The amount of labor required for a construction project can go a long way to determining the overall cost. Contractors’ expenditure on labor is affected by wages, crew size, productivity and labor conditions. As such, estimators must have accurate information prior to creating a project bid. They have to take into account the number of workers they will need, the training they will need and the length of time they will be working for the project as well as the complexity of the project. Any miscalculations of the labor can make a significant difference between what estimates were made and what the actual cost of the project will be.
Entering an hourly wage alone is not enough to give accurate estimates of labour. Construction Project Estimating Software blends quantities, labor hours, productivity rates and crew data with applicable labor costs. It can also link up labors calculations with take-offs and historical project data. These features provide a framework for the estimated personnel costs. Still, the results remain reliable as long as the current rates are used, a realistic assumption for productivity.
Why Are Labor Costs Important in Construction Estimating?
Labor Can Represent a Major Project Cost
Labour is one of the significant cost items in many construction projects. The final bid can be impacted by slight differences in the estimated hours. Estimators need to be aware of the amount of work and manpower needed for each scope.
Labor hours can vary depending on the client’s needs, project size, complexity and site conditions. This allows teams to see through the bigger picture when it comes to their overall estimate, as it’s separated from labour, material and equipment costs.
Labor Costs Depend on More Than Hourly Wages
An hourly wage is not necessarily a true reflection of the cost of a worker’s employment. You might also consider payroll taxes, insurance, retirement contributions, leave and any other related expenses that may apply to the contractor.
A fully burdened wage rate is the basic wage plus employment costs that apply. These costs are listed in Procore’s current guidance as being wages, taxes, insurance, retirement contributions, and leave.
Productivity Affects Total Labor Hours
Productivity is about how fast a work crew can do a certain job. Production may be impacted by access, worker experience, complexity of the project, weather and work sequencing.
Labor hours can be useful if historical project records are available to provide a reference. Those assumptions should be modified for estimators, however, when new job conditions are drastically different.
How Does Construction Project Estimating Software Calculate Labor Hours?
Connects Labor With Takeoff Quantities
The quantity of take-off is a basis for labour calculations. Measuring square footage, linear footage, units, volume or other quantities from project documents.
Those quantities can be related to the amount of labor required through a system of estimating. For instance, the number of labor hours needed to install the flooring can be correlated with the quantity measured in flooring. Estimating workflows are available today to transfer takeoff information to estimate records.
Uses Labor Units and Productivity Rates
Labor units are used to measure the time that is expected to be required to complete a given amount of work. Productivity rates refer to the speed with which that work can be accomplished by that crew.
Each work item can be assigned these values by the estimators. The number and labor assumptions are then used to determine expected hours in the system.
Calculates Total Labor Hours
Once quantities and labor assumptions are entered into the software, the software will calculate total labor hours. The quantity is multiplied by the labour time per unit, and this is a simple calculation.
For instance, 10,000 square feet with 500 square feet per labor hour equates to 20 hours of labor. Actual results may differ when conditions for the project have an impact on productivity.
How Does Software Account for Different Labor Rates?
Uses Trade-Specific Labor Rates
Electricians, plumbers, carpenters, labourers and other trades are likely to be involved in construction projects. The wage rates and skills needed for trades can vary.
Separate rates will provide a more detailed estimate. It also enables contractors to make changes to individual trade costs without altering other types of labour costs which are not related to the trade in question.
Accounts for Crew Composition
The crew can be composed of a foreman, skilled workers, assistants and general workers. Different hourly costs can be assigned to each role.
The composition of the crew as well can impact production. So, the cost of the workers and the crew structure required for each task should be taken into account when estimating.
Calculates Loaded Labor Rates
Loaded labour rates include costs of labour which are in addition to wages. These can be taxes, insurance, retirement contributions, paid leave and any other expenses that may apply.
This figure provides a more accurate estimate of costs to contractors. To accurately estimate the costs of employees, Procore advises using a fully burdened labor rate.
How Does Software Adjust Labor Costs for Project Conditions?
Considers Project Complexity
Hours allocated for certain work may vary depending on how complex the project is. Productivity can be impacted by restricted access, difficult layout, and unusual construction methods and installation conditions.
If information about the project is reliable and shows that working conditions differ, estimators may be able to make reasonable adjustments to their labour assumptions.
Uses Productivity Factors
Productivity factors enable the estimator to consider factors that could vary the production process. The normal production rate may be inappropriate for congested areas or difficult locations.
Difficulty factors can be added to current estimating systems for determining labor requirements. For example, Procore’s documentation states that it considers difficulty to be one of the factors affecting job complexity.
Uses Historical Project Data
Labor hours and productivity from completed work can be demonstrated from historical data on projects. This information provides a reference for the estimator value if there is a similar project.
Teams should compare project scope, project conditions, project crew, and work methods before using historical figures, however.
How Does Construction Estimating Software Handle Labor by Trade?
Tracks Individual Trade Requirements
There are various skills and productivity assumptions for different trades. Estimators can break down the labor by the trade to produce a more detailed cost breakdown.
For instance, the electric work could be carried out by electricians and helpers, and the concrete work could be done by finishers, laborers and equipment operators.
