How to Calculate Indirect Labor

how to calculate indirect labor How to Calculate Indirect Labor in Construction.
Labor that is not assigned to a specific task or process is called indirect labor.
The total indirect labor budget in a construction company is the sum of the indirect hours of each work in progress plus the indirect hours of the company in the engineering, budgeting, quality control, purchasing, sales, administration, accounting, finance, etc. departments…

In this phase, only the indirect labor of the personnel affected solely to the project being quoted is considered.

Generalities for the estimation of indirect labor

One aspect to consider is that the costs of the personnel who operate machines and vehicle drivers were already charged in the “Equipment Cost” stage.

In turn, the costs of personnel inputs categorized as indirect were also charged in the “Valuation of consumables” stage.

The figure shows a table summarizing what is explained below. How to Calculate Indirect Labor - Calculate Man Hours.
Indirect Labor Cost Examples in Construction

How to Calculate Indirect Labor for a Project

Indirect labor costs group together wages paid to workers who perform tasks that are not directly involved in actively converting materials into finished products or providing services.

As an example, some points to be considered in estimating indirect labor costs in a project are described:

Supervisory or support staff

The site supervision group comprises the project manager, foremen, supervisors, etc.

The work management is in charge of the work director, who is the professional figure in charge of the supervision, follow-up, and control of the project.

The tasks carried out by the project manager are multiple and depending on the complexity of the project, may or may not require the help of a whole multidisciplinary team.

Major tasks of the project manager:

-To check that the resources foreseen to execute the project suffice to execute the plan of works in time and form.

-To control, through foremen and supervisors, that the works are executed according to the requirements of the plans and technical specifications and with the expected performance.

-Verify that their personnel and those of the subcontractors comply with the quality and safety standards established in the tender documents.

-Execute the certification of the work carried out, in time and form, to get payment.

-Verify compliance with current labor requirements.

-Verify compliance with environmental standards, etc.

General Services Department

This department ensures the timely provision of basic services for each work, for example:

-Supplying industrial water of the right quality for sanitary use, cleaning, concrete, testing, etc.
We generally get this supply through the drilling of wells.

-Supplying drinking water for staff consumption, usually through hot and cold water dispensers.

-Supplying electrical energy (if requested by the client in the tender specifications), for example, with own or rented generators.

-Maintenance of the toilets for the employees, the best option is still the chemical toilet with washbasins.

-Maintenance of personnel transports vehicles that take workers from their lodgings to the construction site and back again.

For this purpose, we generally use minibusses with less than two years of use and speed controllers.
We emphasize that the safety department issues the authorization for its operation.

-Maintenance of the telephone and Internet communication system.

-Labor for the maintenance of construction machinery and the supply of fuel and lubricants.

-Another daily task is the transfer and removal of all work equipment from the site.

How to Calculate Indirect Labor costs of the surveying service

The topography specialist and his collaborators are to ensure the correct positioning and leveling of all the elements to be built or assembled.

Indirect Labor Cost Examples in Construction – Storerooms

They are in charge of the management of construction materials, input and consumption materials, spare parts, stock control, ordering and protection of tools, issuing reports, etc.

Administrative Department

The administrative department controls the documentation of personnel income, the number of hours worked, the completion of payments in the salary accounts, minor purchases, etc.

Autonomous groups that do not depend on construction management.

Safety and Environment Department

The safety and environment department is an autonomous group in charge of ensuring safety and environmental conservation and which audits each of the tasks carried out on-site daily in order to prevent incidents and/or accidents.

The security department is the one who decides how a work is executed safely, so this department must approve the procedure with which any task is carried out.

Quality Control Department

This is another autonomous department that is in charge of the following:

-Execution of tests and samples in civil works.

-Control of the traceability of the pipelines in terms of the certification of the materials and non-destructive tests.

-Checking compliance with the technical requirements stated in the datasheets for equipment, instruments, electrical panels, and each material entering the site.

This department is autonomous and depends on the quality control of the company’s central office.

Read also “How to #Calculate the Indirect #Man-hours of an #Proposal” posted on Oct 3, 2019.

Check out the upcoming article on how to Estimate other Indirect Costs of the Project.

How to Calculate Indirect Labor – Calculate Man Hours

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