Understanding Labor Units

The first distinction an estimator must accept is that a labor unit is not absolute; it is a benchmark, or starting point. This statement may sound odd, but ask yourself, if three electrical contractors undertook the same job, would all three complete the job in the same time? Obviously, the answer is no. If this is the case, then how can a standard set of labor units work for all three companies? This can only come through factoring.

The estimator must become familiar with the company's productivity. This comes from studying job costing records. These let the estimator know how the company's labor units compare to the benchmark. A successful electrical contractor keeps accurate records of job costs and is constantly revising the factors accordingly. This concept allows the estimator to use any of the nationally recognized labor units: NECA's Manual of Labor Units, MEANS, or any of the other databases available today.

Using a standard set of labor units gives estimators consistency in their estimating. How can several estimators use the same database of labor units if each estimator has an individual concept of what each labor unit represents? Each estimator uses the labor unit to his or her own interpretation of its meaning. The units are standard as listed but individually interpreted. For example, two estimators are using the same labor unit to install a load center. The first estimator uses a four-hour labor unit to represent the entire installation including mounting, terminations, and the installation of breakers. The second estimator uses the four hours plus labor units for each installed breaker, arriving at a total of six hours. Which estimator is correct?

At this point, both are. Job costing factors are then applied, correcting the total labor to represent the company's ability to produce against the benchmark. Assume that job costing history indicates that each company typically installs this loadcenter in two hours, including breakers. The first estimator will apply a 50 percent discount factor to his or her labor estimates, while the second estimator will discount the estimate by two thirds. Both estimates now arrive at the same labor total, because both adjusted the estimate by factoring in their information from job costing records. (Not all factoring is discounting; it is possible that a markup applies.) Each company should select a database of labor units as its standard, be it published or company-created. I recommend the NECA Manual of Labor Units, as these are the benchmark of the electrical construction industry. They are periodically updated to keep current. Most published labor unit databases available today are directly affected by NECA's. Whatever you choose, using the prescribed method here will give you accurate estimates.

The remainder of this article will reference the three labor columns established in the NECA manual: "Normal," "Difficult," and "Most Difficult." It would be impossible to relate all the influences that enter into considering labor units, yet three principal factors affect a labor unit: * The job's degree of difficulty. * The installation's degree of difficulty. * The company's ability to perform against the labor unit. The job's degree of difficulty takes into account the type of project and the working conditions. So vast are the variations in the electrical industry that before selecting a labor unit on any project, the estimator should have standard procedures in place to determine which column in NECA's database to use for a particular estimate. These standards should be rigidly adhered to for consistency.

The simple outline below provides general construction classifications in boldface type. It is meant to help you to determine the influence on selecting a labor unit for new, unoccupied areas of building construction with suggested NECA columns for each classification in quotes.

The author lists five construction projects below with his suggestions for NECA classifications:

- Residential construction includes speculation homes, high-end homes, and apartment buildings. Use NECA "Normal."

- Commercial construction involves office buildings, R&D buildings, stores, malls, and theaters. Use NECA "Normal."

- Institutional construction includes schools, hospitals, and asylums. Use NECA "Difficult."

- Industrial construction involves manufacturing facilities and power plants. Special projects are performed on sewage and water treatment plants, mines, and foundries. Use NECA "Most Difficult."

Considering that these job types have individual characteristics, it would be ineffective to set up a single-column database that is universally applicable. The installation's degree of difficulty takes into account special installation difficulty factors, such as weather, mounting elevations, weight, occupancy, and duplication. Not all difficulty factors add to the labor; some (such as duplication) reduce the labor unit. Labor units are established for certain construction periods and conditions (usually the most favorable). Unusual weather, both cold and hot, affects productivity on the job. Higher temperatures affect workers accustomed to colder climates, and vice versa. This factor cannot be analyzed from tables of labor units and is best appraised based on training and experience. Mounting elevations take into consideration such things as ceiling heights and the floors of a building. All increase the labor unit. The standard labor unit is increased by 5 percent for mounting elevations over 10 feet and 10 percent for installations of 16 to 20 feet. Consult a labor factoring chart for addition factors.

[If you would like to obtain a labor factoring chart, send your request by e-mail to jthayer@conest.com, or call (800) 662-7687, ext. 316.]

For ceiling heights greater than 20 feet, an additional allowance must be made for scaffolding. Remember to include lift rental charges in your estimate. Note today's standard of factoring is based on motorized man lifts for over 20 feet. If you are using rolling staging, an allowance for a ground man to supply and push the staging may be required. Consideration should be given to the number of staging setups that will be in close proximity to each other. The suggested factor would be to add 5 percent per foot for that portion over 10 feet, using one ground man for one top-side electrician.

Weight is always an important factor in labor units. Estimators should obtain weight data on all special equipment. Time studies for installations on hours per pound are not consistent. The estimator should develop criteria using job experience data for specific equipment. Equipment manufacturers are a good source for labor requirements on special equipment. Occupancy should sometimes be recognized. Consider an adjustment factor to compensate for the excess labor required when working in occupied areas. The standard labor units (for unoccupied areas) should be increased 50 to 100 percent.

Duplication occurs when multiple installations of like products can save installation time. Fixtures in the same concentrated area, parallel conduit runs, and conductors in a raceway are all examples of possible deductions for duplication. My pet duplication is multiple conductors in a raceway. Most labor units that you see are for one conductor in a raceway. If you are pulling four conductors in the same conduit, does it take four times as long as it does for one conductor? Most contractors will admit that feeders are where they make their biggest profit. The question always comes up, why factor? Why adjust some items up while others are adjusted down? It all comes out in the wash, right? Project management is the answer.

After the estimator wins a bid, someone has to produce the project. With a more accurate bid, the project manager has documentation for creative management. Allocating labor resources is critical. Under- or over-staffing typically affects the bottom line. Project managers need to know specific labor requirements for each phase and task of the job. Accurate hours averaged for the entire job are not enough in today's competitive market. The company's ability to perform against the labor unit is where many companies either make or break it. Every electrical contracting firm's productivity starts with management, and management starts with an accurate estimate. Information and communication with field personnel is critical. Factors to enhance workforce productivity include:

* Submittals are approved in a timely manner.

* The right materials are available in the right quantities at the right time.

* Tools and equipment are on the job when needed.

* Drawings are accurate and marked up, with documentation.

* Job progress is properly tracked.

* The better electricians throughout the company get training support.

* The office provides timely administrative support.

* The firm's work is coordinated with the general contractor and all subcontractors.

Competitive construction bidding is one of the biggest gambles in electrical contracting. What are the working conditions? Which general contractor and subcontractors will be engaged in the project? These are just two pertinent factors the estimator must consider when anticipating job conditions. When selecting a software package, consider the job's degree of difficulty, the installation's degree of difficulty, and the company's ability to meet the labor unit as distinct and separate issues. One adjustment factor is like having one column of labor units. It works for some jobs, but not all.

About the Author

George Hague

President of ConEst Corp.
George Hague is president of ConEst Corp. For more information, contact Jan Thayer jthayer@conest.com or call (800) 662-7687, ext. 316.

Stay Informed Join our Newsletter

Having trouble finding time to sit down with the latest issue of
ELECTRICAL CONTRACTOR? Don't worry, we'll come to you.