As part of calculating your final sell price, you need to determine how many electricians it will take to build the job. The answer could determine whether you need to factor in additional labor costs, such as overtime labor, supervision costs and more labor hours.
More labor hours may require the need to add electricians, which could mean additional costs for drug testing, badging and security, training, and other required nonproductive time. You may need to add costs for tools, trucks, travel, lodging, meals, equipment rental, uniforms and insurance. You may need to increase your administration costs (overhead), as there is a lot of paperwork in hiring extra or temporary employees. And there is paperwork involved with laying them off after their work is done.
A simple formula: Total man-hours ÷ actual work days ÷ 8 hours/day = No. of electricians
Example: Your estimate says the project will require 4,000 man-hours to build. The contract is six months, which, by the way, is not really 180 working days—unless your electricians work seven days per week. On average, there are only 20 working days each month. So, six working months is only about 120 working days.
Now apply the formula: 4,000 hours ÷ 120 days ÷ 8 hours = 4.17 electricians (call it 4)
Keep in mind, your estimate’s 4,000 hours does not include any time for lost productivity. The 4,000 hours is only a figure from your extended takeoff and is strictly based on what it will take to build the job. You’ll be lucky to get six fully productive labor hours per day, per electrician, so you need to factor for the lost time.
A better formula: Total man-hours ÷ actual working days ÷ 6 hours/day = No. of electricians
Now your electrician count is up to 5.5. Might as well make it six. Guess what. You gained another two electricians per day.
Lost time formula: No. of actual working days × No. of lost hours/day × No. of electricians = No. of hours needed to add to your estimate (really)
But wait, there’s more! Even though you are going to get only about six productive hours per day from each electrician, you still need to pay them for eight. So, unless you like giving away money, you need to add back in the lost unproductive labor.
120 days × 2 hours × 6 electricians = 1,440 hours
What?! Another 1,440 hours of lost time? It can’t be! Or can it? Do the math, and prove me wrong.
What does the schedule tell you?
Knowing the contract schedule is critical. The duration of the project and its phasing will have a direct impact on how many electricians you need to have on the job and when. As most projects go, you are not going to need all your calculated electricians each day. In fact, most days you will need only a percentage of them, which means there will be days when you will need only one or two and days when you will need 10 or more.
The job startup is typically light. Coordination, mobilization and layout may require only your foreman and one other guy for a couple weeks. Maybe the job site won’t be ready for six months? Keep in mind that underground rough-in work can happen fast, and you don’t want to miss the opportunity to get in fast. You could need 20 electricians right out of the gate.
So how will you know which part of the job will be labor light and which will be labor heavy? This is where your well-planned, super-segregated takeoff comes in. If you performed and entered your takeoff in a manner that allows you to analyze your job by systems (e.g., rough-in, wiring, device installation, etc.) and even phasing, you should be able to run a few reports to find out where, when and how much labor your project will have.
A matter of class
Another important labor assessment is calculating how many foremen, journeymen and apprentices you will need. Smaller jobs are relatively easy, as they typically don’t need a complicated mix of labor. Larger jobs pose a greater challenge. Will you need more than one foreman? Are there enough hours to warrant a full-time (100 percent overhead) superintendent? How many different crews will you need to have?
Fuzzy math aside, at the end of the day, it may come down to which electricians your company has available. So be careful: If you bid the job with 30 percent of the labor using apprentice wage rates and, during the job, you are able to use only 10 percent, the remaining 20 percent might be billed at higher journeyman, or worse, foreman rates.
Correctly calculating lost labor and the perfect labor mix might seem like a laborious task, especially 30 minutes before the bid, but it is one well worth performing. Adding it all up could mean not bidding the job—yes, I said not bidding the job—as you most certainly don’t want to win a contract your company can’t possibly build.