Contractor Labor Productivity Benchmarks
Separate four questions: actual hours versus usable budgets, completed-job margin, quoted labor revenue share and closeout timestamps. Each has its own population and denominator. Joining them requires matched job identities; the published distributions alone do not establish a common cause.
Interpretation reviewed . This review does not change the original observation periods.
Key Finding
40% of the 315,393 jobs with usable hour budgets run over their labor-hour budget. 18% blow past 150%.
The median job lands right on budget (99.4% of estimated hours), while the average is 119% and 18% exceed 150% of budget. These summaries do not establish the contract's pricing basis or whether extra hours came from authorized additional scope. Review those records before calling an hour overrun an unrecovered cost. A company-wide P&L can conceal which jobs overran; compare each job's actual hours, pricing, material cost and approved scope before attributing the margin difference to labor.
Meanwhile 6.2% of completed jobs lose money outright and 16% run under a 20% margin across the completed-job margin population. The separate labor-budget sample does not establish that labor caused those losses. Trace the same job IDs and complete costs before making that attribution.
Labor Productivity Benchmark Distribution
Metric-specific distributions from the contractor research universe. The completed-job margin sample contains 1,747,089 jobs from 1,791 companies; the labor-budget measure uses 315,393 jobs with usable budgets. These are research populations, not a count of Level client engagements. Anonymized and aggregated, no individual company is identified. Machine-readable data: contractor.json.
| Metric | Bottom Quartile | Median / reported reference | Top Quartile | Note |
|---|---|---|---|---|
| Labor Hours, Actual vs Budget | > 131% of budget | 99.4% (on budget) | < 70% of budget | 40% of jobs go over; 18% exceed 150% of budgeted hours |
| Job-Level Gross Margin | < 28% | 44.3% | 60%+ | 1,747,089 completed jobs from 1,791 companies. 6.2% lose money; 16% run under 20% margin |
| Labor Share of Quoted Revenue | 16-17% (low quoted-labor share) | ~29% | 42%+ (high quoted-labor share) | Directional quote-line observation while the eligible sample count is re-derived. Revenue mix is not payroll cost, a better/worse ranking or a measured cause of realized margin |
| Job Closeout Lag | > 9.6 days | 1.7 days | not published | P25 is not published for this metric. Bottom decile is ~36 days (P90 35.8). Closeout is a status interval; invoice and cash timing require separate records. |
| % Jobs Over Hour Budget | - | 40% (pooled) | - | Pooled across 315,393 jobs from 1,391 companies: 40% exceed budgeted labor hours, 18% exceed 150%. Per-company distribution not published. |
| Annual Revenue per Service Vehicle | not published | 77% of survey respondents at $250K+ | not published | Vehicle denominator, not technician headcount. Useful for service fleets but not directly comparable with mixed project crews.Independent industry survey, commercial mechanical service, 2022. MSCA 2022 |
| Scheduled PM Hours per Service Technician | not published | 300-800 hours/year | not published | Annual scheduled preventive-maintenance hours per service technician. This is capacity mix, not total billable hours.Independent industry survey, commercial mechanical service, 2022. MSCA 2022 |
| Field Technician to Office Ratio | not published | 2-3:1 | not published | Field technicians per office employee. Do not compare with a ratio that counts only back-office coordinators.Independent industry survey, commercial mechanical service, 2022. MSCA 2022 |
| Nonbillable Technician Time | not published | 5-10% annually | not published | Typical annual nonbillable technician time in the survey summary.Independent industry survey, commercial mechanical service, 2022. MSCA 2022 |
Join the exceptions before assigning a cause
Start with jobs that have usable original hour budgets. Preserve approved scope changes and compare actual hours on the same time basis. Join those job IDs to final invoices, credits and complete costs, including paid travel and callbacks. Report unmatched jobs instead of treating the separate margin sample as the same population. A materials-heavy job with fully recovered additional hours can have a different outcome from a service job with unrecorded costs.
