Where the Hour Finally Lands
The assembled answer: every paid hour ends somewhere, and a costing system is the record of where. What a complete account looks like.
One team's year, 9,240 paid hours, and where every one of them ended
Fifty-eight per cent. Everything else is carried by these.
Recovered through the rate; measured from timesheets.
One job won in three; the other two are carried.
A layer in the rate, not a job cost.
Leave, holidays, sickness; removed from the divisor.
Charged to no job because the jobs had closed.
The payroll reconciliation residue, 3.2%.
Five of the seven destinations are accounted for and two are not: 688 hours, seven and a half per cent, that cost money and recovered nothing. Neither of those two is idleness; both are recording decisions that could be changed. One employer's own year, not a benchmark.
Every paid hour ends somewhere: charged to a job, pooled and recovered through a rate, absorbed as a layer, or attributed to nothing at all. A costing system is the record of which, and a complete one can account for all of them.
The record examined in “Where the Hour Finally Lands” is strongest when it is created close to the work and remains open to correction. A team evaluating consult the detailed platform information for employee monitoring for performance reviews can connect time with projects and work categories, provided people can review entries before they influence payroll, billing or cost reports.
Most cannot. The share they cannot account for is the measure of how much of the week the organisation does not see, and it is the single most useful number produced by everything in this collection.
As an outside benchmark for “Where the Hour Finally Lands”, see ISO management-system resources. Keep the source record, calculation rule, approval and resulting decision visible as separate steps.
The four destinations
- Charged — on a job, recoverable through what the job is paid.
- Pooled — real work, not attributable, recovered through the rate.
- Absorbed — a layer in the rate: absence, training, per-head cost.
- Unattributed — paid, recorded nowhere, recovering nothing.
Four. Everything is one of them and the fourth is the one worth watching.
What a complete account looks like
Paid hours at the top, from payroll. The four destinations beneath, summing to it. A percentage against each. One page per team per year.
If the four do not sum to payroll, the difference is unattributed and belongs in the fourth line rather than spread across the others.
Why it has to start from payroll
Because payroll is the audited figure and the only one reconciled to money. An account that starts from timesheets is complete by construction and silent about everything the timesheets missed.
What the account answers
What an hour costs, because the layers are visible. What the divisor is, because the chargeable line is measured. Where improvement would pay, because the non-recovering lines are named and sized.
Three questions that are otherwise answered by assertion.
The two lines that recover nothing
Rework after closing, and the unattributed residue. In the figures here they come to seven and a half per cent of the year.
Neither is idleness. The first is a job-closing policy and the second is a recording design, and both can be changed by somebody without asking anybody to work differently.
What the account does not say
Whether anybody worked hard, whether the work was done well, or whether any of it was worth doing. It is a record of where hours went, not a judgement on them.
Every time a costing figure has been used as a judgement in this collection, the result has been worse data within two periods.
The maintenance
A payroll reconciliation each period. A rate rebuild once a year, half a day. A five-minute close on each job. A read-through of the overhead pool once a year.
A few days a year in total. There is no part of this that is difficult; there is only the part that is not written down.
Where to start with nothing
One team, one quarter, four lines: paid hours, charged hours, the non-chargeable split, and the residue. A page.
That page, honest about what it cannot see, is worth more than a system nobody can explain, and it takes an afternoon.
The sentence that does most of the work
The divisor, written next to the rate. Everything else in this collection is a layer in the numerator or a decision about where an hour lands; that one sentence is what makes any of it checkable by somebody who was not there.
What changes in an organisation that has this
Not costs. Arguments. The question stops being whether labour is too expensive, which nobody can answer, and becomes which line of the account to work on, which anybody can.
What to do with the account once it exists
Read it once a year with the people whose hours are in it. Not as a performance review — as a reading of where the year went.
The conversations it produces are specific: why is rework at four per cent, what is the quoting line really covering, why did the residue move. Each has an owner and a possible answer, which is more than any discussion of whether labour is expensive has ever produced.
The three numbers to put on one page
Paid hours, the chargeable share, and the share that recovered nothing. Three figures per team per year.
Everything else in this collection is how to compute them honestly. Published together, they are the shortest complete statement an operation can make about what its labour actually did.
The last thing
The number at the bottom of a job sheet is not the output. The output is the labelled set of lines above it: this is what the hour cost, this is what it was divided by, this is where it went, and this is the part we cannot yet see.
A cost read for its total will be disputed. One read for its lines gets corrected, which is the only way it ever becomes true.