How to avoid losses when commuting to job sites?
If you haven’t been estimating the costs of driving between sites, you’ve been overlooking an important source of costs. Whether the financial model of your business considers time spent driving as a billable cost or not, it’s important to know what it amounts to, so you avoid losses when commuting.
It’s easy to underestimate this cost because it does not seem like a productive chunk of time, at first sight. Don’t let the “oh, it’s just a drive” fool you. Commuting-related losses occur due to the “Portal to Portal” Act. Let’s break down what you need to know about this rule as an employer.
The Portal to Portal Act has been around for around 78 years. It came to life due to the necessity to legally define a “compensable workday”. The Act obligates employers to compensate employees for all hours worked during the working day.
No, this does not include commuting time to work.
When an employee travels from one workplace to another during the same workday, the hours spent on the road are compensable.
See Related: How to Create a Desirable Compensation Plan
If your business doesn’t call for long commutes, and driving between sites isn’t a significant cost, you should still learn how commuting will impact your current business model as it continues to grow. If today, you are making two stops per day, tomorrow you might be required to make 5 or more. So it is important to understand how will this shift impact your financials?
This was exactly the experience of Ed, who in a single morning, would drive 10 miles east of the office and then 20 miles west of it. As the business grew, spending a portion of the day driving between sites became the norm. Losses increased simply because of his failure to factor commuting as a real cost to the business.
See Related” 30-60-90 Day Plan: An updated step-by-step guide
Is there a consensus?
How do we go about estimating such costs? Is there a rule of thumb?
To answer these questions, we will look at two of the most common methods recommended by managers themselves. The beauty of these methods lies in simplicity, making it easy to account for travel time even with limited resources.
- Let’s consider a small plumbing business that only has a couple of gigs on the same day. Generally, the employee can clock in upon arrival at site A and clock out when they’re leaving. On the drive to site B, the employees can clock back in This way, the time spent driving is billed into site B’s expenses. This cycle can be repeated for as many gigs as needed.
- Why all the clocking? Some suggest the mentioned method requires too much clockwork from the employee’s side, making it a tedious task. Construction manager Ed suggests clocking in on the arrival of site A, followed by a second clock in upon arrival at site B. According to him, clocking out should be saved for the lunch break or the end of the day. Simplifying the process for employees and minimizing mistakes, while avoiding losses when commuting.
See Related: The Logic Behind Calculating Billable Hours
Which strategy is better?
Saying that there is a “correct” way of estimating drives between sites assumes that all businesses rely on the same tools, have the same needs, and value time similarly. Those of you who have been with our blog for a while, know that we don’t like to generalize our audience, and we try to address the same topic through the lens of different industries and needs.
The important question then becomes: what are some tips and tricks in estimating drives between sites so that losses are avoided regardless of the industry you’re in?
To simplify cost estimation processes, businesses are increasingly relying on time automation apps, instead of manually estimating the time spent on and off-site for each employee. Because of human error, businesses relying on manual time tracking are losing $110,000 annually.
The time spent driving between sites can easily be tracked on apps like Atto, automatically accounting for transportation time, and allocating it to the relevant project.
Forbes points out that time automation saves businesses $4 million annually. Assuming a 40 hours work week, a time automation app saves employees 6 weeks, and employers 9 weeks worth of time every year.
See Related: Best Time Tracking Apps for iPhone in 2020
Each business has a different method of accounting for time spent between sites. Differences also arise in how you decide to allocate the costs of transportation across projects. Which one is better? That is entirely up to you to decide! Our advice is - estimate regardless!
Why? Tracking hours correctly is important for job costing decisions. The importance lies in understanding actual costs per project. Having accurate data about your costs helps you in bidding successfully by pricing accordingly.
Ask Your Team
Last but not least, look for answers within the company! The employees who are on the move every day, from one side to the other can give you more insights than you expect.
Approach your team by asking them how they think drives between sites can be more efficient. See whether your team has a habit of clocking in and out appropriately, or whether they may be part of the reason why hours spent traveling between sites is unaccounted for. If you deem it necessary, plan a quick employee training to ensure a coherent approach to time tracking.