Mike Holt Business Newlsetter Series
Mike Holt
Estimating is a skill that can make or break a career or company. Understanding the estimating and bidding processes is essential for your business to remain profitable. In this electrical estimating series I explain how to determine the material cost, labor cost, and calculate direct job costs, overhead and profit. You'll have the knowledge to anticipate and avoid losses - which in some cases might mean not taking the job!

This is newsletter #16 in the series. If you have missed prior newsletters, and are enjoying the series, we encourage you to take advantage of the discount offer for the complete Electrical Estimating Program. Click on the coupon at the bottom of this page.

Variables That Affect Labor Units

There isn't a set of labor units that fits every job. Data from a labor-unit manual must be adjusted to fit the job conditions that you are dealing with. Some job variables can be anticipated and controlled, while others must be accepted as a cost of doing business. The adjustment factors that we will be discussing are only a suggested guide. You must keep historical information on past jobs so you can develop your own adjustments. Keep in mind that you may only have a few of these variables on any one job. In the following pages, we's discuss 17 variables that affect labor units. This newsletter will cover 2 of them.
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1. Building Conditions
Identical electrical material used in different types of buildings and projects may require either more or less labor to install than the average amount of labor for a given part. The major reasons include building complexity (finish or construction type), floor conditions, hoisting restrictions, and working height.

Building Complexity. A complex building design can cause confusion and often requires greater supervision, so you need to be alert to this condition. For example, it takes more time to run 100 ft of trade size ¾ EMT in an existing research laboratory than it does to run it down the wall of an unfinished warehouse. Different material used to build the same building may also have a bearing on how long it takes to install material. For example, installing a lighting box on a wood framed ceiling member is much easier than installing the same box on a metal framed ceiling.

Floor Conditions. If the floor area is covered with sheets of plywood, wood, garbage, or even rain water, you can bet that it is going to take your staff more time to complete the installation. Some general contractors require the subcontractors to clean up after themselves so that the next trade has a clean working area, whereas other general contractors let this issue resolve itself between the subcontractors. Not only is this a labor item on the bid it may also impact the efficiency of your crew.

Authors Comment: Many times on larger jobs, general labor is provided by the developer or general contractor. Their sole task is to maintain a clean jobsite. Make sure to indicate or protect what isn't trash or you may get to buy more!

Hoisting Restrictions. In some high-rise buildings, elevators or cranes can only be used to transport construction material during certain hours of the day, so be sure to coordinate the movement of material and tools so that you do not have electricians standing around waiting for them. Some projects will require that material be moved only during off-hours, or that you schedule your time for crane or buck hoist use in advance. Additional costs for premium time need to be included in your bid if this will cause you to work outside normal hours.

Working Height. Labor units are based on buildings and projects with up to three floors above grade or street level. As the number and height of floors increase, there is an increase in the number of labor hours needed to install and move the same equipment, material, tools. In addition, the need to wait for the lifts at the start of the day, end of the day, for breaks, lunch, charging time, and so on, increases the number of labor hours that will be required.

Single-Floor Adjustment. Add 1 percent for the single floor level you are working on. For example, if you are doing a build-out on the ninth floor, increase your total labor by 9 percent.

Author’s Comment: NECAnet.org has a research report entitled The Effect of Multi-Story Buildings on Productivity.

Entire Building Adjustment. When wiring the entire building, the following adjustment factors apply to the total building labor hours for buildings with repetitive floor drawings.

Wiring the Entire Building Labor Adjustments
1 to 2 Floors 0%
3 to 6 Floors 1%
7 to 8 Floors 2%
9 to 14 Floors 5%
15 to 19 Floors 7%
20 to 30 Floors 13%

Author’s Comment: The reason these percentages appear low is because each floor in the building is similar and you gain labor productivity due to repetition.

2. Change Orders
Jobs are rarely completed as originally planned; revisions to the electrical system are often required to accommodate changes in the building design or to accommodate a change in the owner’s needs. Change orders often result in a delay in the job schedule for all trades, which in itself can decrease the labor productivity of your staff. Because change orders often affect the planning or scheduling of work, those in the field sometimes develop a negative work ethic and unfavorable worker attitude toward the project which hinders productivity.

Other monetary factors you should consider when dealing with change orders include increased overhead cost, interruption of job flow, the effect on labor of compressing the job schedule, overtime, revisions to as-built drawings, increased project management cost, and possible restocking charges from your suppliers for returned items. If the schedule is delayed there are other unexpected costs, such as increased financing cost, storage cost, supervision cost, and so forth, which must be recovered.

Authors Comment: Be sure that any and all change orders are in writing and signed by someone who is authorized to approve any additional costs that may be incurred as a result of the change(s).

There are no specific labor adjustments you can add to a job for anticipated change orders. The best you can do is be aware of the impact on the estimated job labor. You might need to add additional labor when pricing the change order to compensate for the loss in productivity it causes to the original contract.

Author’s Comment: NECAnet.org has a research report entitled Impact of Change Orders on Labor Efficiency for Electrical Construction.

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We'd love to hear from you about this series, and the ways you're using it. Send us your comments and feedback by clicking on Post a Comment below. Look out for the next part in this series a month from now, and please share with your colleagues.
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