Labour Allocation

Labour allocation is the practice of deciding how many hours each task on a job should take, assigning those hours to the right people before work starts, and then capturing actual hours once the work is done. The comparison between estimated and actual hours is where the real value sits. Without it, a business can complete a job, send the invoice, and only discover weeks later that the crew spent two extra days on site that were never priced into the quote.

In project-based businesses - construction, AV installation, electrical contracting, plumbing - labor is typically the most volatile cost category. Materials have supplier invoices to anchor them. Labor often does not. If hours are not allocated to a job before work begins and tracked during execution, they disappear into general overheads rather than appearing as a recoverable job cost.

How Labour Allocation Works in Practice

The process starts at the quote stage. Labor should be broken down by trade or role - for example: first-fix electrician, second-fix electrician, site supervisor - and priced at a fully burdened rate that includes direct wages, employer-side taxes, insurance, and any job-specific costs such as travel allowances or site certification. For most trade businesses, fully burdened rates run 1.2x to 1.5x the direct wage rate.

Once a job is won, those labor estimates move into the works order or job record. Each operative is allocated to the job with a defined scope and time budget. When work is carried out, actual hours are recorded against the job - from timesheets, a daily site sign-off, or a digital form completed on site. The comparison between allocated and actual hours then becomes a live indicator of whether the job is on margin or running over.

Common Failure Points in Labour Allocation

The most frequent failure is quoting labor at direct wage rates rather than fully burdened rates, which understates the true cost from the outset. A $30-per-hour wage rate becomes closer to $55 to $70 per hour once employer taxes, workers' compensation, benefits, and vehicle costs are included. Quoting at direct rates compresses gross margin on every job before a single hour is worked.

The second common failure is treating allocation as a back-office task rather than an operational control. Labour allocation is only useful if field teams are recording actual hours against specific jobs in close to real time. A works order that shows allocated hours but has no field record to match actuals against cannot tell you whether the job made money until it is too late to act.

Zigaflow links labour allocation to works orders and jobs, so allocated hours sit alongside purchase orders, materials costs, and supplier invoices in a single job record. When invoice time arrives, the full cost picture is already captured.