Calculating accurate labour costs is well-worth the effort

Pricing labour? You mean: look at the plans, scratch your head, and decide that three guys on-site for 12 weeks should be plenty, right? Wrong!

On a recent survey I conducted, almost every single person wanted to know above anything else about how to price labour. Believe it or not, there is a science behind it, and it is not a mythical unicorn! There are a few key things that you absolutely must have correct to be able to get an accurate labour calculation.

1. Your materials measure must be SPOT ON. If you find that your supplier take off tends to be a bit off and you often have to order extra materials, then this is not the measure to rely on for your labour calculations.

Do yourself a favour, get out the scale ruler and your calculator, and make sure you know the measurements for every single item on the plans. Grab yourself a copy of the latest Australian and New Zealand Standard Method of Measurement (ANZSMM 2018) which supersedes the original NZS4202. Run through the carpentry and concrete sections (and any other sections that relate to your scope) and measure each item stated. If you can’t be bothered, get your QS to do the hard yakka for you. Why go to this effort you ask? 2. Because….. you are going to use each and every one of those material measurements, and you are going to apply a labour constant to all of them. The definition of a labour constant, is the metric measurement of how long it takes the average guy to do the average job on the average day broken down into units. Before you start to panic, labour constant data is available however you should always adjust it for your own team. You can find labour constants in books such as The Ready Reckoner, or on subscription websites, like QV Costbuilder.

An example of how a labour constant works:

Task – Installing wall studs 100x50 timber

Your measure for this item across the build is: 89.2 lineal metres

The labour constant for installing 100x50 wall studs is: 0.13/lm

Therefore, 89.2m x 0.13 = 11.59 hours

11.59 hours at say, $50/hr = $579.80

So, this calculation gives you two important things. It is able to be used and multiplied against your hourly rate to provide a dollar value for the labour only. It also tells you what your man hours are that you will need for the job, which in turn gives you your site time that you can calculate your P&Gs against, adding in for subcontractor time and the like. These man hours should also be used to help you track the job, for instance if you have 20-man hours set aside for installing plasterboard, and your time sheets say that you actually took 40 hours, then you know to ask what happened…. Did something change onsite? Should you be getting a variation? Or is one of the team slacking off?

Bottom line…. The materials measure accuracy is extremely important, and is used to calculate labour only jobs, and full tenders. It is also the backbone of an easy back cost and making sure you pick up on your variations. It is well worth being vigilant!

Red QS Limited. Red QS is an NZCB National Partner and the builders QS, providing bespoke QS services to the construction sector across NZ. The team has an exceptional level of skill across the board, and our services are available on an as needed basis! Contact paul.watson@redqs.nz for further information.