This course introduces the types of cost estimation from the conceptual design phase through the more detailed design phase of a construction project. In addition, the course highlights the importance of controlling costs and how to monitor project cash flow. Students will work on a break-even analysis of construction tasks in a project.
Productivity Component and Examples
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Из курса от партнера Columbia University
Construction Cost Estimating and Cost Control
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Pricing
James Sneath, Associate Director of Cost Management for Turner and Townsend, discusses pricing, labor costs and equipment costs. Topics include, cost materials, formwork, reinforcing steel and concrete. Money component and productivity component is discussed in labor costs, as well as estimating equipment costs.
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Ibrahim Odeh, Ph.D., MBAInstructor, Department of Civil Engineering and Engineering Mechanics, Columbia University
Director of Research and Founder, Global Leaders in Construction Management
So let's drill down to The Productivity Component of the labor cost.
So factors that influence the productivity output.
Again, you've got Regional Variations, and that could include training,
experience itself, and skill of the local labor force in that region.
Also, rules are different, so you're going to have work rules,
which are negotiated between employers and unions for that particular region.
There's going to be Environmental Effects, so that will be weather,
the actual terrain or the topography, and other natural phenomena.
Then, there's the physical locations and
working conditions of individual craftsmen.
So height above grade, heat, noise, lights,
all types of constrictions, stability,
stability of work situation, dust, etc., etc.
Productivity is more difficult to estimate than the money components.
But, as with all of this,
preplanning can minimize the impact of many of these factors.
So these include careful scheduling of outdoor operations,
use of enclosures, thoughtful layout of construction facilities,
thoughtful scheduling of parallel activities.
It's a bit of planning put into this,
you can minimize the difficulty of productivity.
Then, part of productivity is the Work Schedule itself.
So scheduling projects on a multi-shift basis can avoid some but
not all of the ill effects of scheduling overtime.
So really, on any project, you don't want to have overtime.
As we discussed earlier, there's an increase in costs for that and
if it can be avoided, there's no need to have it.
But certain projects, you have no choice, it has to be overtime.
Particular projects such as in a subway or on roads when
the quieter periods are going to be through the nighttime.
Other factors, so
multi-shift work can also incur a significant financial premium.
And it can introduce productivity problems as well.
So if shifts are rotated,
the natural body rhythms of the workers are continually disrupted.
So it's a bit like the jet lag effect that
all of us have when we go long distances on planes.
So you have the day people versus your night people and
the necessity to assign jobs that match these cycles.
So factors affecting humans as workers, and
this all comes into the cost of labor as well that you need to control.
So you have physical fatigue over, so overuse of energy.
You got two parts to this really, you have short term fatigue,
that's associated to heavy tasks.
Then you have long term fatigue, associated with long work periods.
You can also have Mental Fatigue.
It's the inability to maintain high level of concentration for
extended periods of time.
And then you've got typical Boredom, which is the inability
to maintain continuous attention to tasks that offer little challenges.
So all of these factors that need to come into consideration
when you're looking at productivity and building up your labor cost.
Okay, so Labor Cost Estimating.
So your work hours equals your quantity takeoff times your productivity rate.
Your total labor costs, therefore,
equals your work hours times your average wage rate.
So let's look at an example.
So we're going to be placing eight inches by eight inches by twelve inches
concrete masonry units, so concrete blocks basically.
We've looked up the Productivity Rate, which is 0.11 work hours per square foot.
From our Quantity takeoff, we've got an area of
1,000 square feet that requires the CMU blocks.
The crew involved to actually build that wall would be three masons and
two helpers.
So other information we need to know is 60% of the hours
will be worked by the masons and 40% by the helpers.
So let's put together a cost here.
So what is the mason and helper work hours?
Also, we want to know the average wage rate per labor and
also what is the total labor cost on average?
So Total Work Hours = 1,000 square feet by 0.11 = 110 work hours.
So that's your total work hours.
Your mason work hours, therefore,
will be 0.6 x 110 work hours = 66 mason work hours.
0.6 was your 60% that we had
allocated to the mason labor force there.
And then the same again for the mason helper.
We've got 40%, so 0.4 times 110 work hours = 44 mason helper work hours.
So there we go, we've worked out the hours involved for
the mason and the mason helpers.
