SBQ2423

EstimatingtheCostofLabour
FARADIVAMUSTAPA DEPARTMENTOFQUANTITY SURVEYING,FACULTYOFBUILT O ENVIRONMENT

 EstimatingtheCostofConstruction Labour

LectureTopic
EstimatingtheCostofLabour

LectureContents
IntroductiontoConstructionLabour Typesofconstructionlabour C Components of fLabour b C Costs BasicprincipleforEstimatingLabour Monetaryfactors Labour productivity

ConstructionLabour
Constructionindustry yisavery ylabourintensive industries. InMalaysia,duetoheavyrelianceontraditional construction t ti method, th d th theusageof fconstruction t ti labours aremuchmorecomparedtotheEuropean countries. Thelabour costcomponentsofabuildingproject oftenrangesfrom30% 50%fromtotaloverallcost.In someconditions, conditions itcangoesashighas60%fromtotal costs. Hence,itisavitalcomponentofaconstructionproject.

Testyourself
Howmanytypeofconstructionlabour availableinMalaysia/yourcountry? Duration:1minute Answers:

TypesofConstructionLabour
Constructionoutputismadeupofseveraldifferentsystems suchasthestructuralsystem,exteriorclosuresystem, HVACsystemetc. Thesesystemscanbebrokendownintomanymore subsystemsandsubsubsystems. Thisresultsinseveralworkpackagesandthereforethe works(package)canbecompletedbyeitherindividualora groupofgang(crew). Additionally,thereare3typesofconstructionlabour namely; y
Skilledworkers Unskilledworkers Generallabours

ComponentsofLabour Costs
Labour costsaredeterminedby2factors. factors

Monetary
Hourly ywage g rates Wagepremiums Insurance Fringebenefits Taxes(Levy)

Productivity
Ratioofinput p Vs. RespectiveOutput Eg.Workhoursofa workers(bricklayer)Vs. Amountofwork produced(laying500 bricks)

ComponentsofLabour Costs
ConstructionProductivity=quantityofwork produced timeduration Eg.Ifabricklayercanlay500bricksin8hours, h hence the h associated i dconstruction i productivityisthus, 500 8=62bricks

ComponentsofLabour Costs
Althoughmostitemsassociatedwiththe monetaryfactorremainrelativelyconstant overashortperiodoftimeie. ie Duringthe constructionphase,productivityontheother handcanfluctuatewildly. wildly Toaccuratelyestimateproductivity,an estimatornotonlyneedsagoodhistorical record,butalotofexperience.

BasicprinciplesforEstimatingLabour
Theformulaforcomputingthetotalcostoflabour isquitesimple.It requires i knowledge k l d of fthe th total t t lhour h orlabours l b needed d dto t perform f allthetasksandapplyittothecorrespondingwagerates. Totalcostoflabour = totalworkhourx wagerate Determiningthetotalworkhoursforataskinvolvesaknowledgeof thequantityofworkrequiredforthetaskandtheproductivityrate forthespecificcrewthatwillbeperformingthework. Thequantityofworkassociatedwiththematerialquantityis determinedby ytheq quantity ytakeoffdiscussedinp previouslecture.

BasicprinciplesforEstimatingLabour ( (contd) d)
Tryityourself:
Hours Bricklayers 3bricklayersx 3daysx8 hr/day / y=72 hrs 2general labour x3 daysx 8hr/day=48 hrs T t l Total StraightTime Totalcost Rate(RM/hr) RM50 ?

General labour

RM20

BasicprinciplesforEstimatingLabour ( (contd) d)
Hours Bricklayers 3bricklayersx 3daysx8 hr/day=72 hrs 2general labour x3 daysx 8hr/day=48 hrs Total StraightTime Totalcost Rate(RM/hr) RM50 RM3,600.00

General labour

RM20

RM960.00

RM4560.00

MonetaryFactors
Pricinglabour isoneofthemostdifficult componentsofcostestimateasitincludes manymorevariables variables. Thesesareseveralfactorsthataffectpricingof labour namely;
I. Basewagerates II Fringe II. F i b benefits, fi i insuranceand dtaxes(l (levy) ) III. Wagepremiums

MonetaryFactors(cont (contd) d)
I.

Basewage g rates Thisisadollarsp perhourp paidto anemployeeforeachstraighttimehourworkers.

Straighttimehoursornormalhoursreferstothe

regularworkinghoursof8hoursperdayMon Fri. therefore40hoursperweek. week

Basewageratesvaryby;
9 9 9

location craft t of type fwork kwithin ithi acraft ft

MonetaryFactors(cont (contd) d)
Labours (workers)areclassifiedinto3 establishedlabour classificationswith differentbaserateasfollows;
Generalworkers servesasabenchmark Skilledlabour receivesacertainpercentage morethangeneralworkers Supervisor receivesacertainpercentagemore thanskilledlabour andsometimereceivesfixed amountontop pofthebaseoftheskilledlabour andalsoknowaskepala.

MonetaryFactors(cont (contd) d)
Otheradditionstothebasewagerateare sometimesprovidedforspecialskills,suchas operatinganequipmentorforworkingin remotelocationsanddangerouswork conditionssuchasworkingonhighgroundor closetovoltage.

MonetaryFactors(cont (contd) d)
II. Fringebenefits,insuranceandtaxes(levy) the

contractormustpayvariousfringebenefitsforthe workers.Itmayincludecontributionssuchashealth andwelfare.Someexamplesforfringebenefitsare SOCSOandLevy.

