The yield indicates the quantity of units of work carried out in a period, usually an hour or a day. If the work is performed by a team of five workers, the execution time is 50 hrs / 5 people = 10 hrs. For a 100m 2 brick wall, the unit time will be 50 hours. For this, a unit time is sometimes used – for example, it might take 0.5 hour to build 1m 2 of brick wall. Of course, knowing the cost of your labour is only half of the problem: you also need to know how much labour will be needed to complete the task. The labour rate that eventually feeds into your project cost calculation comes from the labour burden along with the mark-up that is required to provide a profit for your company. Values are usually rounded up to allow for a margin of error and to simplify calculations. Total annual labour burden = £3000 + £1000 + £2000 + £3000 = £9000 Converting this total annual labour burden to an hourly cost is done by: Total annual labour burden / total workable hours = £9000 / 1720 hrs = £5.23 If the annual labour burden comprises the following: Total workable hours = 2080 hrs – 360 hrs = 1720 hrs For example:Īn 8-hour working day over 52 weeks = 8 hrs x 5 days x 52 weeks = 2080 hrsĪ 20-day holiday allowance and predicted absences (sickness, training, etc) of 25 days per year = 20 days + 25 days = 45 days (45 days x 8 hrs = 360 hrs)
In addition, the labour burden can be expressed as an hourly cost by dividing the total yearly labour cost by the number of hours an employee will work. Labour burden (%) = Indirect costs / direct costs * 100 It is also sometimes given as a percentage: The labour burden is the cumulative total of these direct and indirect costs. This includes things like payroll taxes, insurance, holiday and sickness pay, training and other employee benefits. Indirect costs relate the cost of each employee outside of their hourly wage. Direct costs are the wages that you pay to your workers – this is sometimes also called the base rate.
The cost of your labour force is made up of two distinct elements: direct costs and indirect costs. But the descriptions below give an overview of the sorts of calculations that are necessary to establish your labour costs. Terminology in this area can vary slightly from country to country and the specific costings that are required will vary from project to project (for example, the labour burden as a percentage or as an hourly cost). According to The Construction Labor Market Analyzer, your construction labour cost percentage should be anywhere from 20% to 40% of total costs. But it is vital for the financial success of a project to get this right because the cost of labour makes up such a significant part of the total cost. One aspect of calculating the total cost for a bid that can cause particular problems relates to the cost of the labour that is used on the project. Calculating labour costs accurately is crucial
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