Extensions RSS Feed
- Trainer's Corner January, 2010
- By John Barrett, Instructor
-
During the course of a typical estimate, the estimator, in addition to recording material costs, by default, systematically and simultaneously captures all associated installation labor costs. While it is important to capture current market pricing on material costs during takeoff, it is equally important to, at the very least, be aware of future labor costs and how they may affect your project. Over the build life-cycle of a project, several factors may affect projected labor costs, the most prevalent being worker salary increases. Using the Labor Escalation page in Accubid Enterprise Estimating, you can easily account for these costs effectively and safely.
To access the Labor Escalation page, click the Labor Escalation tab at the bottom of the screen.
Fig. 1
The Labor Escalation page is easily customizable and so gives you the flexibility to account for Labor escalation in any number of ways. In our example, we will use the proposed length of a project and determine the amount of time, expressed in percentage, that will be allocated to the escalated (post pay-hike) rates.
Suppose the construction schedule for a project runs from January 1 to December 31. If management plans on administering a 5% pay raise to all field personnel in June, which represents roughly half of the project’s life, it becomes very clear how the cells are populated in order to account for the hours which will be directly affected. See Figure 2 below.
Fig. 2
When a hard value is entered in the % of Contract field, the calculation is as follows: Full Rate = (Shop Labor Total $ + Field Labor Total $ + Incidental Labor Total $ + Labor Factors Total $) / (Shop Total Hrs + Field Total Hrs + Incidental Total Hrs + Labor Factor Total Hrs) The program simply takes the portion of the contract you’ve allocated (% of Contract) and multiplied it by the proposed escalation percentage (Escalation %). The result is expressed in both dollars per hour (Escalation $) and gross total (Total).
It is important to note that the escalated dollar per hour rate (See Figure 4) is always calculated using the percent of the Field Full Rate (see Figure 5).
Fig. 4
Fig. 5
The way you manipulate the Labor Escalation page can be as simple or complex as the estimate requires.
While it is important to note that labor costs on a typical commerical project might only be in the neighbourhood of 20-30%, It is crucial to understand that labor costs typically account for 80% of your performance risk. Therefore, it’s always best practice to at least attempt to account for any known or projected labor costs during the build life cycle of your project.