Estimating in Building Construction

53

7–1 LABOR HOURS

AND PRODUCTIVITY

The basic principles of estimating labor costs are discussed
in this chapter; they form a basis for the labor costs, which
will be illustrated in each chapter that covers quantity take-
off. Estimating labor requires determining the number of
labor hours to do a specific task and then applying a wage
rate. A labor hour is defined as one worker working for one
hour. Determining the labor hours requires knowing the
quantity of work to be placed and the productivity rate for
the specific crew that will perform the work. The crew is an
aggregation of construction trades working on a specific
task. The productivity rate is often expressed as a number of
labor hours per unit of work, although it may also be
expressed as the quantity of work performed by a crew dur-
ing a standard eight-hour day. In this book, we will use the
number of labor hours per unit of work.
The productivity rates can come from a number of
sources, but the most reliable source is historical data. The
advantage of historical data is that it reflects how a particular
company’s personnel perform the tasks. The historical pro-
ductivity rate is determined by dividing the total number of
labor hours to complete a task by the actual quantity of work
performed, as shown in Formula 7-1.

Formula 7-1

Productivity Rate

For historical data to be useful, the accounting system
should not only track the cost to complete a task, but also
track the number of labor hours required and the quan-
tity of work performed. For example, if a job requires the
construction of a concrete slab, it is insufficient to know
that the labor to construct the slab cost $5,523. The his-
torical data must also tell us that it took 170 labor hours
and that 10,000 square feet of slab was constructed. With-
out the labor hours or the quantity of work performed, it

Productivity rate

Labor hours

Quantity

is impossible to determine a productivity rate from his-

torical data.

EXAMPLE 7-1 HISTORICAL PRODUCTIVITY RATE

Type of work—8'' ×8''×16'' Concrete Masonry Units

(CMUs)

Quantity of work—1,700 square feet

Labor cost—$6,987

Labor hours—170 labor hours



Formula 7-2 is used to determine the estimated number

of labor hours for a task using the productivity rate.

Labor hours Quantity takeoffProductivity rate

Labor Hours Formula 7-2

The productivity rate that is used, if derived from his-

torical data, is for the average or standard conditions for the

projects used in calculating the historical production rate.

On many occasions, the project that is being bid deviates

from these standard conditions. Therefore, the number of

labor hours needs to be modified to take into consideration

how the project that is being bid deviates from the standard

condition. This is done by using a productivity factor. For-

mula 7-3 is the mathematical means by which the productiv-

ity factor is applied.

Adjusted Labor Hours Formula 7-3

The productivity factor is a combination of several vari-

ables or conditions. This is perhaps one of the most compli-

cated determinations. There are no hard-and-fast rules

concerning productivity factors. The elements of experience

Adjusted labor hoursLabor hoursProductivity factor

0.1 labor hours per sf

Productivity rate

170 labor hours

1,700 sf

CHAPTERSEVEN

LABOR