Labor Codes in the Work Breakdown Structure

Labor codes classify the work that your employees do. They classify work on a project, phase, or task in categories, or levels, that you define, such as department, progress, service, or staff level.

Some typical labor code levels are:

• Departments, such as Architectural and Environmental. This is usually a one-digit level.
• Phases, such as Pre-Design and Survey. This is usually a one-digit level.
• Services, such as Marketing Studies and Field Survey. This is usually a two-digit level.
• Staff Level, such as Principal, Non-Technical, Senior Engineer, Engineer. This is usually a one-digit level.
• Non-billable labor code. Some firms designate a level to distinguish billable from non-billable labor. This is necessary if you bill for time and materials contracts and do not bill for most of your labor. You can always choose not to bill labor during the Interactive Billing cycle. This is usually a one-digit level.

Unlike a set of phases or phases and tasks, which you define on a project-by-project basis, your labor codes defaults are established on a firm-wide basis. The same set of labor codes apply to all of your firm’s projects.

You do not have to use labor codes. Without labor codes, your work breakdown structure may still contain enough information to meet your administrative needs for tracking work on a project. If you do decide to use labor codes, they are required with all timesheet transactions, to identify each hour of labor.

Reasons to Use Labor Codes

• Typically you use labor codes for internal budgeting and labor tracking by department, service, or staff level, or any combination of these. If you structure your project numbers, phases, and tasks to represent departments, services, or staff levels, you may not need to use labor codes.
• If you use the Project Budget Worksheet, you must budget labor by at least one labor code.
• Labor codes are reflected on the Project Progress report, which is the key project management report in Vision.
• On all project-related reports, labor detail is sorted in labor code order.
• You can use labor codes for generic resources in Resource Management.
• You can use labor codes as a level in a project plan.
• You can base labor billing amounts on labor codes. Although labor codes are typically used internally, if you bill labor based on activity rather than based on employee or employee level, you may want to use labor codes. Here are some points to keep in mind:
  • If your firm bills labor based on the employee's billing category or staff level, and for a given job an employee can perform different jobs and be billed at multiple rates, you can establish a labor code for staff level. For example, all labor charged to code E09, Engineering Department/Principal, is billed at $90/hour. Although uncommon, this billing technique can be useful for small firms, where one employee performs several jobs. It allows a single employee to be billed at multiple rates, based on the work he or she is currently doing.
  • Some firms devote a labor code level to marking labor charges as billable or non-billable, so that rework or ineffective time can be charged to a project but not billed to the client. These firms might use 0 as the final character of the labor code if labor is billable and 1 if it is not billable. This approach works if a firm has non-billable functions that employees are aware of when they enter their timesheets. If you do not follow this approach, you can still choose not to bill certain labor charges when you prepare your invoices.