Industry Best Practices

LEM Tracking Guide: Labor, Equipment & Materials Best Practices

LEM (Labor, Equipment, and Materials) tracking is the industry standard framework for calculating out-of-scope work costs. Implementing strict LEM procedures ensures transparency between subcontractors, general contractors, and project owners.

Published by TrakSlip Editorial•7 min read

1. The Three Pillars of LEM Tracking

Every LEM billing log breaks out extra work costs into three distinct cost centers:

L

Labor

Hours worked, labor rates, overtime multipliers, and burden costs (benefits, taxes, workers comp).

E

Equipment

Rented vs. owned machinery, operating hours, standby rates, and fuel surcharge allowances.

M

Materials

Consumables and specialized materials with attached supplier invoices and contract markup percentages.

2. Best Practices for Standardizing LEM Rates

Disputes over LEM bills occur when rate schedules are not pre-established before extra work begins. Follow these rules to protect your claims:

  • Establish Pre-Agreed Master Billing Schedules: Include standard hourly labor rates, overtime multipliers, and equipment rate sheets in your original trade contract.
  • Separate Active vs. Standby Equipment: GCs require standby equipment to be billed at lower rates (excluding fuel & wear costs). Clear LEM logs distinguish between active run hours and standby hours.
  • Attach Real-Time Photo Documentation: Pair every LEM log entry with timestamped site photographs showing the physical work performed.

3. Streamline LEM Billing with TrakSlip

TrakSlip automates LEM calculations in the field. Foremen log crew hours and materials, pre-configured markup rates are automatically applied, and GC e-signatures are captured digitally in seconds.

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