Both Guy and I have seen this over and over - a contractor's casual approach to timesheet coding covers up a significant amount of wasted time.

The wasted time is created by poor labor coordination and decision making on daily assignments. Many times, the field productivity is far better than indicated as hours that should be coded to indirect activities - and pulled out of the labor productivity calculation - get tossed into the pile of direct hours and used to measure field productivity.  That is an extremely misleading practice.

Wondering whether you have an indirect labor opportunity to capitalize on?

Here's a quick acid test:

1. Do your field workers code their time to a project?
2. If the answer to No. 1 is yes, do they assign their time to task codes?
3. If the answer to No. 2 is yes, do you have a task code for "overhead" or something similar?

If you didn't answer YES to all three, you could not possibly know the amount of time and money you're losing to indirect labor. You need to correct that situation as soon as possible.

If you truthfully answered YES to all three, congratulations.  You're probably in pretty good shape - assuming you taught your foremen and/or superintendents how to code time.

Be forewarned that your indirect labor should not be zero. Zero is neither a realistic nor desirable target. The appropriate amount of indirect labor is somewhere between 1% and 10% depending on the size of your company and the service it performs.