MonetaryFactors(cont (contd) d)
III. Wagepremiums awagepremiumisextramoney

paidtoworkersforovertimework(OT).Itispaidat aminimumoftimeandhalfor150%overthebase rate.However,overtimepremiumsof200%or doubletimemayberequiredforovertimeworkon S d orP Sunday Public bli Holidays. H lid Wagepremiumforhazardousworkconditionsor unusuallystrenuos workaretypicallypaidasafixed increaseoverthebasewagerate.

MonetaryFactors(cont (contd) d)
Samplecalculationsforaloadedlabour costperhour
CostElement Base Wage SOCSO Levy GrossHourly wage rate PercentIncrease Over BaseRate RM/hour 8.75 @RM70per day) 0.20@RM40per month h 0.55@RM100per month RM9.50 8.57%

SourcesforLabour RateandTrend
CIDBpublications JKRpublications Building ildi C CostIndexes d

Labour Productivity
Labour productivityratesarecharacterizedbytheir

tendencytovaryfrom; Individuals Daytoday Projecttoproject Asaresult,itbecomesoneofthemostinaccurate aspects p ofestimating. g

Activity2
Discusswhatwillinfluencetheproductivityof alabour

Labour Productivity(cont (contd) d)

Factorsaffectinglabour productivity
ExternalFactor Market k conditions Climatic Cli ti conditions InternalFactor Work k conditions Management M t conditions

Labour Productivity(cont (contd) d)

ExternalFactor
Marketconditions whentheeconomyisbloomingwithlotsof constructionwork,workerscanbescarce. Likewise,whentheneighboringcountriesstopexporting i immigrant i tworkers, k the th workers k canalso l be b scarce. Theconditioncanresultsininfluxoflesstrainedorunskilled workersintothemarketandhencerequiremoretimeto completethework work. However,whenconstructionworkisscarce(few),therewillbe fewerunskilledworkersinthemarketduetocompetitionfor jobsandalimitedamountofwork. Thecontractorwillbecomemoreselectiveandhireonly the mostskilledworkersandthatlabours (workers)aremore motivatedtoworktoremainonthejob.

Labour Productivity(cont (contd) d)

ExternalFactor
Climaticconditions referstotemperature,wind andrainfall. rainfall Typically Typically,anyweatherextremeswill affecttheproductivityoflabour. Toohotcouldleadtoexhaustion Toocoldcouldimpairmotorskills Rainandstrongwindcouldaffectworkers workers ability tosee Henceitcouldallresultedinslowingdownor stoppingtheproject.

Labour Productivity(cont (contd) d)

InternalFactor
Workconditions referstoworkspace,sitelayoutand organisation,lightingandnoises. Workersworkinginamplespacewillworkfasterthanthose working ki in i aconfined fi dorlimited li it dworkroom. k Thisalsocouldduetotheacceleratedworkwhichputsmore menonthejobandleadtositecongestion. Theproblemwillbeevenworseshouldthestoragearea(for materials)arelocatedawayfromtheworkwheretheworkers needtospendmoretimemovingbackandforthtoget materialsandthereforespentlesstimeonproductivework. Hence,propermaterialstorageandgoodsitelayoutplanningis neededtoensureampleworkspaceandbetterproductivity.

L b Labour P d ti it (contd) Productivity ( td)

InternalFactor
Managementconditions referringtoconsturction supportsuchasschedulling,procurementandinformation support. support Schedulling ofworkactivitiesonsiteaffectsworkflowand theamountofactivitiesonsite. Properschedulingofactivitiescanminimise disruptions andfacilitateworkflow,thusimprovingproductivity. Management g canalsoimprove p productivity p yby ymaking g surethatallmaterials,tools,equipmentandlabour are adequatelyprovidedtocarryouttheworkinanefficient manner.

Labour Productivity(cont (contd) d)

Productivitysourcescanbereferredto; BuildingConsturction CostData Builders ild Publication bli i (REHDA) ( ) Textbooks(butmostlyreferringtoUKorUSAs productivity)

Labour Productivity(cont (contd) d)

Adjustingproductivity theproductivityrates thatarederivedfromhistoricaldataareoftenfor average g orstandardsp projects. j Therefore,theproductivityratesneedtobe modifiedtotakeintoconsiderationhowthenew projectdeviatesfromthestandardcondition. Exampleofhowtoadjustproductivityasfollows;
WeightedWageRate(BareCost)=3(RM26.65)x2(22.35) 3x2 =RM24 24.93/hr 93/h

Labour Productivity(cont (contd) d)

Adjustedproductivityrate=standardproductivity ratex productivityfactor Productivityfactorcanbedeterminedforasingle variablesuchasweather.Eg. g Productivity yratefora workerduringaveryhotdayis0.9. So,itonnormaldaytheworkercouldlay100m2of concrete,thenon0.9factor,heorshecouldonlylay 90m2ofconcreteduringaveryhotday.

Productivityimpactandthecostof overtime
Overtimeisthemostcommonmethodusedonsiteto expediteprogressofwork. However,schedulingovertimeformorethanseveralweeks canresult ltin i huge h productivity d ti it losses. l

Productivityimpactandthecostof overtime(contd)
Daysper week 5 Hoursper Week1 day (%) 8 10 12 6 8 10 12 100 100 90 100 95 90 Week2 (%) 100 95 85 100 90 80 Week3 (%) 100 90 70 95 85 65 Week4 (%) 100 85 60 90 80 60 Average4 weeks (%) 100.00 92.50 76.25 96.25 87.50 73.75

Referenceandfurtherreadings
Edition Edition,Peurifoy,R.L Peurifoy R L andOberlander, Oberlander G.D. G D EstimatingConstructionCosts,5th EditionMc GrawHill, Hill 2002. 2002 Popescu,C.M,Phaobunjong,K,Ovararin,N EstimatingBuildingCosts Costs,MarcelDekkerInc 2003.

Theend.Thankyouforyour attentions.