# How to Calculate the Man Hours Cost

How to Calculate the Man Hours Cost for Construction Projects.
A complete guide for calculating the number of man-hours of direct workers of a construction project.
For estimation of the direct man-hours to be employed in the execution of a work, it is required at least.

-That the person responsible for the estimation or the group of estimators and consultants that make up the work team for this tender, have experience and capacity to define the logical sequence of execution of each of the stages of construction or assembly of the work being quoted.

-Availability of accurate information on the number of man-hours required to execute each project task.

## How to Calculate Direct Man Hours Correctly – Man-hour Performance Tables.

The process of measuring the consumption of man-hours or fraction of man-hours that are necessary to perform a task; requires defining the conditions within which we accomplish the measuring.

This ensures that repetition can corroborate the measurement.

We define these conditions as standard conditions.

### Man Hours Calculation for Construction Projects – Standard conditions

The total man-hours calculated using the records in the tables are only valid if the project is executed 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 take into account the influence of the particular conditions prevailing in each project.

In short:

-Estimators must have reliable records of the man-hours to be spent on completing each activity.

-Knowing the number and type of tasks in the project, the number of man-hours can be calculated mathematically, which according to the outputs indicated in the tables are required to complete the undertaking.

-The estimators or their assessors must have complete information about the conditions under which we will execute each project.

The complete information on the conditions in which we develop each project, as mentioned in the previous paragraph, is obtained from:

-The documentation of tender.

-The information got during the site visit.

-The consultations to the purchaser.

The next step is to define which correction factors are to apply to the total labor hours that were mathematically calculated.

After estimating the direct labor hours required for each specialty and with the data on the duration of the work, the number of workers to be employed is obtained.

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.

After estimating the direct working hours required in each specialty and with the data of the work term, we define the quantity and specialty of the workers.

As for the cost per hour of the workers, in general, the companies have already established the cost of the work hour of each person dressed and by specialty, that is to say, with work clothes, security elements, and the toolbox if it corresponds.

### How to Calculate the Man Hours Cost – Increased overtime costs

Working overtime produces a significant increase in the worker’s cost’s man-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 construction and industrial assembly, companies usually work on their sites for over 8 hours a day from Monday to Saturday and sometimes also with all or part of their staff on Sunday considerings and public holidays.

We should note it that the employer plans to carry out the work with extended working hours, mainly for two reasons:

1- To offer attractive salary compensation to the worker, taking into account that he has only assured his work continuity for that work and that in addition, the worksite is frequently far from his home.

2- 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 work permits are approved, 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.

It should be noted that each country has its labor legislation which, among other things, defines the following issues:

-What is the amount of weekly hours normally paid in the construction and assembly area?

-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 what is regulated by labor legislation, it is usually the approved collective labor agreements of the trade unions that ultimately regulate 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 what is stipulated by national legislation.

### Hypothetical calculation of the incidence of overtime

Assumptions:

-It is assumed 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 hours worked on Saturdays after 1 p.m. and on Sundays and we pay holidays at 100%.

The percentage by which the cost of the hour is increased by the incidence of overtime 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 Man Hours CostTherefore, if the working day begins at 8 a.m. and we work 10 hours from Monday to Saturday, we have:

According to the labor agreements, the normal extension of the working week shall not exceed 40 hours.

-From Monday to Friday, 10 hours are worked per day for a total of 50 hours.

-This is 10 hours more than the normal 40 hours, so are paid at 50% that are 15 hours converted to normal.

-On Saturday work 10 hours, of which 5 are paid until 1 pm with a 50% surcharge and the remaining 5 hours must be paid 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.

Hours worked per week

-Monday to Saturday = 10 hours * 6 days, equals 60 hours worked.

### How to Calculate Direct Labor Cost – Incidence of overtime

The percentage increase in the cost of the workers’ hour isâ€¦ [72.5/60] * 100= 20.83% more.

This is a very important surcharge to consider and should be reported to the company accountant, who ultimately will set the man-hour cost for that project.

This is a very important surcharge to consider and should be reported to the company accountant, who ultimately will set the man-hour cost for that project.

How to Calculate the Man Hours Cost – Calculate Man Hours