Understanding the labour unit
There’s much more to understanding the labour unit than just a price book selection. Brian Seymour writes.
If I had a dollar for every time a trainee queried a Labour Unit, by saying “I could fit that off in half the time shown in this manual”, then I would be able to relax on my yacht in the Caribbean.
My answer is: “No doubt you could, especially if you are positioned in front of it, with your tools and material items in hand – hit the stopwatch, and hoorah, completed in half the time.”
However, these sceptics have not taken into consideration all the other compulsory labour activities that brought us to this position. The material and tools do not appear like magic to the workface.
Temporary electrical contractors lose money due to overrun of labour. Most tradies worth their salt can put together a shopping list of materials but when it comes to assessing the expected time needed to instal those materials, it becomes a problem. This is when a researched set of labour units becomes invaluable.
The new estimator must understand is that a labour unit is not conclusive; it is a benchmark or a beginning. The estimator must become familiar with the company’s productivity. By studying the company’s job costing records will validate how the its labour units compare to the benchmark. Profitable electrical contractors keep accurate records of job costs and constantly revise these factors.
The actual process of installing the materials is only one aspect of the estimate. There are times when the non-productive time may even greater than the basic installation. During my long-term tenure in industry training, I have related anecdotes of past projects which demonstrate the extent of non-productive labour. Items such as, walking time, transport, travel, and parking will be different on nearly every job but still need to be included.
For example, one of our successful projects which employed a large work force validates the importance of being vigilant of non-productive activities. At the time of the estimate, we assessed, the walking time from the site sheds to the workface was an average of fifteen minutes each way.
Therefore, to and from start and finish plus lunch time required a formula such as: -15 x 4 times/day = 1 hour, x 220 day/year x 354 workers x 3.6 years = 272,580 hours, and this is before even one minute of productivity.
Not an item to be overlooked, and that was only one aspect of the project, there were many thousands of hours also expended distributing material, tools and equipment and a myriad of other tasks on such a large, long-term construction project.
Even the one-man contractor on a small service job, the non-productive time and expenses could exceed the cost of your productive labour.
As an example, replace a broken power outlet in the CEO’s office on the fifth floor.
- Can you park adjacent to the building, or do you need a carpark?
- How much time to get from your vehicle to the workface?
- Will you have immediate access to the CEO’s office?
- Can you shut down the circuit without prior arrangement?
If you are asked for a quote for this job, you should ask the above questions. Otherwise, if you need to include the above costs, it can be expensive (I was recently charged $82 for a day parking in the CBD). One way to alleviate these costs is to offer to carry out the work out of hours, most street parking is free prior to 7.30am and less restrictions on circuit shut down.
To correctly assess and select the proper unit for an intelligent and experienced analysis of the installation conditions, cannot be reduced to a price book selection procedure performed by clerks or other uninformed personnel. To allow such personnel to apply labour units is to gamble with the accuracy of the final labour estimate.
To the trainee estimator, particularly after studying and discussing the determination of labour units, the selection of the appropriate unit may appear a difficult and time-consuming task. However, after an experienced estimator has made the take-off, and listed the materials, he/she has a particularly good mental picture of the overall type of installation which is required and is thoroughly familiar with the set of labour units he/she is using and can readily choose the units most applicable.
The estimator must realise that every unit encompasses more than just the minimal time allocated for a task. Each labour unit also carries a pro-rata share of labour time that cannot be identified with any specific operation, and therefore is expressed within the labour unit. To convert labour units to minutes, multiply the decimal by 60 minutes. Example, 0.3 x 60 = 18 minutes
For instance, take the listed labour unit to fit-off a flush combination power outlet; 0.3 each many electricians will say “I can beat that time easily” and maybe so if the task ONLY took in the physical time of the fit-off, but the unit is made up of the following tasks:
Distribute material Locate outlet Cut out/clean aperture.
These labour units also include time for normal material handling, material installation, drawing study, measurement and locating and normal non-productive labour.
Some electricians working on new volume housing do not bother with clean up (“not our job”) and could well use a new residential installation labour unit of 0.23. Or those fitting off the same outlets on skirting ducts, wall ducts or workstations where the outlets are already located and cut out may use a unit of 0.22, or 13 minutes.
The labour units are average times based on actual time studies, taken from thousands of operations, on a great variety of installations, by hundreds of tradespersons.
The first step in arriving at the most accurate total estimated labour for a given job is to take off and list the material items on the pricing sheet, segregated in accordance with the installation and building construction. e.g., ceiling height, concealed or exposed, type of building construction, multiple runs, restricted access etc.
Once this take-off has been completed, the next step is to apply the labour units specifically related to that installation, for the size and type of material involved, it is therefore important to list conduits and ducts which are located in different positions separately, such as: surface, in the pour, hung from beams or cables run in multiples on cable trays, catenaries and so on to enable the correct labour unit to be selected.
