3 Practical Ways to Save on Construction Payroll


Dealing with payroll woes is a reality for all construction contractors. Even if you have other things to worry about, compensating your employees and workers will always be one of your priorities. After all, payroll management will have a direct impact on your company’s relationship with its employees. It is also one of your biggest expenses and also affects your company’s cash flow.


In short, payroll is a big deal, and if you are not careful, payroll mistakes will cut your revenue more than it should. Here are three ways you can save big on construction payroll.

1. Consider outsourcing your payroll process.

Keeping your payroll operation in-house may seem like a good idea, but it may be costing your company more than you think.


It is fairly common in the construction industry to hire workers with different employment statuses. On-site labor and office work may be filled with salaried employees and hourly laborers, but there are also contractors and subcontractors to consider. As different employee statuses may require different legal requirements, keeping track of all of them is a huge challenge


In addition, payroll is a time-consuming process. Working in a construction company, the accounting staff may have a hard time keeping up with the continuous payroll cycle as well as delayed payments from clients that are all too common in the industry. It can be easy to miss deadlines, commit errors in calculating exemptions, or miss new payroll regulations.


By outsourcing your payroll process, you will reduce the direct costs of processing payroll. A huge construction company may be able to handle an in-house payroll department but for small and medium businesses, an outsourced payroll is often more cost-effective. Contracting with an outsourcing company that specializes in payroll also reduces the risk of payroll mistakes. These mistakes can incur penalties that can be very costly, especially if it involves the IRS. Finally, outsourcing can save you the time to research changes in regulations. This is especially useful for the benefits department, which handles the benefits as well as the deductions in the payroll system.


2. Integrate automated timekeeping on-site.

Because of the realities of human nature, employees may have the habit of tardiness, early punch-ins, late punch-outs, and extended breaks, especially with a manual timekeeping system. The payroll costs that result from the ease in gaming a manual system can build up over time. Inaccurate time tracking can cost an employer a significant amount in added wages and payroll taxes.


Employing an automated timekeeping system can eliminate these employee tendencies. Since digital time cards are recorded to the minute, combining it with scheduled enforcement will eliminate early time-ins and late time-outs. Some timekeeping systems through mobile apps also include GPS tracking which ensures employees are indeed on location for work. Automated timekeeping also cuts administrative costs as well as labor costs that are associated with manual timekeeping.

3. Optimize employee shift schedules.

Poor shift scheduling can lead to increased operating costs and wasted payroll dollars. Especially in huge job sites with extended construction hours and different job positions to rotate, shift scheduling is a huge challenge.


A well-planned schedule is necessary for a smooth and efficient operation on the construction site. When employees know when they are supposed to come in and how much they should work, it gives them a sense of responsibility and will be able to give their peak productivity. Also, it also reduces the chaos that arises from having too few employees during peak hours or too many in idle hours.


If your company manages several projects as well as a sizable crew, using spreadsheets may be time-consuming. You may as well use pen and paper. Consider using automated scheduling software to optimize schedule by site, by project, or by crew.



Chris Woodard is the Co-Founder of Handle, where they build software that helps contractors, subcontractors, and materials suppliers secure their lien rights and get paid faster by automating the collection process of unpaid construction invoices.