Thursday 14 April 2022

Labor Accounting is cornerstone of project management

Planning and accounting for labor costs are important aspects in project management, for the reason that they can have a direct impact on the main parameters of the project, such as cost, timing, order of work, project duration and the quality of the resulting product (service). This article discusses several types of work planning and describes how to enter the actual data on them.

Much attention in project planning should be paid to human resources, as they have the greatest impact on the project and on its risks. Project resources refer to the employees, equipment, machinery and machinery that are involved and used in the project to perform planned tasks. Every organization is interested in increasing productivity and optimizing time costs, so it is very important to take into account all the resources of the company, exercise control and effectively distribute them between projects. 


According to the degree of detail, resource planning can be divided into two groups:

  • Enlarged workforce planning;
  • Operational planning of labor resources.
  • Aggregated workforce planning
  • Is the definition of all the workforce that will be involved in the project. At the same time, for each labor resource, the number of hours (days, weeks, months) that it needs to work within the task is determined.
  • Resource planning can be one-tier or two-tier. Organizations that use single-tier planning typically plan by role or workforce, while the two-tier approach allows you to plan for both roles and work forces at the same time.

Planning by roles is planning by the positions of employees or by types of equipment, machines and mechanisms. It is used in long-term projects, when at the time of drawing up plans it is not yet clear which specific employees and mechanisms (machinery, equipment) will perform the work. Such planning makes it possible to assess the degree of availability of the project with resources and determine the needs for the involvement of additional resources of contractors (subcontractors). Creating a role plan is performed for the entire project period and consists of the following operations:

  • Define all roles for the project. The project manager determines the overall need for roles for the planned period, thereby ensuring that the project tasks are required by the required specialists;
  • Define work for each role on project tasks. The project manager, based on the planned durations of the project tasks and the amount of work, determines the labor costs for each role in hours and gives an estimate of the costs for them.
  • After the project manager has finished planning by roles, he begins to refine his plan by planning for the workforce corresponding to the planned positions on the project tasks.

Workforce planning

refers to the detailing of the plan to the level of specific performers and mechanisms (machinery, equipment). For example, the role of a Mechanizer was planned on the task, and the employee who will work in this position is Bondarenko V.G. Such detailing allows you to control the work of specialists, distribute working time between them in order to eliminate downtime and overload, estimate the number of personnel not involved in the project, and also distribute the time of highly qualified experts between projects. The workforce planning process consists of the following operations:

Identification of all labor needs. The project manager determines all the workforce for the project and creates a request to line managers (department heads) to provide the required resources to the project.
Reservation of existing human resources for participation in the project. Heads of departments consider a request for the provision of labor resources to participate in the project for the planned periods, after which they either allocate them or reject the request with the reason for the refusal.

In case of a positive result, the project manager receives a family list of actually approved labor resources. If any of the requested workforce is not available for participation in the project, the head of the department notifies the project manager. After that, the project manager, if authorized, solves the problem himself, or convenes a workshop with interested parties to make a decision on the provision of labor resources. Usually, the options for resolving this problem are:

  1. Recruitment of new employees for the project through the personnel department;
  2. Retraining of existing staff;
  3. Moving employees from other projects;
  4. Rescheduling of work on the project, if this does not violate, for example, the technology of production of the product, etc.
  5. Conclusion of contracts, subcontracts for the performance of the required work on the tasks of the project for certain periods.
  6. When choosing one of the solutions to the problem, the manager needs to re-identify the risks that are associated with the decision and may affect the project, as well as make an assessment of financial costs.

Updating of the workforce plan. After the project manager has agreed on the workforce with the heads of departments and solved the problems with the shortage of personnel, he needs to update the project plans by making appropriate adjustments.

Operational resource planning Operational resource planning

is detailed and is carried out in order to effectively use the time of employees and equipment in the project. It is used as an independent type of planning, and in conjunction with aggregated planning and is designed to detail the time of resources on the task by hour by day. This type of planning is often used in organizations where employees perform many operations on different tasks per day, projects have a high degree of uncertainty, as well as when involving specialists in the project whose work was not planned in the aggregated resource plan. Such planning helps to resolve resource conflicts in a timely manner, since resources are planned on average for two weeks in advance.

