Which measurement method for percentage of completion uses labor hours incurred?

Which measurement method for percentage of completion uses labor hours incurred?

• A. Cost to cost - costs incurred
• B. Efforts method - labor hours incurred
• C. Output method - completed miles
• D. Schedule method - milestones

Answer: (B)

In long-term construction contracts, progress can be measured in several ways, and the one that uses the amount of labor actually performed is the efforts method. It calculates percent complete by dividing labor hours incurred to date by the total estimated labor hours needed to finish. This percent is then applied to the contract value to determine revenue recognized to date. Using labor hours ties progress to actual work effort, which is particularly useful when labor is a primary driver of progress and other costs may be variable. The other methods rely on different progress signals—costs incurred, physical output, or milestone completion—rather than labor hours.

In long-term construction contracts, progress can be measured in several ways, and the one that uses the amount of labor actually performed is the efforts method. It calculates percent complete by dividing labor hours incurred to date by the total estimated labor hours needed to finish. This percent is then applied to the contract value to determine revenue recognized to date. Using labor hours ties progress to actual work effort, which is particularly useful when labor is a primary driver of progress and other costs may be variable. The other methods rely on different progress signals—costs incurred, physical output, or milestone completion—rather than labor hours.