Tips on Estimating Project Labour Costs More Effectively

30th December 2021

Tips on Estimating Project Labour Costs More Effectively

Labour is the backbone of any successful construction project. However, creating an accurate estimate of labour costs involves taking into account a range of factors that are often difficult to estimate. These include employee time and fluctuating worker productivity, as well as leaving room for unforeseen changes in the project schedule.

Here are some tips from Surf City Cranes in Brisbane, on how to create a more accurate and meaningful estimate of the most important cost in construction projects: Labour.

Known Knowns: The Labour Base Rate

For a cost estimation that deals with many unknown factors, the one that is most clearly known is the labour base rate. The labour base rate will depend on the number of members on the crew. Members in different roles, with more qualifications or more years of experience, will be able to command higher wages, which will have to be reflected in the overall labour base rate. Using these considerations, it’s possible to calculate how much the total construction project will have to pay for labour per hour.

Known Unknowns: Costs Outside of Wages

Workers are entitled to more benefits than just their hourly wages, and this cost will have to be calculated into the labour costs of a construction project. These costs could include superannuation payments, public holidays, leave, benefits specific to the employer such as insurance and trainings, and other factors. Keep in mind that non-wage labour costs can fluctuate, as workers may take more or less leave than expected.

Each aspect of non-wage labour costs will need to be calculated separately. Superannuation payments are easy to calculate. However, calculating leave for holidays, sick days and similar rights will first need an accurate understanding of how long the worker will be employed to work on the construction project, to calculate the proportion of annual leave that will be dedicated to the project.

Unknown Unknowns: Unforeseen Delays

Underestimating labour costs is one of the most common mistakes that plague construction projects. Even if care is taken to come up with a labour base rate that takes into account the wage variation for different types of workers, construction projects are often delayed. Unforeseen delays stretch out the project so that you have to employ your workers for longer, quickly blowing up your projected labour budget. Labour costs are one of the biggest parts of a construction budget, so a miscalculation here can have large implications.

What Can Lead to Mistakes in Estimation?

There are a number of software options to help estimate the labour cost of construction projects. Of course, the ends are only as robust as the means, so an inaccurate estimation software means an inaccurate projection.

Any labour cost estimation should be tempered by common sense. For example, estimations made by people who haven’t first visited the construction site may not take into account the unique challenges of a given site.

Worker productivity can also fluctuate over the course of a project, and this may be difficult to project for.

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