Separates Labor Cost Categories
Estimates can be used to break down the direct labour, project-specific staff, and subcontracted labour. This allows for improved visibility and understanding of workforce costs’ impact on individual project scopes for contractors. This also aids in easier comparison when teams review the estimated and actual costs of the project at a later time.
Compares Labor Requirements Across Work Packages
Estimators are able to see the labour needed in various work packages. This comparison could uncover some odd work arrangements before the company makes its bid.
A clear breakdown also aids in the internal review. Managers have the ability to determine which scopes are more important than others to consider before making an estimate.
How Does Software Combine Labor With Material and Equipment Costs?
Connects Labor With Takeoff Data
The quantity of material and/or labour required for calculations can be supplied from take-off. Changes to quantity may impact connected labour needs.
For instance, more wall surface equates to a greater amount of materials and more installation time. Takeoff data can be fed into estimate records in current estimating workflows.
Separates labour, material, and equipment costs
Having cost categories separate helps to review an estimate. Estimators can check on the cost of labour without necessarily combining it with equipment and material costs.
The same structure will facilitate revisions as well. The price change of a material does not always need to be matched by a change in labour productivity.
Calculates the Total Cost of Work
Once the materials, equipment, labor and indirect expenses of the project are entered, the estimate will display the anticipated project cost.
This will help contractors get a better handle on their finances before pricing. It also provides a framework to analyze overhead, contingency and profit.
How Does Software Handle Labor Cost Changes During Estimating?
Updates Labor Rates
Wage adjustments or changes in employment costs may affect labour rates, or the requirements of the project itself. It is advisable that when reliable information becomes available, the estimator should update the rates.
Current rates are important because they can lead to differences between the estimate and actual cost of labour.
Adjusts Labor Quantities
Project quantities can change as a result of drawing revisions. If the quantities are changed, then the related labor requirements might change as well.These revisions are easier to track when using calculations in conjunction with takeoff information.
Maintains Estimate Versions
Estimated versions retain previous assumptions and changes. They are able to demonstrate variations in quantities, labor costs, productivity assumptions and total costs. This information provides teams with a better understanding of the process used to arrive at the final estimate.
What Should Contractors Check When Estimating Labor Costs?
Labor Hours and Productivity Assumptions
Contractors should confirm that estimated hours match the project scope. Productivity assumptions should also reflect expected site conditions and work methods.
Current Labor Rates
The labour rate should be based on the prevailing circumstance of the company and project at the time. It is also important for contractors to take into account any employee costs associated with labor burdens that may apply.
Crew Composition and Skill Requirements
The estimate(s) should include the number of workers needed for each scope. There may be specialized tasks that need workers’ experience or different combinations of crew.
Historical Project Data
Past data can be used to verify the performance of the workers in the completed projects. These numbers should not be used in a new contract without comparing scopes with similar ones.
What Should You Look for in Construction Project Estimating Software?
Labor Rate Management
The system should enable teams to handle their trade-specific rates, labour units, crew cost, and loaded labour assumptions. Rate reviews are easier when it is easy to see rates.
Takeoff and Labor Integration
Data for take-off and labor needs to relate in the estimating process. This relationship can help to avoid unnecessary recalculations and simplify changes to quantities.
Historical Cost and Productivity Data
The information from the historical costs and productivity can be helpful for future bids. When making new assumptions, teams should have access to information about previous project(s).
Estimate Revision and Reporting Features
The process of estimating revisions should be easily traceable. Labor totals, quantities, rates and other cost categories should be reported for labor.
Conclusion
Estimating a job’s labor is more than just hours times the hourly rate. The contractors should take into account the quantities, productivity, composition of the crew, trade rates, labour burdens and conditions of the project. These factors are combined with the takeoff data and project data from past projects and incorporated into a connected estimating workflow. Construction Project Estimating Software can streamline these calculations all in one streamlined process. The final estimation remains, however, dependent on the accuracy of the inputs and good estimating judgement. Labor rates, reasonable productivity expectations and similar project information are still critical. When taking the time to consider these factors, contractors can produce more accurate estimates and gain insight into the time and manpower they can anticipate needing.
FAQs
How does construction project estimating software determine labor costs?
Includes both project quantities and labor units, productivity, crew costs, and applicable labor burdens. This gives an estimated labour cost per scope.
Does construction estimating software determine the amount of labor hours?
Yes. Quantities and production assumptions can be used to estimate systems to determine the estimated number of hours required. The output of the results is dependent on the inputs and productivity assumptions used.
In the construction estimating process, what does labor rate mean when loaded?
The loaded labor rate is a comprehensive measure of the overall expenses of hiring a laborer. Can consist of wages, taxes, insurance, retirement contributions, leave and other job expenses that apply.
Can software have different labor rates for each trade?
Yes. Estimators have the option of setting different rates on trades, workers and crews. This will produce a more realistic assessment of labour costs.
Is Historical Labor Data Possible in Construction Estimating Software?
Yes. Information from the history of the project can be used for references in labor hours and productivity. Contractors should check any contract that is comparable before applying any history.