In some instances, the experienced estimator may choose the units which fit the majority or the average condition of the job. For example, if there is a small amount of conduit run on steel and a large amount of conduit installed in the concrete pour, he may choose the units for the latter type of construction and apply them to all the branch circuit sections. If there is closer to an equal amount of both types of construction the estimator may make a quick mental average for the two units and use the average unit.
However, this assessment comes with some years of experience and to the novice estimator I would recommend listing each category separately.
There are many variations and types and sizes of basic material which effect the content of labour expended in the installation. By keeping in mind, the characteristic labour operations required to install the basic materials, the estimator can more readily visualise the labour requirements for all variations in the types and sizes to select the applicable labour units.
In the case of an unusual installation in which there appears to be no applicable specific labour units, the item can usually be reduced to a series of component individual labour operations, for which a comparable labour unit may be available.
The questions the estimator needs to ask in this case:
Single or three phases? What is the rating?
The estimator must mentally install an item of material which he may not have used before and therefore it is a matter of breaking in down to component parts. By asking the above questions he can then establish a labour unit which will be realistic for the installation of this equipment. An experienced estimator will not usually misjudge the time of each item of work to any great extent and the accumulated total of the labour allowed for all components will be close to the actual. The trainee estimator should proceed with caution and discuss the assessment with an experienced foreman or supervisor.
The estimator must track actual installation times of new or unfamiliar material and equipment. This is accomplished through time sheet reporting and keeping new works separated either by a time code or a segregated timecard.
In summary, when selecting the proper labour units, the estimator must keep one principle in mind – it is his/her responsibility to include in the estimate the total amount of material and labour which will have been expended when the job is completed. The units must be chosen with some degree of intelligent analysis and not used blindly just because they happen to appear on a printed sheet.
A set of labour units is not necessarily the panacea of the estimator’s ailments but rather a tool to be used in a methodical manner with appropriate modification for job conditions to accurately predict labour cost.
Adjusting the labour
The estimator needs to allow adjustments to the labour allocation to cater for the conditions which are outside the standard labour units:
- Building contractor
- Multi storey buildings
- Overtime (a reduction in productivity)
- Chequerboard concrete pours
- Project extended duration.
- Distance to get the labour to the site.
- Qualified tradesmen shortage
- Working heights
- Degree of non-productive labour
The building contractor can make or break productivity with the degree of coordination they offer. Disorganised sites, poor supervision, slow turnaround for site information, site accommodation and uncoordinated lifts can be a disaster. Make sure you know the track record of the builder’s performance.
There are obvious differences in various building types, residential installations will be the fastest, commercial installations will be more time consuming and industrial installations will be the most difficult and will also affect installation times. Single story installations will be easiest while multiple story building will have a serious effect on installation times. Getting workers, equipment and material to the higher floors will create a huge impact on productivity.
Overtime can be a major expense if the cause cannot be charged elsewhere. It is the estimator’s responsibility to ensure that the estimated hours can be completed within the scheduled completion date. If overtime becomes compulsory to meet completion dates due to the schedule, then the estimator must make allowance. It must be remembered that long hours will have repercussions and affect productivity.
If there is considerable installation works in a large concrete slab, then it is advisable to establish that it will not be poured in a checkerboard sequence. The labour could escalate 20% to 30% extra.
If the project becomes an extended duration, the estimator needs to be aware of the additional costs associated. Extended supervision and project management increased and extended jobsite resources, site office, site tools, scaffolding, storage and utilities.
If the job is outside the travel award, an allowance must be made for both travel time and the mode of travel. Is it personal, or company vehicle or public transport? Does it require air travel and accommodation? These decisions must be made at the time of the estimate. Working in different geographical areas or parts of the country can also require adjustments in labour award costs.
During times of qualified labour shortage, it will become an additional cost to the estimate the options available could be a considerable expense. Working at heights increases the estimated cost, apart from the additional cost per hour, there are the additional safety factors to consider and the machinery/equipment required to safely access the workface.
If all, or a large portion of the job is outdoors, there needs to be an allowance for non-production during inclement weather. This may include checking long range forecasts for the area and scheduling exposed works to be prioritised. Or considering some works which can be prefabricated indoors.
Adjusting the estimate for the quantity of non-productive hours includes all those above and the additional head office costs. The most appropriate method to use is the standard labour units and apply the adjustment to the sector of the work which any of the above affects.
To understand the labour unit, the estimator must know what is included in the structure units you are using. No matter whether you are a multi-national, thousand staff company or a one-man contractor, we all have the same expenses to complete a job. It is most important when making predictions on the labour content, to track actual progress. Remember, supervision is a cost and is often overlooked in a small contracting company but must be included if the labour unit system you use regards supervision as a separate item, unless you want to make a donation to your customer.
This will reinforce your confidence for future labour forecasts.