FINSTOCK EVARSITY

LESSON 4: LABOR COST ESTIMATION

Lesson Subtopics:

 Determining labor productivity rates

Determining labor productivity rates:

Labor productivity rates are essential for estimating the time and cost required to complete
masonry tasks (Sahu & Meena, 2021). These rates are typically expressed as the number of
masonry units installed per hour or per day.

Figure 1: Determining labor productivity rates

Source: Learn to calculate

Estimators must consider factors such as the complexity of the masonry design, the skill level of
the workers, and site conditions when determining labor productivity rates. Historical data from
similar projects and industry standards can also help inform these rates.

Calculating direct and indirect labor costs:

Direct labor costs are those directly associated with the installation of masonry units, such as the
wages of masons and laborers (Miao et al., 2022). Indirect labor costs include expenses related to
supervision, quality control, and other support activities.
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Figure 2: Calculating direct and indirect labor costs

Source: Accounting form management

To calculate direct labor costs, estimators multiply the labor productivity rates by the total
quantity of masonry units and the hourly wage rates of the workers. Indirect labor costs are
typically calculated as a percentage of the direct labor costs or as a separate line item based on
the project's specific requirements.

Accounting for overtime and special labor conditions:

Overtime pays and special labor conditions can significantly impact labor costs and must be
accounted for in the estimation process (Oladimeji et al., 2021). Overtime rates are typically
higher than regular hourly rates and may be triggered when workers exceed a certain number of
hours per day or week.

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Figure 3: Accounting for overtime and special labor conditions

Source: Business accounting

Special labor conditions, such as working at heights or in confined spaces, may require
additional safety measures, specialized equipment, or training, which can increase labor costs.
Estimators must consider these factors and include any associated costs in their labor cost
calculations.

Labor cost estimation on a global scope:

 In developed economies, labor costs often constitute a significant portion of the total
masonry construction cost due to higher wage rates and stricter labor regulations. Estimators
in these regions must carefully consider factors such as union agreements, benefits, and
insurance requirements when calculating labor costs.
 Emerging economies generally have lower labor costs compared to developed economies, as
wage rates are typically lower. However, estimators in these regions must still account for
factors such as skill levels, productivity, and any applicable labor laws or regulations that
may impact costs.

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 In Sub-Saharan Africa, labor costs can vary widely depending on the country and the
availability of skilled workers (Adebayo et al., 2020). Some countries may have a shortage of
trained masons, leading to higher labor costs, while others may have lower costs due to an
abundance of low-skilled workers. Estimators must also consider the impact of informal
labor practices and the need for on-the-job training.

Advances in technology on labor cost estimation:

 The use of artificial intelligence and machine learning algorithms can help predict labor
productivity rates and costs more accurately. These technologies can analyze historical data,
identify patterns, and consider various factors such as weather conditions, crew composition,
and material availability to provide more precise labor cost estimates (Gupta et al., 2022).
 Wearable technology, such as smart helmets and sensors, can monitor workers' movements
and gather real-time data on productivity and safety. This information can be used to
optimize labor allocation, identify areas for improvement, and refine labor cost estimates
based on actual performance data.
 The adoption of prefabrication and modular construction techniques can help reduce on-site
labor requirements and improve productivity. By shifting some of the work to controlled
factory environments, estimators can more accurately predict labor costs and minimize the
impact of weather delays and other on-site disruptions.
 The integration of blockchain technology in construction contracts and payment systems can
help ensure fair compensation for workers and improve transparency in labor cost tracking.
Smart contracts can automate payments based on predefined milestones or productivity
targets, reducing the risk of disputes and enhancing the accuracy of labor cost estimates.

Video to watch:

Title: Construction-Estimating Labor Costs for Work

Link of the video;

https://www.youtube.com/watch?v=0PW5PFR9EfE&ab_channel=CivilEngineeringAcademy

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References:

Adebayo, A. A., Oladapo, B. I., & Akintunde, O. (2020). Challenges of estimating masonry
construction costs in Nigeria. Journal of Construction Engineering and Management,
146(8), 04020093. https://doi.org/10.1061/(ASCE)CO.1943-7862.0001872

Gupta, S., Jain, R., & Singh, S. (2022). Application of artificial intelligence in masonry
construction cost estimation: A review. Automation in Construction, 134, 104087.
https://doi.org/10.1016/j.autcon.2021.104087

Miao, F., Zhang, J., & Li, H. (2022). Improving the accuracy of masonry construction cost
estimation using machine learning techniques. Journal of Construction Engineering and
Management, 148(4), 04022012. https://doi.org/10.1061/(ASCE)CO.1943-7862.0002231

Oladimeji, A. B., Oke, A. E., & Aghimien, D. O. (2021). Key terminologies in masonry
construction cost estimation: A review. Journal of Engineering, Design and Technology,
19(3), 612-628. https://doi.org/10.1108/JEDT-07-2020-0289

Sahu, R. K., & Meena, R. K. (2021). An overview of masonry construction techniques and
materials. Journal of Building Engineering, 44, 102944.
https://doi.org/10.1016/j.jobe.2021.102944

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Multiple choice questions:

1. Labor productivity rates are typically expressed as:

A. The number of masonry units installed per hour or per day

B. The total cost of labor per project

C. The number of workers required for a project

D. The hourly wage rate of masons

Answer: A. The number of masonry units installed per hour or per day

2. Which of the following is NOT a factor that estimators must consider when determining labor
productivity rates?

A. The complexity of the masonry design

B. The skill level of the workers

C. Site conditions

D. The age of the workers

Answer: D. The age of the workers

3. Direct labor costs are those:

A. Directly associated with the installation of masonry units

B. Related to supervision and quality control

C. Incurred for safety measures and specialized equipment

D. Associated with administrative tasks

Answer: A. Directly associated with the installation of masonry units

4. Indirect labor costs are typically calculated as:

A. A percentage of the direct labor costs

B. A separate line item based on the project's specific requirements

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C. Both A and B

D. None of the above

Answer: C. Both A and B

5. Overtime pay and special labor conditions can:

A. Significantly impact labor costs

B. Be ignored in the estimation process

C. Reduce the overall project duration

D. Improve worker productivity

Answer: A. Significantly impact labor costs

6. In developed economies, labor costs often constitute a significant portion of the total masonry
construction cost due to:

A. Higher wage rates

B. Stricter labor regulations

C. Union agreements, benefits, and insurance requirements

D. All of the above

Answer: D. All of the above

7. In Sub-Saharan Africa, labor costs can vary widely depending on:

A. The country and the availability of skilled workers

B. The use of advanced construction technologies

C. The implementation of strict labor regulations

D. The preference for imported materials

Answer: A. The country and the availability of skilled workers

8. The use of artificial intelligence and machine learning algorithms can help:

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A. Predict labor productivity rates and costs more accurately

B. Analyze historical data and identify patterns

C. Consider factors such as weather conditions, crew composition, and material availability

D. All of the above

Answer: D. All of the above

9. The adoption of prefabrication and modular construction techniques can:

A. Increase on-site labor requirements

B. Reduce productivity

C. Help reduce on-site labor requirements and improve productivity

D. Increase the impact of weather delays and other on-site disruptions

Answer: C. Help reduce on-site labor requirements and improve productivity