A well-designed estimate summary sheet ensures you won’t break out in a cold sweat when the costs come in. Brian Seymour goes through a checklist.
It can also be the difference between business survival and liquidation.
At this stage of the tendering process the estimator must use sound judgement on such elusive elements as labour productivity, job conditions, material waste, tools and equipment, and ‘walking time’.
Although a percentage of non-productive time is allowed for in each time-tested labour unit, every operation needs to be assessed on its own merits.
To arrive at total labour hours, you will need to adjust the estimated labour hours on each job depending on complexity, then allow additional labour for the above-mentioned elusive elements.
To calculate total labour hours of a project, transfer estimated hours from individual pricing sheets to the price summary worksheet, then adjust the labour hour value based on the working conditions.
Whether this is based on a percentage of total labour hours or for a specific section of the project (such as working in heat, cold, confined space, height, etc) will vary from job to job. The percentage of adjustment only comes with experience and quality job records.
Further considerations are necessary: for example, labour skills, building conditions, materials handling, weather, construction schedule, occupied premises, overtime and shift work.
If you have applied these during the take-off stage, be careful not to double up. However, it’s wise to have a checklist to ensure all contingencies are covered.
Several other labour requirements are often overlooked and should be allowed for, as follows.
Preliminaries. Include the labour required to set up the job, such as the site shed, job box or trailer, and any temporary power. Consider site facilities such as toilets, water, power, etc.
Asbestos and hazardous materials. Even if a specialist is engaged for removal, additional labour will be required by the electrical contractor to secure the site.
You should also include removal of discharge lamps and tubes, ballasts, radioactive exit signs, etc.
Refurbishment. This requires removal of the electrical installation and materials, which can consume many hours of labour.
Underground cabling. Trenching may require core drilling and cutting up roadways or paths.
Beware of existing services (water, gas, telecommunications), hidden rock and reef that may require blasting, and unstable sandy soil that may need shoring.
Creating ‘as built’ plans. These are often specified for when the project is finished and may run up quite an expense. The cost of revisions must be built into any variation requests.
Matching materials or equipment. This can be very expensive and time consuming, especially with colours and size.
Identification and labelling. Many estimates allow for the manufacture and supply of labels, but the installation time is often overlooked and can be substantial.
Is the job ‘live’? Working on installations connected to the grid requires special precautions to ensure personal safety, and it takes much longer.
OH&S site orientation or initiation. Are all personnel required to attend?
Job location. Is this outside the normal travel scope? If so, labour hours will have to be allocated. Will it mean additional travel cost? Will there be an additional charge for materials delivery?
Project complexity. Personnel may have to attend site inspections and site meetings.
Work in public areas. This will mean additional labour when it comes to public safety, such as installing safety barriers and even providing a ‘flag man’.
Supervision. Additional labour is required if your job employs subcontractors, even when they are specialists in their own right. The electrical contractor is responsible for the outcome.
Time to the workface. Labour is required to move workers from the site shed to the workface. In the case of multi-storey buildings or large building sites this can be considerable.
Estimating the total adjusted labour hours is only one step in the process. Accurately estimating the labour cost for a job is just as important, and it can be the difference between a profit and a loss.
To the uninitiated this would seem a simple task of multiplying the labour hours by a dollar figure.
Do you intend to use a composite labour rate (based on a company average rate) or a weighted job labour rate. The latter may require different rates for all divisions of labour, such as foreman, leading hand, graded electrician, and apprentices at various levels.
A highly technical project may require the more skilled electricians and final year apprentices. Using a composite rate may result in a considerable loss.
Incorrect staffing of the project may produce an over-qualified team, and an incorrect estimate may leave you with an under-skilled team. Both scenarios could end up being extremely expensive.
The other labour costs to consider include annual holiday pay, statutory holiday pay, sick pay, superannuation, long-service leave, WorkSafe or WorkCover, payroll tax, etc.
Allocation of material costs is much simpler than estimating labour, but it requires a fair degree of concentration to ensure the correct pricing is used.
For instance, it would be a very costly mistake to allow for standard outlets when Medilec ‘O’ style units are called for.
In addition to direct materials, you need to assess the potential for waste and theft. Installing a power outlet in a customer’s premises will probably not need a loading for waste or theft, but larger installations need a percentage for wasted materials.
Depending how well the workforce has been trained will reflect the degree of waste. How many projects do you see on rough-in where lighting cables are hanging 2-3m from the ceiling at each outlet? This could easily incur a 10% waste factor in the cable installation.
Large jobs with poor security are open to material and equipment theft.
Onsite handling and storage of material is also a cost factor. A multi-storey project may require a number of lifts per floor just for the light fittings. Can this be done during normal working hours or, as with some CBD projects, out of hours?
Is there a charge for this? Is there security for the lighting fittings on each floor?
Even an industrial site may have a costly material-handling process. Many industrial sites will not allow contractors’ vehicles to enter, and this requires co-ordinating the customer’s forklift or transport drivers to carry materials from an outside car park to the workface.
The time involved in this co-ordination can be considerable and needs to be included in the final price.
As the estimator, you must also be aware of suppliers’ quotes. The switchboard manufacturer’s quote will usually state “This quotation includes delivery to site FOB”, meaning free on board.
This means it is the electrical contractor’s responsibility to off-load the unit, which may require a forklift, a crane or 10 men.
These ‘hidden’ on-costs for labour and materials can severely cut profit margins if not included in the initial estimate. A well-designed estimate summary sheet is an invaluable checklist for ensuring nothing is missed.