What the data tells us
Median job is on budget, the average is 119%
The published median is 99.4%, the mean is 119% and 18% exceed 150% of budget. Those are separate summaries of the usable hour-budget population. Investigate jobs with large overruns, but match authorized scope changes and contract pricing before deciding whether additional hours reduced realized margin.
6.2% of completed jobs lose money in the observed sample
Median completed-job margin is 44.3%; 6.2% finish underwater and 16% land below 20%. This is an observed distribution, not a universal healthy target. Join the low-margin jobs to actual hours, cost coverage, final invoices and credits; the separate hour-budget population does not establish which low-margin jobs had overruns.
Labor share ranges from 17% to 42%+ of revenue
The directional quote-line revenue-mix reference is ~29% labor, with 17% and 42%+ reference points. Its eligible count is being re-derived. These are labor selling-price shares, not payroll-cost ratios or healthy bands. Reconcile quoted and completed revenue separately from supported labor cost before using the mix in a staffing or pricing decision.
Closeout lag does not establish cash timing
The median job closes out in under 2 days, but the slowest 10% take about 36 days (P90 35.8). The closeout timestamp does not establish billing or collection status. Match completion, invoice and payment dates before attributing a cash delay to closeout.
The CLEAR Framework for Contractors
Learn moreEvery contractor runs on five financial pillars. Labor productivity sits at the center of the L pillar.
Expand all 5 CLEAR financial pillars (Cash, Labor, Earnings, Accounts, Risk)
DSO, invoice speed, retainage, progress billing. The gap between completing work and collecting payment is where most contractors bleed cash.
Hours vs budget, technician utilization, billable capture, callbacks. With 40% of usable-budget jobs over their hour budget, compare scope and workload by job and crew before deciding on headcount.
Job-level margins, service agreement profitability, install vs service mix. Join completed-job margins to supported costs and final revenue before assigning a cause.
Quote conversion rate, pull-through revenue, and customer retention. Use the maintenance-contract benchmark to separate recurring contract value from downstream work.
Customer concentration, warranty exposure, bonding capacity. An illustrative 20% concentration threshold is a practitioner screening choice, not a measured probability of a cash crisis.
Related Reading
Frequently Asked Questions
What percentage of contractor jobs go over their labor-hour budget?
About 40% of the 315,393 jobs with usable budgets exceed their budgeted labor hours, and 18% run past 150% of budget. The median job lands almost exactly on budget (99.4% of budgeted hours), but the average is 119%, dragged up by the roughly one-in-five jobs that blow well past their estimate. These hour records do not rank the causes of margin loss or identify whether the contract was fixed-price. Compare scope changes, final billed amounts and full costs for the same jobs before attributing a margin difference to extra hours.
What is a healthy job-level gross margin for a contractor?
The median job-level gross margin is 44.3% across 1,747,089 completed jobs from 1,791 companies within Level's broader 2,200+ contractor research universe. The top quartile clears 60%, the top decile 75%. The problem is the bottom: 6.2% of completed jobs lose money outright, and 16% run under a 20% margin. Join individual loss-making jobs to complete costs and final revenue; the margin sample does not establish which jobs had labor-hour overruns.
How much of contractor revenue is labor vs materials?
In Level's quote-line records, labor is about 29% of quoted revenue and materials about 33% at the median, but the variance is enormous. The eligible sample count is being re-derived, so use this as directional revenue-mix context rather than a population percentile. An illustrative 70%+ labor or 70%+ materials revenue mix can be modeled, but neither is established as an observed contractor group here. Quoted labor revenue share is not labor cost as a percentage of revenue. The records do not establish that labor-heavy shops earn more or that materials-heavy shops scale more easily. Check actual capacity, complete costs and completed-job margins for comparable work.
Why does labor productivity matter more than headcount?
Headcount alone does not measure available capacity or delivered work. The 40% usable-budget overrun share does not establish that hiring fails. Compare paid, productive and contract-billable hours with approved scope and final revenue. Separate workload, skills and data gaps before deciding whether to hire or change scheduling.
Operating review
Questions before trusting a margin report
The margin, cash, and operating questions we check first when reviewing your numbers.
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Are supplier returns and later bills in the same job population?
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