Timesheets v Allocation Sheets: Why Your Payroll Data Isn't Commercial Evidence

A timesheet tells you that Sarah worked 10 hours on Tuesday.

An allocation sheet tells you that Sarah spent 4 hours on piling in Zone B, 3 hours on ground beam formwork in Zone C, and 3 hours standing because the concrete delivery didn't show up.

Both documents record the same person on the same day. Only one of them is any use to your commercial team.

If you're a QS or commercial manager working under NEC4, you already know the difference matters. But most contractors still treat timesheets and allocation sheets as interchangeable. Some don't use allocation sheets at all, relying entirely on payroll data to support their applications for payment and compensation event quotations.

That's a problem. Because timesheets answer a payroll question: how many hours should this person be paid for? Allocation sheets answer a commercial question: what did this person actually do, and can we prove it?

Under the Schedule of Cost Components, only one of those questions gets you paid.

What a timesheet actually records

A timesheet is a payroll document. Its job is to record the hours a person worked so they can be paid correctly. On most construction projects, timesheets capture the person's name and role, the date, start and finish times, overtime hours if applicable, and the project or cost centre they're charging to.

That last point is important. Most timesheets allocate time to a project, not to an activity within that project. A salaried construction manager fills in their timesheet showing 45 hours charged to Project X this week. An agency labourer's timesheet shows five 10 hour shifts on the same project. Both feed the payroll system. Both generate a cost against the project's Defined Cost ledger.

What an allocation sheet records instead

An allocation sheet is a commercial document. It records who was on site, what activities each person or gang worked on, how many hours were spent on each activity, what equipment was used and where, what materials were consumed, any standing time or disruptions and their causes, and the weather conditions affecting work. We've covered why the allocation sheet belongs in your site records in more detail.

The critical difference is the link to activities. Where a timesheet says "Sarah, 10 hours, Project X," the allocation sheet says "Sarah, 4 hours piling Zone B, 3 hours formwork Zone C, 3 hours standing (late concrete delivery, supplier ref CD/2847)."

That granularity is what makes allocation data commercially valuable. It connects cost to output. It identifies disruption contemporaneously. It provides the evidence chain that links a compensation event to affected resources. And it feeds your CVR with actual cost data against work breakdown structure elements rather than a lump sum against the project.

The seven things a timesheet can't do

This is where the gap becomes commercially dangerous.

It can't tell you what activity someone worked on. A timesheet records hours against a project. It doesn't record hours against piling, formwork, drainage, earthworks, or any other activity. When you need to know what your earthworks gang cost you this month versus last month, the timesheet is silent.

It can't identify standing time. If a gang was on site for 10 hours but only productive for 6, the timesheet shows 10 hours. The 4 hours of standing time, which might be your strongest compensation event evidence, disappear into a flat line of payroll data.

It can't substantiate a compensation event. When you submit a CE quotation to the Project Manager, you need to demonstrate the resources affected and how they were deployed differently because of the event. A timesheet showing 10 hours on site doesn't prove that those 10 hours were impacted by anything. You need the allocation record showing which activities were disrupted, which resources were diverted, and what the cost impact was.

It can't feed your CVR with meaningful data. Your Cost Value Reconciliation depends on knowing what activities cost you versus what you tendered. Timesheets give you a project level total. Allocation sheets give you cost against every element in your work breakdown structure. The difference is the difference between knowing you spent £400,000 on people this month and knowing you spent £120,000 on drainage, £95,000 on structures, £85,000 on earthworks, £60,000 on preliminaries, and £40,000 on standing time.

It can't demonstrate productivity. Productivity is output divided by input. The allocation sheet provides both: hours spent on an activity (input) linked to measured progress (output). The timesheet only provides hours on site. Without knowing what those hours achieved, you can't calculate a productivity rate, benchmark against your tender, or forecast cost to complete with any confidence.

It can't protect you from Disallowed Cost. Under NEC4 Clause 11.2(26), costs can be disallowed for resources not used to Provide the Works, after allowing for reasonable availability and utilisation. If your only evidence of what resources did is a timesheet saying they were on site, and the PM challenges whether they were productively deployed, you have no defence. The allocation sheet provides that defence by linking every hour to a specific activity. We go deeper on this in what gets struck out as Disallowed Cost.

It can't separate Client caused disruption from Contractor inefficiency. This is the big one. When productivity drops, the PM will want to know why. Was it because of a compensation event the Client caused, or because the Contractor deployed resources inefficiently? The timesheet can't answer that question. The allocation sheet can, because it records what happened, where, and why. "3 hours standing, late design information, RFI ref 247" is evidence. "10 hours on site" is just attendance.

What NEC4 auditors actually want to see

The Ward (2024) series on auditing people costs under NEC4 Option C and E contracts is instructive here. When auditors inspect Defined Cost claims, they expect time demonstration to be linked to a range of records including timesheets as a minimum, plus allocation sheets and attendance records.

