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Customising labour units

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Labour allocation for a particular job is the most difficult task an estimator has to do in order to arrive at a competitive tender that will return a profit. Brian Seymour explains.

In the previous articles that I have written, I have covered the basics of labour unit application; however, there is a lot more to assigning a particular labour unit to a task than picking it from the labour unit manual.

The units in these manuals are based on the average time it takes an average electrician to do the task in average conditions. But, these averages may not always be applicable to your job and it is the estimator’s responsibility to alter these units to reflect the conditions you will be working in. Intelligent analysis of all the facts is needed to determine the rate of these factors.

The prime reason for adjusting a labour unit is for circumstances that vary considerably from the scope of conditions assumed when a labour unit was listed. There are some grey areas here where poor project management can lead to blaming the estimator for not having originated a reasonable expectation of these variances.

Factors that can have a considerable effect on the productivity of a project and are outside the norm when assessing the labour component include:

External conditions – Weather, commuting time, accessibility, availability of skilled labour and walking time.
The project – Site access, project size, heat, cold, confined space, type of work, size of workforce, fast track, project schedule, compression;
Project management – Supervisory team, material availability, tool availability, stacked trades, overtime, concurrent operations, clean up, labour to the workface.
Site labour – Quality of tradesmen, absenteeism, morale, fatigue, quality assurance, learning curve.

Projects that have a substantial proportion of the work being performed outdoors need the estimate to allow for the expected number of days downtime due to weather. Although weather is mainly unpredictable, the estimator can make assessments depending on the season, past weather pattern data and local knowledge. This assessment should also take into account whether there is any other work on site that can be carried out during inclement weather.

Allowing walking time to get the labour from the site shed to the workface on a major project can be a considerable cost. With a large workforce, the estimator may need to schedule staggered start times to ensure the least amount of lost time, especially if it requires the use of vehicles or access through security and site induction programs.

Commuting time to remote projects where accommodation is isolated from the worksite and the mode of transport required to access whether it is by road, rail, all-terrain vehicle, light aircraft or helicopter is only one of the considerations. The impact on the labour also includes the number of men that can be transported per trip and whether this transport under the control of your company or an outside source. Remote projects are often face difficulties in attracting skilled labour, so how many of your staff are prepared to work on a remote site? To bring in skilled labour from outside the company is always a greater expense and uncertain productivity.

For factors that affect labour units like site access when bringing materials to the site, you need to determine how much labour is required. If you are installing a power outlet for Mrs Jones, then it is only a few steps from the van to the workface with materials you can carry in the hand, no additional labour factor required. However, if it is a large industrial site and no permission is granted to bring your own van on site and materials have to be brought from the car park via the clients forklift to the workface, there will be an amount of labour expended in this delivery function that are not included in the standard labour units.

The height of a building can have a significant impact on labour productivity. As the number of floors increase there needs to be additional labour hours to move equipment, material, tools and personnel to the work area.

Working in multi-storey buildings requires an adjustment to the labour units and many estimators use percentages to take in consideration the additional time involved in moving men and materials throughout the project. There have been many productivity studies done by contractor associations and a general rule of thumb is to apply the following percentages:

1 – 2 floors + 0%
3 – 6 floors + 1%
7 – 8 floors + 2%
9 – 14 floors + 6%
15 – 19 floors + 7%
20 – 30 floors + 10 %

Through actual job experience most electrical contractors establish their own factors and have determined a calculated percentage to add to their basic estimate overall. However, the percentage of adjustment is a matter of experience and judgement for each business.

Working in hot, cold or confined spaces has an effect on the standard labour units and needs a percentage added to reflect the additional time it will take to complete a task under these conditions. For instance, while the standard labour units may be used to establish the labour for a specific task, a percentage for additional time must be added to compensate for the conditions such as heat. In an extreme case, working above a foundry where the temperature could be up to 50ºC, a person may only be able to work in the area for 15 minutes at a time. This could be 15 minutes on the task and 15 minutes relief time. If this is the case, the labour unit needs a 100% factor added to it.

Projects that are fast tracked, compressed or have a short construction time will include stacked trades (where all trades are working in the same area) and the productivity of labour will be depleted. An estimator will know by the time schedule and the amount of work to be completed within that timeline as to the expected lost time that has to be recovered. This may be made up by an adjustment to the labour units or it may require a number of calculated hours added to the final estimate. Research shows that projects working overtime show a substantial loss of productivity compared to a typical project and therefore adjustments must be made to cater for these conditions.

Although a labour unit manual includes in the units a pro-rata amount of normal non-productive labour, there are times when there will be abnormal non-productive labour due to the type of project. Certainly on fast tracked and complex projects the required supervision increases considerably and on large sites material handling will be outside the normal labour units. Work in the CBD must take into consideration the available times for lifting (crane) the delivery of materials, which may be out of hours and incur overtime.

A pro-rata amount of time is allowed in the labour units for clean up but on some projects this non-productive time escalates with increased packaging and contractors being liable for removing their own rubbish.

The quality of tradesmen performing the work also requires thought when preparing a tender. Many contractors have been in a situation whereby the amount of work secured is greater than the company’s workforce and requires additional labour to service the project. This may not be a problem for ordinary installations but can be a concern when the style of work requires electricians with specialised skills, which will result in lack of productivity. Further, working on new technology may involve a learning curve which also has an impact on productivity and may require attendance at training courses by the operatives.

The estimator should also be aware of those projects that are boring or unfriendly working environments as they tend to cause high absenteeism and loss of morale, which will influence the productivity. Although the measurement of these factors is subjective, there are many indicators the estimator has to alert him of the necessity to increase the labour units, i.e. projects with high noise (foundry, steel mills), remote locations and unfriendly environments (desert, ice), hazardous areas (need to suit up and access through air locks and showers), and dirty, putrid sites where incentives may have to be built into the labour component to encourage attendance and many other situations where these adjustments must be recognised.

Projects with full quality assurance programs in place must be recognised that there will be additional labour expended in the reporting, inspection and maintenance of the system.

In summary, it is well recognised that the most effective method of estimating is to use a set of labour units which are applied to the materials. Although the customisation is subjective, and a firm basis of information is significant, it reflects the unique conditions of the project and it is the estimator’s responsibility to tailor these units to suit these unique conditions.

Brian Seymour MBE, industry consultant and author of Electrical Estimator’s Labour Unit Manual and Starting Out, conducts regular industry
training programs throughout Australia on behalf of the electrical and air conditioning industries. Contact brian_seymour@optusnet.com.au or visit
www.moyseur-consulting.com.

About Brian Seymour

Brian Seymour

Brian Seymour MBE, industry consultant and author of 'Electrical Estimator's Labour Unit Manual' and 'Starting Out', conducts regular industry training programs throughout Australia on behalf of the electrical and air conditioning industries.

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