I recently asked the participants in jlconline's
Estimating and Takeoff forum what part of the estimating
process was most difficult for them. The nearly unanimous
answer was "estimating labor costs."
Labor costs are harder to estimate than the costs for materials
and subs. It's possible to calculate the material and sub costs
for a job, then make a wild guess about how many days it will
take your crew to do the work. I know contractors who make a
good profit doing it. However, this method is just as likely to
produce a loss. The best way to estimate labor is to develop
productivity rates for the work your company self-performs. You
can do this by analyzing data from time cards (for more on time
cards, see Tracking
Your Time, 6/02).
Analyzing Time Card Data
Before explaining how to develop the rates, I want to dispel
the myth that it's impossible to apply time card data because
carpenters perform many different tasks per day and no two days
are alike. It may be difficult, but it is not impossible. The
trick is to base the rates on data from "good" days and then
adjust the rates to fit the project you're estimating. This
means using a productivity adjustment factor that's based on
how much longer things take on "bad" days.
For an example, let's pretend your crew, Jim and Ted, are going
to trim out the interior of a 1,000 SF addition. When the work
is done you review the time cards and notice that productivity
varied and that you can't always tell how many hours were spent
on each task. A summary of the time card data is found
The good days. What can we
tell from this breakdown? Let's start with the "good" days,
where the crew did not have to shift from task to task.
On Tuesday Jim hung and cased 9 doors by himself in an 8-hour
day. The resulting productivity rate is 8 man-hours / 9 doors,
or 0.89 man-hours per door. For simplicity I'd round it to 0.9
man-hours per door.
On Thursday it took the crew 6 hours to install 240 lf of base.
This works out to 0.025 man-hours per lf. For simplicity, I'd
call it 2.5 man-hours per 100 lf.
On Thursday it took the crew 10 man-hours to install 125 lf of
crown. That works out to 8 hours per 100 lf.
The bad days. Now let's look
at the other days. On Wednesday the crew worked on three
different things but did not break the hours out by task. There
are two ways to fix this problem. You can subtract the amount
of time the doors and base should have taken based on the
calculations performed above. That would leave you with the
approximate amount of time it took to trim the windows. Or, you
could ignore the data from that particular day and track window
trim the next time you do it. You don't have to analyze the
data from every single day.
During the week 13 hours were spent receiving material, setting
up and removing tools, and on miscellaneous tasks. I refer to
this as "setup and takedown" time, and I could spread it across
the other tasks. However, it happens on every job and hardly
varies with the size of the project. I prefer to carry it as a
separate line item in the estimate.
*Receive material delivery and spread doors and trim:
*Set up miter saw, compressor, etc., and start layout:
*Hang and case 6 doors: 7 man-hours
*Hang and case 9 doors: 8 man-hours (one man out
*Hang remaining doors (4), trim 8 windows, start base
(50 lf): 16 man-hours
*Install 240 lf of base: 6 man-hours
*Install 100 lf of crown: 10 man-hours
*Adjust doors, touch-up corners, miscellaneous pickup,
take down tools, etc.: 4 man-hours
Variables to Productivity
Say you had data from four different projects that involved
hanging doors. In the example above it took 0.9 man-hours per
door. How do you explain it if the same crew shows rates of
0.85, 1.2, and 1.3 man-hours on the other three jobs? Odds are
there are some underlying factors that affected productivity.
Maybe the framing was absolutely perfect on the project where
it took 0.85 hours per door. The job where it took 1.3 hours
per door might have been in an existing building with plaster
walls that varied in thickness and weren't even close to plumb.
To make matters worse, there was no room to store the doors
inside so the crew had to haul them in one at a time from a
In the first case, the 0.05 hours saved per door was due to the
extra good job done by the framer. On the 1.3 hour example, the
true time to "hang the door" was probably around 0.9 man-hours,
but the extra walking and carrying added 0.4 hours per unit. So
how do you account for these factors? It's too complicated to
carry different production rates for "hanging door," "hanging
door in perfect framing," and "hanging door when wall is messed
up and door is stored far away."
A better solution is to develop a rate for a "typical"
installation and then apply a productivity adjustment factor.
The factor is just a multiplier. If you think the project will
be a nightmare, you could multiply the standard rate by 1.3 or
The multiplier is based on the kind of work you normally do. If
you're a remodeler, most remodeling tasks will have a factor of
1.0. If your numbers are based on doing new construction,
remodeling work will have a factor of more than 1.0.
The productivity factor will usually be between 1.0 and 1.25.
It will only be more if you land an unusually high-end project
or are working on something that's a real mess. In those cases,
you might use a factor of 1.5 or 2.0. If a task requires such a
heavy multiplier, it may be different enough to have a
productivity rate of its own.
It's probably too laborious to apply the factor to individual
tasks. It would be easier to apply it to the entire project but
that might not make sense either. For example, the difficulty
of trimming the existing structure may slow the carpenters down
but it will have no effect on the subcontractor who's forming a
foundation for the addition. It's probably best to apply the
productivity factor by trade.
On a tight-access addition, the excavator, mason, and framer
may get a 1.25 multiplier, while the inside trades get none. If
it's a cut-up interior, the framer, drywaller, and trim guys
may get a 1.15 multiplier, while everyone else gets none. In my
experience, framing and plumbing require the highest
multipliers, especially in old houses. The frame could be out
of plumb, the lumber could be an oddball size, and the existing
pipes could be crumbling and about to break.
In the beginning, your productivity factors will be an educated
guess. As time goes on you'll develop a feel for when to use a
multiplier and how big it should be. Once you put together the
basic estimate and decide which parts to apply the productivity
adjustment factors to, it's simply a matter of breaking out the
labor and doing the math.
Bob Kovacshas over 15 years of experience managing
and estimating residential and commercial construction
projects. He is moderator of the
Estimating and Takeoff forum at jlconline.com.