Labour Costing

Labour productivity is fundamental to the success of any Construction project. The best method to control and monitor this resource is to understand the actual expenditure of each activity in accordance with the priced tender allowable.

Bill of Quantity rates are normally made up of the following components;

• Labour
• Material
• Plant
• Subcontractors
• Mark-up

The labour component is usually broken down into a team size (eg. 1 Carpenter + 2 Helpers) that can execute work at a determined productivity. Various % factors can be applied to increase or reduce the productivity as difficulty is decided at the tendering stage. Once this information is extracted from the BOQ rates then the labour allowable for all trades can be entered into a spreadsheet; that is the team size, productivity and quantity for each activity. This information will be used to compare against actual costs.

Should you however not have the team detail in your priced BOQ then simply enter the labour component and quantity into the template. This information will still allow you to calculate the actual efficiency but will not assist you in determining team sizes or productivity required at the start of a project.(This will have to be established manually on site)

Once the allowables, productivity outputs and team sizes are captured we can start feeding in the daily costing and progress measurement into the template. The site foreman is required to record the actual manpower used each day and identify the activities and quantity of work that was executed. For example the following information will be recorded.

Placing concrete         11/03/20           1 artisan           8hrs      4 helpers          8hrs      35m3

Once all the daily record sheets are received, first check that the number of labour and hours correspond with the clock in card information. It is very important to make sure all labour and hours of work are accounted for, and that the labour not taking part in the direct works is removed from the calculation. Failure in checking this will result in a fruitless exercise with meaningless results.

By entering the number of labour and hours worked against the recorded activity, the spreadsheet (view template) will calculate the labour cost for the day based on the actual labour hourly rates. The quantity of the work measured is then entered and the allowable value is generated. These sums compared against each other will determine the profit or loss value for that activity.

Completing this exercise on a daily basis will be extremely helpful in managing the project and understanding which activities require more attention or possibly require a request for additional payment. - Refer to the Commercial Costrol Package.