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How to Calculate Indirect Labor

The image shows a pickup truck arriving at a construction site. How to Calculate Indirect Labor

How to Calculate Indirect Labor in Construction.
Labor not assigned to a specific task or process is called indirect labor.

Total indirect labor in a construction company is the sum of:

At this stage, we will consider the indirect labor of the personnel affected only by the quoted project.

General to Estimate Indirect Labor

We have already allocated the costs of personnel operating machines or vehicles to the “Cost of equipment” step.

Indirect cost summary sheet

In this sheet, we see the indirect labor costs grouped according to the task performed by the personnel.

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.

The following are the relevant aspects to be considered when estimating the indirect labor costs of a bid.

Salaries of Safety and Environment Department

The safety and environment department is an autonomous group in charge of ensuring safety and environmental conservation.

Undoubtedly, its most important function is to audit each task to avoid incidents and/or accidents.

Therefore, this department reviews and approving the procedures for the execution of tasks.

Salaries of Quality Control Department

This is another autonomous department that is in charge of:

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

Supervisory Staff Salaries

The site supervision group comprises the project manager, forepeople, 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 performed by the project manager are multiple and may require the support of a multidisciplinary team.

Major tasks of the project manager, for instance:

General Services Department Wages

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


We emphasize that the safety department issues the authorization for its operation.

Administrative Department Salaries

Warehouse Staff Wages

They are in charge of:

Salaries of the Surveying Service

The surveying specialist and his collaborators must ensure the correct placement and leveling of all the elements that are built or assembled.

Wages consumed in the mobilization and demobilization of the work site

The cost of the work includes wages for:

Wages for search of existing buried installations

In this section we impute the salaries incurred to detect existing installations on the site:

The Importance of Site Visit Before Quoting

We will discuss this section in more detail in the next post, how to Estimate other Indirect Costs of the Project.

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

How to Calculate Indirect Labor – Calculate Man Hours

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