Plumbing Connection Summer 2016

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PLUMBING CONNECTION

SUMMER 2016

ESTIMATING

ANDY FARRELL

ESTIMATING LABOUR RATES

hen it comes to pricing a job it’s the responsibility

of the estimator to accurately calculate each

aspect of the project and provide a detailed report

of their findings.

There are three essential elements required to accurately

price a plumbing project, these consist of labour, material

and plant/excavation costs. These elements are used to

create a library of standard rates, which are the catalyst

for estimating. The material and excavation components

often remain relatively consistent as the quantities within a

standard rate rarely change. Labour on the other hand can

be affected by many external factors, and as such, should

have a higher level of focus when pricing a job.

The key to covering the labour component on an estimate

is to first calculate the ‘actual’ cost of employing a qualified

tradesman and dividing it by their total productive hours (on

the tools) over a year.

For example, calculate the total cost of employing a

tradesman by adding their wage, allowances, workers

compensation, superannuation and any redundancy

payment schemes to determine a total ‘yearly’ cost.

Secondly, determine the projected ‘productive’ hours by

calculating the total hours per year (52 weeks x 40 hours/

week = 2080hrs) and then deducting the days off due to

annual leave, public holidays and sick days (approx. 8 weeks).

BASIC LABOUR RATE CALCULATION SHEET SAMPLE.

Most projects should have a consistent labour rate, but

may change due to an additional site EBA allowance. In these

cases, simply fill out a new Labour Rate Calculation Sheet

and enter the figure into your estimating program.

As mentioned above, for estimating purposes we always

use the labour rate for a qualified tradesman as the

standard for pricing project work. The theory behind sticking

with the one labour rate is to ensure we have continuity and

efficiency.

The reasoning behind this theory is that when we

build a standard rate, the labour component is calculated

using an experienced tradesman to perform the work

at a rate of 100% efficiency. For the sake of estimating

we presume an apprentice will be less efficient (for this

example, 20% less efficient) than the tradesman and

will take longer to complete the same task. As it is less

expensive to employ an apprentice (for this example, 20%

cheaper) the cost to complete the same work ‘in theory’

should be equivalent.

The main variance that may occur in relation to labour

is the allowance of time you have provided to perform a

task. For example, if you are installing drainage in an open

area and clear site, then it’s reasonable to assume you will

be more efficient compared to completing the same work

within a confined space or tight area. The cost of an hour’s

labour will not change, but the duration of work will increase.

Therefore, when pricing the latter works, additional hours

need to be added to compensate for the reduced efficiency.

The whole premise of implementing an estimating system is

to improve the accuracy and consistency of pricing plumbing

work, and an important element to achieve this is to determine

the actual cost of labour to ensure you are covered.

ANDY FARRELL

ASKS THE QUESTION: DO YOU KNOW THE COST OF YOUR ESTIMATING LABOUR RATE FOR

CONSTRUCTION WORK?

Contact:

To get an editable copy of our Labour Rate Calculation Sheet

visit –

www.plumbingpack.com.au

LABOUR RATE CALCULATION SHEET

Basic wage per week

$1,360.00

Fares per week

Traveling per week

$110.00

Special site allowances

$112.00

SUB-TOTAL

$1,582.00

WorkCover/Comp (%)

4.50%

SUB-TOTAL

$71.19

Long service leave (%)

SUB-TOTAL

$ -

Redundancy pay (ACIRT) week

$120.00

Superannuation (%)

9.50%

SUB-TOTAL

$129.20

Annual leave loading

17.50%

SUB-TOTAL

$18.31

TOTAL (per week)

$1,920.70

TOTAL (Annual 52 Weeks)

$99,876.28

PRODUCTIVE LABOUR

Total weeks worked (per year)

SUB-TOTAL

M Productive hours per week

LABOUR RATE (Cost):

$59.73

PLEAE NOTE: These figures DO NOT include any mark-ups or profit margins. They

are also indicative only, please ensure you enter your own figures.