Illumiti Innovation Blog

Construction Payroll Solution Tackles Needs of SAP S/4HANA EC&O Companies

Date: February 01, 2022
By: Jim Fang

Following the Field Data Capture to Payroll

In an earlier post, we discussed Illumiti’s Jobsite Mobility Apps for SAP S/4HANA construction companies. By leveraging field data capture (FDC) at the actual job site, the foreman is able to focus on important day-to-day operations rather than more menial tasks such as paper pushing. This helps the project manager stay informed through daily summaries and costs, correcting course and adjusting as needed.

Now let’s dig into the time entries that we recorded for crew members via the jobsite mobility apps and review what occurs on the back-end for payroll.

Addressing Unique Industry Payroll Challenges

EC&O companies face unique challenges when it comes to the payroll function. Time entry can be tricky because location is often dynamic, the nature of work shifts, and multiple geographic locations can complicate matters. Here is where the value of FDC via Jobsite Mobility Apps becomes evident. Beyond the time entry challenge, regulations come into play to ensure that workers are paid properly regarding their terms of rates and benefits. Union agreements add an additional layer of complexity, from multiple rates for different classifications to premiums to the methods in which benefits are calculated. Reporting union benefits to union vendors can be demanding, as well. Illumiti’s Construction Payroll Solution simplifies this complexity.

Consider Bruce, a union employee who works for part of the week as a journeyman on one project and part of the week as a foreman on another project, which is represented by different work breakdown structure (WBS) elements.

When you run payroll, there are two lines of earnings: one for 16 hours at a rate of $39.68, and the other for 24 hours at a rate of $33.07, driven by the different classifications. Illumiti’s construction payroll solution includes a Union Workbench to better understand the details behind these calculations. When drilling down into the workbench, you can view the union pay rate table, as well as a union code and a project ID as a key field. Oftentimes, the same union will negotiate different rates for different projects, allowing you to set it up and pay it accordingly based on the project ID. You can also see the craft and classification, as well as the effective dates. Typically, once a year, the rates will change, and there are tools to “mass upload” the new rates.

construction payroll solution

When you run payroll, you will also see the different benefits calculated. We have a tool for that, too, that way you can see the table behind the union benefits calculation. For a particular union, you can view the different benefits defined, the rates, and the calculation method. Regarding pension calculation, the base wage rate for regular time, overtime, and double time may actually have different bases. To accommodate for this, we have a different base bucket for each. Sometimes, certain benefits are only eligible for certain classifications. Many unions, for example, do not give certain benefits (e.g., a pension) to very junior apprentices. Embedding this level of detail and granularity in the solution is invaluable in terms of facilitating Union Benefits Reporting.

Now consider Bernard, a non-union employee, who’s classified as a journeyman. He worked 3 days on the Davis-Bacon project, and 16 hours on another project. Bernard’s rates will be different. When you run payroll, you will see two different rates: $35 and $23.60. The two projects were also in two different states, so the withholding tax reflects these two different work locations. When viewing the benefits, you will see that there is a Davis-Bacon contribution. Looking at the Davis-Bacon rate table behind this calculation, you will find the journeyman rate for this project set to $35. The “plus benefit” rate is $48, which means $35 plus $13 per hour of benefits need to be paid. Further, if what you have been paid in the benefit wage tax is not enough, it's going to add additional money to the employees so that it can meet the Davis-Bacon requirement.

sap successfactors on mobile

A Certified Payroll Report is an important part of Illumiti’s Construction Payroll Solution – and as mentioned in our previous post, standard labor costs are available on a daily basis with actual labor costs available once payroll runs at the end of the week or pay period.

As an EC&O industry-focused system integrator, Illumiti implements SAP solutions faster, more efficiently, and with lower risk than other integrators. We’re able to do this because of our industry templates and intellectual property, as showcased in the Jobsite Mobility Apps and Construction Payroll Solution for SAP S/4HANA companies.

To learn more, visit: https://illumiti.com/industries/construction/

About the Author

Jim Fang

Jim is an SAP Consultant with 23 years of SAP Payroll experience; Architect of IP solution for Engineering, Construction and Operations SAP Payroll.

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