When planning projects with a high degree of uncertainty, this period is often reduced to a week, and vice versa, when the structure of the project is typical (for example, a rigid technological process), the planned period of the operational plan of labor resources can be increased to one month.

The process of operational workforce planning consists of the same operations as when assigning labor resources to a project. If the organization uses operational work planning, then the project manager needs to update plans for the planned period on a weekly basis and form requests for reserving labor resources from department heads.

Accounting of actual labor Costs Accounting of actual labor costs is carried out to collect objective information about the actual time spent on the implementation of project tasks, to assess the effectiveness of the employee's work. For the productive use of each employee's time, it is necessary to understand how much time it will take him to perform a particular task, and how his work will affect the project as a whole. To do this, it is necessary to carry out and control the accounting of the actual labor costs of all employees.

The work accounting process consists of the following operations:

  1. Filling in the time sheet. Each employee has his own time sheet, where everyone writes off the time for tasks for the entire working day. If an employee does not have the opportunity to fill out his report card, for example, he works at some construction site, then he delegates his rights to fill out the report card to his immediate supervisor, who will provide data on the performance of work (the dispatching process takes place). It is recommended to fill out the time sheet at the end of each working day, otherwise when it is filled out at the end of the week, the accuracy is reduced by 10%." However, not in all organizations it is convenient to enter the report card for each day and then the data entry is carried out at the end of the working week for all working days at the same time.
  2. Actual labor costs are written off in hours, which is the most optimal for further plan-fact analysis of labor costs. Usually, the rules for filling out the time sheet are approved in each organization its own, so that all employees understand up to what point in time, in what format and how often it is necessary to enter (and further approve) the actual labor costs.
  3. Approval of the actual labor costs by the head of the department. After the employee has filled out the time sheet before the period specified in the regulations, the head of the unit for the specified period within the specified period forms a document with the written off hours of employees and further corrects the data. If he changes the number of hours written off by an employee, then at the time of approval he must leave his comments, explaining the situation.
  4. Approval of work by the project manager. The project manager approves the written off work for all his projects for the specified period, adjusting the hours of employees if necessary. If he changes the number of hours written off, he must leave his comments when approving, explaining the situation. The sequence of approval of labor costs by the project manager and the line manager is carried out depending on the order adopted in the organization. In some companies, there is no approval of labor costs, but it is recommended that management monitor the written off hours by employees for an overall view of the performance of each of them.

Generate reports on the actual work costs of departments for the reporting period The project administrator generates reports with summary work costs and expenses for them by departments of the organization to provide documentation to the head of the company.


Factual information on the hours spent gives not only an assessment of the actual performance of work, but also allows you to get actual expenses in financial equivalent, to assess the performance of personnel until the end of a certain period, to assess the situation of work performance in a timely manner and, if necessary, to update the terms and plans of the project. In addition, cost statistics are accumulated in the context of roles and labor resources, which makes it possible in the future to analyze and ration the same type of operations. The accumulated results can be used as a basis for evaluating new projects by analogues, since the tasks of the projects are repeated or very similar.

An important point is that there is information for analyzing the quality of planning and execution of work. To do this, planning and fact accounting must necessarily be carried out in one unit - in hours, with larger units (days, weeks, months), the accuracy of the project is lost, which entails an incorrect assessment and updating of plans.


In the case when the actual data on labor costs exceed the planned ones, the probability of increasing the deadlines of the task increases and, as a result, the failure of the entire project deadlines increases. The reason for the increase may be:

  • Incorrect assessment of labor intensity at the planning stage;
  • Inappropriate competency or productivity of the workforce.
  • By comparing similar labor resources and their work results, it is possible to determine the cause of the problem. Usually, if 90% of the workforce is invested in routine assessments, and 10% regularly exceed them, then the project manager needs to pay attention to their qualifications and possible reasons for such a deviation. If 90% does not fit into the planned assessment, then, consequently, the problem is in the assessment itself, which does not take into account the influence of any external or internal factors.


Accounting for labor costs is an important component in project management, which allows you to predict new risks in the early stages through a plan-fact analysis of data for the period, find ways to solve existing problems in advance, monitor the quality of project work and identify the effectiveness of each labor resource.

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