers fill out. Whether they write their name on a sheet that's pinned to the wall, or their own sheet, it takes time
- Collect. When the payroll period closes, somebody needs to collect the timesheets. This could mean driving around to various sites or doing a weekly call-around, and then keying the data in manually
- Submit. There's a lot of 'good faith' that goes into expecting direct employees or subcontractors to submit paper timesheets on time, but it doesn't always play out as desired. As payroll deadlines get closer, the stress grows, the turnaround shrinks and the time wasted chasing paper rises
- Process. The back office is one of the biggest victims of a contractor continuing to use paper timesheets. Just trying to figure out the scrawling of possibly thousands of people is challenging enough. But those figures must be keyed into a spreadsheet and then rekeyed into a finance system. There might be some manual calculations too. It's slow, time-consuming, and financially dangerous
Paper timesheets cost construction businesses too much time, and it's time that could be spent on more productive activities that add value to the company and money to the bottom line.
You simply can't trust paper timesheets
Using paper timesheets to track and manage labour can cause construction companies major problems because too much can go wrong. It's too easy to make mistakes and their consequences can be devastating. Small errors that pass by unnoticed can combine and compound into heavy losses.
- There's often rounding-up and the adding of hours, which affects 75% of businesses, with employees admitting to the American Payroll Association (APA) that they stole an average of 4.5 hours per week.
- Human error is almost guaranteed because there are too many manual and labor-intensive 'variables' to consider. Putting aside the 88% of spreadsheets with mistakes, you're relying on every worker (possibly thousands) filling out paperwork correctly, then the next person inputting those precise details into a spreadsheet, then the back office rekeying into the finance system. It's messy and ripe for costly errors.
- Handling disputes with a paper trail is tough, leading to problems with employees, subcontractors, and the client. If the client queries an invoice from months earlier and your relationship and, in extreme cases, your business is on the line, paper doesn't cut it. It's easily lost and manipulated to hold any weight in an audit.
- You also can’t be proactive with labour management because the data, even when accurate, is not visible in real-time, which means you cannot look back and measure performance or track budgeted hours vs worked worked. By the time you have this information, it’s too late to take any meaningful action.
You lose sight of the bigger picture
One of the most significant benefits to digitising anything in construction is the reservoir of data that you can access. You can't get a comprehensive overview of your payroll costs and identify negative patterns when you just stick the data in a folder and store it in a filing cabinet.
Here are several things you cannot do:
- Generate real-time reports
- Track payroll between pay periods on a granular level
- Identify consistent problems
- Understand the actual 'to the minute' time worked
It's counterintuitive to rely on paper timesheets when it offers no actionable insights into how your business operates and costs you chances to improve based on your actual performance.
Biometric timesheets, on the other hand, can drastically improve your labour management
There are countless reasons that construction companies should switch from paper to biometric timesheets, and they're not all wrapped up in the downsides. Biometric time and attendance software has many benefits that eradicate the 'cost of paper timesheets' and improve your business.
The technology has employees clock-in and out by scanning their face or fingerprint instead of using pen and paper. And as workers have a unique biometric profile, it's accurate and eliminates buddy punching.
The right biometric solution offers you more than just time and attendance tracking, like:
- Confirming location with GPS technology
- Controlling site safety proactively
- Managing labour with intuitive dashboards
- Monitoring budgeted costs vs actual hours
- Producing 100% accurate timesheets every time
Can you really afford not to switch from paper timesheets?
We have laid out the downsides of paper timesheets.
Some of them are obvious, while others might be lesser known. But nothing beats seeing the cold, hard figures to bring home the reality of the situation. And that's what you can find here on our ROI calculator.
Our ROI calculator gives you a modest representation of the potential savings your business could have if you move to more accurate biometric timesheets.
If you're one of the 60% of construction companies that still rely on paper timesheets, it's essential to understand the cost of doing nothing because, as you can see, it’s costing you big. We have shown how medium-sized construction companies could save at least £175,500 annually with biometric technology.
Use our interactive online calculator to see how much you could save by switching from paper timesheets.
It might seem like a big jump to implement biometric time and attendance software, but the industry is accelerating in that direction because the benefits (the issues too) are becoming too difficult to ignore.