Chapter 4

Labor
 1 - Labor Classification

Direct Labor Indirect Labor Overhead Labor

Carpenters Construction Manager Home Office Support

By . Mohammad Salama
 2 - Developing Labor Rates

1 - Base Wages

• The amount that goes directly to the employee

2 - Fringe Benefits

Paid Time off (PTO) Medical & Life Insurance Benefits

Government Mandate Benefits

By . Mohammad Salama
 Example 1

In a 40-hour per week work year how many hours would a machinist work given the following:
• Sick leave allowed = 5 days
• Vacation days = 10 days
• Paid holidays = 10 days
Assume he uses all his sick time

Year = 52 weeks hours per week = 40 hours per year = 40X 52 = 2080 hours

Hours per day = 8 hours

Sick leave = 5 days X 8 hours = 40 hours

Vacation days = 10 days X 8 hours = 80 hours

Paid holidays = 10 days X 8 hours = 80 hours

Actual Hours = 2080- (40+80+80) = 1,880 hours

By . Mohammad Salama
 2 - Developing Labor Rates

3 - Contractor Overhead and Profit

Base wages, including fringes Worker’s compensation, (if applicable)

;
Overhead
; and, Profit, (if applicable).


4 - Fully Loaded or Billing Rate

 A fully loaded rate is the base wage, plus adders that will be paid for an hour’s work on the job

By . Mohammad Salama
 2 - Developing Labor Rates

5 - Overtime Wages

1 - Weighted Average Rate / Crew Composition Rate

2 - Indirect and Overhead Labor

By . Mohammad Salama
 Example 1

You have the following crew mix. Calculate the composite direct crew hourly wage.

1 Foreman = 1 no. X 25 $/ hr. = $ 25

XYZ Production Crew Direct Wage
2 Operators = 2 no. X 18 $/ hr. = $ 36
1 Foreman $ 25.00 / hr.
2 Helpers = 2 no. X 12$/ hr. = $ 24
2 Operators $ 18.00 / hr.
1 Mechanic = 1 no. X 15 $/ hr. = $ 15
2 Helpers $ 12.00 / hr.
Total = 25+36+24+15 = $ 100
1 Mechanic $ 15.00 / hr.

Average = 100 / 6 = $ 16.67

By . Mohammad Salama
 2-5-2 Indirect and Overhead Labor

1 - Indirect and overhead labor

2 - Historical job percentages

General Estimate

Detailed Estimates

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3- Estimating Work Hours to Complete a Given Work Scope

By . Mohammad Salama
 Richardson Estimating System

1 - Job Site Conditions 4 – Work Week

Good + 3% to 5%
Average + 6% to 8% 41 to 48 hours + 5%b to 10%
Poor + 9% to 15% 49 to 50 hours + 11% to 15%
51 to 54 hours + 16% to 20%
55 to 59 hours + 21% to 25%
2 - Worker Skill Level
60 to 65 hours + 26% to 30%
66 to 72 Hours + 31% to 40%
High + 2% to 5%
Average + 6% to 10%
Poor + 11% to 20%

3 - Temperature

Below 40 degrees or Add 1%

above 85 degrees per degree of variance
By . Mohammad Salama
 Example 1

‫ كم يبلغ اجمالي تكلفة طاقم العمل اذا كانت التكلفة من المشاريع‬، ‫ في حالة تغير ظروف العمل طبقا للجدول المرفق‬: ‫ مثال‬
‫ دوالر ؟‬130.9 ‫السابقة هي‬

Jobsite conditions Good

Worker Skill Average
Temperature 95 degrees
Work week 40 Hour

Jobsite conditions Good +4%

Worker Skill Average +8%
Temperature 95 degrees +10%
Work week 40 Hour 0%
Total 22%

‫ دوالر‬159.70 = 1.22 *130.9 = ‫ ليكون السعر طبقا لظروف العمل الجديدة‬

By . Mohammad Salama
 Example 2
 Given the standard labor cost for 100 LF of footing 8 inches by 12 inches = $125.00, if the job site conditions
are:
Jobsite conditions average

Worker Skill poor

Temperature 80 degrees

Work week 50 hours

Jobsite conditions average +7%

Worker Skill poor +15.5%

Temperature 80 degrees 0

Work week 50 hours 13%

Total 35.5%

‫ دوالر‬169.375 =1.355 *125.00 = ‫ ليكون السعر طبقا لظروف العمل الجديدة‬

By . Mohammad Salama
 4- Productivity Improvement

Learning Curve

• Based on the premise that people and organizations

become better at their tasks as the tasks are repeated

• Time to produce a unit decreases as more units are

produced

Lean Management

• A systematic approach to identifying and eliminating waste

through continuous improvement in pursuit of perfection.

Team Building

By . Mohammad Salama
 5- Performance Monitoring

5 .1 Work Packaging / WBS

 To calculate required man hours for each work package

5.2 Graphic Presentation of Earned Value Data

 Graphic presentation for EV factors , e.g. SPI & CPI

5.3 Work Sampling

 A technique to determine the production or unit rates for specific work activities
By . Mohammad Salama