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What Is a Bill of Labor?

M. McGee
M. McGee

A bill of labor is an itemized accounting of the time spent performing a task. These are often given after hired workers finish a complex task such as cleaning up after a natural disaster or repairing a vehicle. This bill only accounts for the work done and time taken; other costs such as expenses or parts are on a different bill. Giving a separate bill of labor is less common now that in the past. Automated account systems make it much more likely that a fully itemized bill containing all relevant information is presented, rather than separate bills covering niche areas.

There are two common uses for a bill of labor. The most common was as a way of detailing the individual man hours that went into a job. When a person hires a group of people to perform a large and complex job, it is important to know exactly who is responsible for which tasks. By setting up a bill that only shows the hours worked, it is easy to see who did what.

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For instance, if a person hires a contractor to put an addition on his house, that contractor will likely have a team of workers that come along. When the project is finished it may have taken 20 eight-hour days to complete, but that doesn’t mean it took 160 hours total. The hours spent by each person on the team is accounted separately and the final total, taking into account days where more or less people were available, would be all the time those workers spent added together.

The less common usage for a bill of labor is as part of project planning, particularly in the manufacturing industry. When a company designs a new product, that product is theoretical through the majority of the time spent working on it. Only in the final phases will an initial prototype be produced. Part of the process of prototyping a product is determining the likely time and energy required to make the item when it goes into full production.

This determination is presented as a bill of labor. The prototyper determines an amount of time to make an item based on the manufacturing conditions likely to be present when the product is finalized. This will give the manufacturer a good understanding of the non-material costs involved in the production. Based on this information, the company can continue on with the product or make changes to cut time costs.

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