Notice the phrase as a minimum. Timesheets are the floor, not the ceiling. They establish that a person was engaged on the project and was paid. But the auditor's deeper question is whether the time charged was spent on Providing the Works. And to answer that question, they need to see what those people were doing.

The NEC People Costs Q&A goes further. It acknowledges that extra detail on timesheet activities isn't necessarily the answer. Instead, the Project Manager needs a better understanding of how costs are processed and managed from the start of the project. The implication is clear: bolting activity data onto a timesheet after the fact isn't as credible as capturing allocation data in a purpose-built system from day one.

On larger projects, the Scope frequently requires time to be captured against a level below project costing, meaning at work breakdown structure level. If that's in your Scope, a project-level timesheet doesn't meet the requirement. You need allocation data.

The behavioural problem

Here's the part that doesn't get talked about enough.

Timesheets are filled in by the people being paid. They have a direct financial interest in the outcome. If your timesheet system is the same system that determines pay, every entry is influenced by the question of whether it will affect someone's wages.

This creates predictable distortions. Hours get rounded up. Breaks get minimised or omitted. Standing time gets absorbed into productive categories because nobody wants their hours questioned. Overtime gets recorded generously. Start and finish times drift toward the contractual norm rather than reflecting reality.

None of this is dishonest in intent. People fill in timesheets to get paid correctly. They're not thinking about commercial evidence, cost control, or compensation events. They're thinking about their wages.

Allocation sheets, when properly separated from payroll, don't have this problem. When a supervisor records resource deployment, knowing it won't affect anyone's pay, they record reality. The gang stood for three hours. The concrete didn't arrive. Two operatives were redeployed from drainage to help with emergency works in Zone A. That's the truth of what happened, unfiltered by payroll anxiety.

This is exactly the argument that resonated in the turnstiles piece. Keep payroll and commercial records separate. Let one system pay people. Let the other prove what they did.

Where each document belongs

The practical answer isn't to abandon timesheets. You need them. HMRC needs them for CIS compliance. Your payroll provider needs them. Your agency suppliers need them. Timesheets are a necessary part of the employment and tax infrastructure of every construction project.

But they belong in payroll. Not in your commercial workflow.

Timesheets handle hours worked for payroll calculation, overtime verification, agency invoice reconciliation, CIS and HMRC compliance, and holiday and absence tracking.

Allocation sheets handle resource deployment against activities, standing time identification and causation, compensation event substantiation, CVR cost data at work breakdown structure level, productivity calculation and benchmarking, Defined Cost justification under the Schedule of Cost Components, and disruption evidence for claims.

When you try to make one document do both jobs, you compromise both. The timesheet becomes cluttered with activity codes that payroll doesn't need. The allocation data becomes corrupted by payroll-motivated behaviour. Neither system works as well as it should.

The integration opportunity

The smartest contractors don't treat these as competing documents. They reconcile them.

Timesheets confirm that 50 people were on site and were paid for a combined 500 hours. Allocation sheets confirm that those 500 hours were deployed across earthworks (180 hours), structures (140 hours), drainage (100 hours), and standing time (80 hours). The two datasets should reconcile. When they don't, that's a flag worth investigating.

The 80 hours of standing time still gets paid through payroll. Nobody loses wages. But commercially, those 80 hours are now identified, categorised, and linked to causes. If the standing time was Client-caused, you've got your CE evidence. If it was Contractor-caused, you know where your inefficiency lives and can address it.

That's the commercial intelligence that timesheets alone can never provide.

Conclusion

Timesheets and allocation sheets exist for different reasons, serve different audiences, and answer different questions.

Timesheets answer: how much should this person be paid?

Allocation sheets answer: what did this person do, and can we prove it?

Under NEC4, where Defined Cost must be justified by accounts and records, where resources must demonstrably be used to Provide the Works, and where compensation events require contemporaneous evidence of impact, the allocation sheet is the document that does the heavy lifting.

Your timesheet gets people paid. Your allocation sheet gets your project paid. They look similar. They feel similar. They are not the same thing.

Sources

• NEC4 ECC Clauses 11.2(26), 52.1, 52.2, 52.4, 61.3
• NEC4 Schedule of Cost Components, People items 11, 12, 13, 14
• Ward D (2024), "Assuring staff costs on NEC4 Option C and E Contracts," NEC Contract News, Issue 129
• Ward D (2024), "Assuring labour and agency costs on NEC4 Option C and E Contracts," NEC Contract News, Issue 131
• NEC Contracts, "Assuring People Costs Under NEC4 Contracts Q&A"
• CECA NEC4 Bulletin No. 50, "Records and Administering NEC Contracts"
• HMRC, Construction Industry Scheme Guide (CIS 340)