Adjusting Labor Costs
Here’s how to customize the labor costs in Get-A-Quote.net if your wage rates are different from the wage rates shown.
Start with the taxable benefits you offer. Assume craftsmen on your payroll get one week of vacation each year and one week of sick leave each year. Convert these benefits into hours. Your computation might look like this:
40 vacation hours + 40 sick leave hours = 80 taxable leave hours
Then add the regular work hours for the year:
2,000 regular hours + 80 taxable benefit hours = 2,080 total hours
Multiply these hours by the base wage per hour. If you pay carpenters $8.00 per hour, the calculation would be:
2,080 hours x $8.00 per hour = $16,640 per year.
Next determine the tax and insurance rate for each trade. If you know the rates that apply to your jobs, use those rates. If not, use the rates in column 3. Continuing with our example, we’ll use 34.14%, the rate for carpenters in column 3. To increase the annual taxable wage by 34.14%, we’ll multiply by 1.3414:
$16,640 per year x 1.3414 tax & insurance rate = $22,321 annual cost
Then add the cost of non-taxable benefits. Suppose your company has no pension or profit sharing plan but does provide medical insurance for employees. Assume that the cost for your carpenter is $343.67 per month or $4,124 per year.
$4,124 medical plan + 22,321 annual cost = $26,445 total annual cost.
Divide this total annual cost by the actual hours worked in a year. This gives the contractor’s total hourly labor cost including all benefits, taxes and insurance. Assume your carpenter will work 2,000 hours a year:
$26,445 ÷ 2,000= $13.22
Finally, find your modification factor for the labor costs in this book. Divide your total hourly labor cost by the total hourly cost for a carpenter. For the carpenter in our example, the figure in column 6 is $27.93:
$13.22 ÷ $27.93= .47
Your modification factor is 47%. Multiply any building carpenter (Craft Code BC) labor cost by .47 to find your estimated cost. For example, Get-A-Quote.net shows the labor cost for installing an 18" long towel bar is $7.82 per each bar. If installed by your carpenter working at $8.00 per hour, your estimated cost would be 47% of $7.82 or $3.68. The manhours would remain the same @.280, assuming normal productivity.
If the Labor Rate Is Unknown
On some estimates you may not know what labor rates will apply. In that case, use both labor and material figures in this book without making any adjustment.
Adjusting the labor costs in this book will make your estimates much more accurate.