How to Calculate Man Hours Cost in a Construction Project. Calculation of Man Hours in a Construction Project.
A complete guide for calculating the number of a working hour of direct workers of a construction project.
In order to perform a reliable estimate of the direct labor required for the execution of a work, it is necessary that:
- Firstly, the person responsible for the estimate and the group that integrates the work team performs diligently.
- Secondly, the group of estimators must have personnel with experience and capacity to define the logical sequence of execution of each of the stages of the construction.
- In addition, it is advisable that, if required, they get the advice on a project to be quoted.
- Finally, it is essential to have accurate information on the labor performance to execute each task of the project.
Table of Contents
- Man Hours Calculation in a Construction Project – Labor Calculation Performance Tables
- How to Calculate Labor Cost in a Construction Project – Working Overtime
- Reasons for Performing Works with Extended Working Hours
- Picture of Workers Collecting their Salaries
- Figure with an Example of How Overtime Affects the Calculation of Labor Hours Cost
- Man Hours Calculation – Hypothetical Calculation of the Incidence of Overtime
- How to Calculate the Cost of Labor in a Construction Project – Hours Paid Weekly
- Weekly Working Time
Man Hours Calculation in a Construction Project – Labor Calculation Performance Tables
The process of measuring the consumption of man hours or fraction of labor hour that are necessary to perform a task; requires defining the conditions within which we accomplish the measuring.
The above ensures that repetition can corroborate the measurement.
We define these conditions as standard conditions.
How to Estimate Man Hours Cost in a Construction Project – Standard Conditions
The total working hours calculated using the records in the tables are only valid if we execute the project under conditions similar to those existing at the time we made the performance measurements.
As each project differs from another, we must adjust the total hours resulting from the mathematical calculation with factors that consider the influence of the particular conditions prevailing in each project.
Firstly, the estimating team must have reliable records of the number of man-hours required to complete each task.
Then, knowing the number and type of tasks to be performed on the project, we mathematically calculate the number of man-hours.
We do this calculation by applying to each task the performances recorded in the tables.
Additionally, the estimators or their advisors must have complete information on the conditions under which we will execute each project.
The above is necessary in order to adjust the mathematical calculation.
Characteristics of each Project to be Quoted
We get the basic information about the characteristics of each project to be quoted from:
- The documentation of tender.
- The information got during the site visit.
- The consultations to the purchaser.
Then, the next step is to define which correction factors are to apply to the total labor hours that were mathematically calculated.
We then estimate the direct labor hours required for each specialty and with the data of the duration of the work, we obtain the number of workers needed.
In short, for this task, the estimator relies on the drawings, the calculation of materials, the tables with performance records, and especially on his experience and the contribution of the specialists.
In general, each contractor has already established the hourly labor cost of the workers.
This cost varies according to their specialty, and includes work clothing, safety elements and toolbox, if applicable.
How to Calculate Labor Cost in a Construction Project – Working Overtime
Working overtime produces a significant increase in the worker’s cost’s labor hours, which must be considered in the estimate.
Working overtime is gratifying for the worker, but we should note it that paying for the hour with a 50% surcharge does not increase the worker’s performance by 50%.
On the contrary, the excessive extension of the working day has the consequence of decreasing the average performance of the worker.
The deviation between costs per hour vs. performance is even more noticeable when the hour is paid at 100%.
Despite the above, in the construction sector companies usually work over 8 hours a day from Monday to Saturday.
In addition, sometimes, they also work with all or part of their workers on Sundays and holidays.
Reasons for Performing Works with Extended Working Hours
We should note it that the employer plans to carry out the work with extended working hours, mainly for two reasons:
First, to offer attractive salary compensation to the worker, considering that he has only assured his work continuity for that work and that in addition, the worksite is frequently far from his home.
Second, to balance the decrease in the effective working times of each day because of operational issues such as
- To counteract the time lost because of the daily mobilization and demobilization of the worker with his tools from the workshop to the punctual work site.
- The construction site is often far from the workshop or maybe high above the ground, etc.
- To compensate for downtime until they approve work permits, etc.
Other situations that lead to the extension of the working day are:
- Works with very short deadlines of execution and high penalties for non-compliance.
- Work on restoration or extension of existing installations on sites that need to be fitted out quickly (usually in architectural and civil works).
- Works that are executed with specialized personnel that are not abundant in the labor market, etc.
Picture of Workers Collecting their Salaries
The following image shows a group of workers waiting to collect their paycheck.
We should note that each country has its labor legislation which, among other things, defines the following issues:
- What is the number of hours per week that are paid as normal according to the local labor legislation?
- What is the maximum amount of overtime allowed per day, month, and year?
- When is overtime paid at 50% and when at 100%?
It should be noted that, regardless of labor legislation regulates what, it is usually the approved collective labor agreements of the trade unions that ultimately define how many hours are worked per week and how overtime is paid.
The conditions laid down by these agreements must meet the condition that they are more favorable to the employee than national legislation stipulates what.
Figure with an Example of How Overtime Affects the Calculation of Labor Hours Cost
Man Hours Calculation – Hypothetical Calculation of the Incidence of Overtime
- We assume that in the region called X, the maximum number of normal hours per week is 40.
- Overtime, at 50%, is paid on each hour that exceeds the normal hours from Monday to Friday and on Saturday hours until 1 p.m.
- That hour worked on Saturdays after 1 p.m. and on Sundays, and we pay holidays at 100%.
The percentage by which the incidence of overtime increases the cost of the hour arises from the ratio of the cost of hours paid over the hours worked per week, multiplied by 100.
Therefore, if the working day begins at 8 a.m. and we work 10 hours from Monday to Saturday, we have:
How to Calculate the Cost of Labor in a Construction Project – Hours Paid Weekly
-1) From Monday to Friday, we work 10 hours per day for a total of 50 hours.
-2) This is 10 hours more than the normal 40 hours, so we paid at 50% that are 15 hours converted to normal, (we assumed that the normal maximum number of hours per week is 40).
-3) On Saturday work 10 hours, of which 5 we paid until 1 pm with a 50% surcharge and we must pay the remaining 5 hours with a 100% surcharge that is, 17.5 hours converted to normal.
-Total hours paid: (sum of points 1 to 3), is equal to 40 + 15 + 17.5 = 72.5 hours.
Weekly Working Time
-Monday to Saturday = 10 hours * 6 days, equals 60 hours worked.
The percentage increase in the cost of the workers’ hour is:
[72.5/60] * 100= 20.83% more.
This is an important surcharge to consider and should be reported to the company accountant, who ultimately will set the labor hour cost for that project.
Read the following article on how to reliably evaluate the equipment selected for a project.
How to Calculate Man Hours Cost in a Construction Project – Calculate Man Hours