We then look up the Hourly Wage Rate, and
we can see here the hourly rate for the masons is
$13.25 and the helpers is $10.00.
We've got our quantities to the sides, we've got the 3 Masons at $13.25,
gives us cost per hour for those three mason workers at $39.75.
Same again for the Helpers, we've got two helpers.
Their individual hourly rates are $10.00.
Gives us a cost per hour of $20.00.
So total there out of this two together gives us $59.75.
It's the Average Wage Rate per Labor.
If you divide it by the quantity, it is $11.95.
And then we look at the Total Labor Cost on an average.
So we've got 110 work hours by the average rate
that we just worked out of $11.95,
gives us a total labor cost of $1,314.50.
Now let's look at the other factors that need to be added onto that.
So the Labor Cost equals the base wage rate
plus the fringe benefits, plus the taxes, such as FICA and
Unemployment costs, and your insurances, which are your worker's compensation,
your public liability, and your property damage insurance.
Let's look at another example then.
So, we've got a brickmason, works ten hours per day, six days a week.
His base rate is $12.45 an hour, the premium time is double the wage.
The Fringe Benefits we need to include are Health and welfare at $0.50/hour.
We need to give him Vacation entitlement at $0.50/hour.
For Insurances, we got Worker's Compensation,
$11.43 per $100 he earns.
We got Public Liability at $0.60 cents per $100.
We've got Property Damage at $0.35 per $100 as well.
Your FICA tax is 6.13%.
Your Unemployment tax is 4.75%.
So let's now compute the average hourly cost.
And as you can see, all of these extra costs really do add up per hour.
Okay, so what's the time of hours worked?
Distinguish between standard and premium time, so that's our first task here.
So what we're saying here, anything under your five day a week and
eight hour days is your standard.
Anything over, then, becomes your premium time.
So for this particular worker, he's done five days at eight hours,
which is 40 hours at standard time.
He's done a further five days of two hours at premium time.
And then on Saturday, h's also done eight hours and a further two hours.
So, therefore, we got a split there of 60 hours for standard time and
20 hours for premium time.
So this is going to affect the rate they use to calculate the labor cost there.
So, direct wages.
So his standard time was 60 hours at $12.45 per hour,
so that equals $747.
His premium time was 20 hours at
$12.45 an hour equals 249.
So the total direct wages equals $996.
We now then need to add on the fringes.
And as we listed out earlier, you got Health and Welfare,
0.5 by the 60 hours = $30.
Vacation, 0.5 by 60 hours = $30.
So for the fringes, we've got $60 there.
Insurance is $12.38 divided by 100
times by the 747 = $92.48.
For total insurances, all three insurance we discussed earlier comes, to $92.48.
Taxes, FICA's worked out at 6.13%.
That comes to the $61.05.
Unemployment tax, a further 4.75% comes to $47.31.
So total taxes there are $108.40.
So the calculation then is your
direct wages plus your fringe plus your insurance plus your tax.
Is 996 + 60 + $92.48 + $108.36,
comes to a grand total of
$1,256.84.
So the average hourly rate, therefore,
is $1,256.84 divided by 60 gives
us an average annual rate of $20.95.
You can see all the components that are required that build up to that to give
you an idea and then it gives you that average there including everything.
So, your Average hourly pay = (Pay hours/Actual hours) * Base Wage.
So we had Straight-time pay at 40 hours.
We had Weekday overtime pay at 20 hours.
And then we had, on a weekend, a further 20 hours.
So, total pay of hours is 80 hours.
So, here's a summary here.
It's the average hourly pay equals 80 divided by
60 times by the wage rate of $12.45 gives us a rate of $16.60.
Your FICA tax is 6.13% times that 16.60,
gives us 1.017580.
Your unemployment tax is 4.75%
times your $16.6 running
total comes to 0.7885.
Your workers' compensation is $11.43 divided by $100
times by the $12.45 from the top of the average we mentioned gives us 1.42.
Your public liability, which is $0.60,
divided by $100 and then you times it by your
average hourly pay of $12.45 = 0.0747.
You've got your property damage insurance worked out on a $0.35 per 100 times it,
again, by your average hourly pay gives you 0.0435.
Your Fringe benefits equals one.
Your Average hourly cost, therefore, is $20.95.
So what we covered there, the Money Components, Productivity, and
we did a couple Examples.
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