4. Price Labor, Materials, and Equipment Ⓒ

L ABOR C OST Six Components to the Labor Cost: 1. Wages 2.Worker's Compensation Insurance 3.FICA Tax, Federal Insurance Contribution Act 4.Unemployment Compensation Tax/Insurance 5.PL&PD- Public Liability and Property Damage Insurance 6.Fringe Benefits Ⓒ

L ABOR W AGES  Vary Considerably with Locations and Type of Crafts, and union vs. op shop.  Agreements Such as Union / Open-Shop / Prevailing Wage  The Above Wage Rates are Known as Base Wage Rate  Compensation for 40 hr/week ( 8 hr/day for 5 days )  For Work Over 8 hr/day Or Weekends the Base Rate is Times  Average Wage Rate Considers S.T. and O.T. = B.W.Rate * ( * O.T.) (Actual Hours Worked per Week) Ⓒ

W ORKER'S C OMPENSATION I NSURANCE  Insurance Paid by Employers  Covers Employees in Accidents or Death Caused by Work  Premium Rate is Specified in $s per $100 of Base Wage  Discounts are Given Depending on Company's Records in enforcing Safety Programs ( Experience Modification Rate, EMR )  EMR can be > 1, With Bad Safety and Accident Records Ⓒ

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Federal Insurance Contribution Act -FICA (Social Security)  Federal Government Requires Employers to be taxed for providing retirement benefits for employees  The Rate = 7.51% of Total Earnings (Avg. Wage) up to $45,000/Year of Employee wage  The Employee Contributes an Equal Amount Through the Employer Ⓒ

U NEMPLOYMENT C OMPENSATION T AX /I NSURANCE  A Tax Collected by the State to Provide Unemployment Insurance.  Paid by Employers  Approximately 3% of Total Earnings (Avg. Wage) of the Employees. Ⓒ

Public Liability and Property Damage Insurance (PL&PD)  An Insurance Protecting the Contractor from Liabilities Involving Damage to a Third Party and Public Property Caused by Contractor's Employee During Construction  Premium is Specified in $s per $100 of Base Wage Ⓒ

F RINGE B ENEFITS  Employers often Pay Benefits in Terms of :  Paid Vacations  Pension Plans  Training Programs, etc.  Others  Rate Ranges From 0.75 to 2.1 $/hr Ⓒ

Union Labor Rates  Means Labor Rates for the construction industry  Provide annual hourly union wages for 46 buildings construction trades in major U.S. and Canadian cities.  The Richardson Report  Provides quarterly union wages for 16 crafts in 120 U.S. and Canadian cities.  The Construction Labor Research Council (CLRC)  Provides construction union labor cost for 17 crafts in 300 cities (average of 3000 projects) Ⓒ

Sources for Non-Union Labor Costs  Means Open Shop Building Construction Labor Costs, R.S. Means  Employment and Earning, Bureau of Labor Statistics Ⓒ

Equipment Costs and Sources of E QUIPMENT C OST Ⓒ

PURCHASED EQUIPMENT  A Contractor does not pay for construction equipment, the equipment must pay for itself.  Estimate Must Include costs of Owning and Operating Equipment which include: 1.Depreciation (function of purchase price, salvage price and time) 2.Investment (function of interest, insurance, taxes, and storage) 3.Maintenance and Repair (function of condition of use) 4.Fuel, Oil, and Lubrication (function of site efficiency and operating conditions) Ⓒ

Sources of Equipment Costs  Cost Reference Guide for Construction Equipment, Dataquest Inc.  Provide hourly ownership and operating costs  Rental Rates Blue Book, Dataquest Inc.  Local rental agency data Ⓒ

5. Define the work done by others  Specialized work  Geographic location  Reduction of risks Ⓒ

Indirect Job Labor Project manager and/or Superintendent Project engineer Draftsman Timekeeper Office manager and/or secretary Safety engineer and/or first aid attendant Watchmen Indirect Job Equipment Project manager’s vehicle Pickup truck Site maintenance Site Facilities Construction Sign Job site fence Construction access/entrance Portable toilets Office trailers: contractor’s,engineer’s, first aid, change room and lockers Telephone service Temporary electric utilities Shop or maintenance facility Fuel for general job vehicles Materials Handling and Storage Material storage area & bins Warehouse facility Subcontracted Indirect Cost Disposal services Soil or rock borings Laboratory tests –Soil samples –Rock samples –Concrete samples Surveying service CPM scheduling services Job photographs Models Artist renderings Bonds and Insurance Performance bond Builders rick Insurance Contractor’s liability insurance Permits Building Site improvement Road or entrance Additions for Remote Sites Communications Living quarters for workmen Kitchen and food service Entertainment Transportation Temporary power Water supply Waste disposal 6. Determine Job Overhead Cost Ⓒ

7. Determination of Markup  Markup is an allowance for: a. Home Office overhead b. Contingency c. Profit  Markup range from 5% to 20% of the total project costs Ⓒ

a. Home Office Overhead Salaries Executive staff marketing staff Accounting staff Estimating staff Legal staff Support staff: clerical, data processing, etc. Facilities Office purchase or rental Furniture purchase or rental Data processing equipment Utilities Telephone, fax, etc. Heating & air conditioning Illumination Water Taxes Company Income Property Insurance Company policies not chargeable to projects Benefits Pension & retirement program Profit sharing & bonus plans Health insurance plan Transportation Company aircraft Company automobiles Company trucks Commercial travel Marketing Advertising Estimating Other promotional costs Maintenance Maintenance& overhaul, not just chargeable Ⓒ

b. Contingency  To cover unexpected risk, error and omission, and contract risk Ⓒ

c. Profit  Profit varies from 1% to 10% or more  Factors affecting profit  Need for work  Contract type  Total bid value  Risk  Competition  Economic Condition Ⓒ

8. Determination of Contract Bond Cost  The contract document usually requires as a minimum a “performance bond” and a “payment bond.”  Bond cost ranges from 0.5 % to 1% of the total contract price. Ⓒ

Example of Determining Total Contract Price  Assumptions 1. Sales Tax = 6% of Direct Material Costs 2. Job Overhead Labor Costs = 25% of Direct Labor Costs 3. Job Overhead Management Costs = 10% of Direct Labor Costs 4. Markup = 20% of Total Project Costs Office O.H.= 10% Contingency= 2% Profit= 8% 5. Bond = 0.5% of 1% of Total Project Costs Ⓒ

Example of Determining Total Contract Price (cont.)  Estimated Directed Job Costs 1. Direct Labor Costs25, Direct Material Costs 15, Direct Equipment Costs 13,000 (Owning & Operating Costs) 4. Subcontract Costs 20, DIRECT COST SUBTOTAL$73,670 Ⓒ

Example of Determining Total Contract Price (cont.)  Job Overhead Costs 6. Sales Tax [6% of (2)] $ Job O.H. Labor [25% of (1)] $6, Job O.H. Management $2,567 [10% of (1)] 9. Total Job Overhead Costs $9, Total Estimated Job Costs $83,555 [(5) + (9)] 11. Total Cost [(10) x 1.2] $100, Bond [0.005 x (11)] $ TOTAL CONTRACT COST $100,767 [(11) + (12)]

Example of Determining Total Contract Price (cont.) Bid Factor = DIRECT COST SUBTOTAL TOTAL CONTRACT COST 73, ,767 == Ⓒ

Total Components of Cost within a bid Insurance Training Salaries Etc. Office equip. Testing Parking lot Access road Etc. Project office Testing Janitors Portable toilets Etc. Support constr. Guard Materials Labor Installed equip. Constr. Equip. markup Bid Price Project Cost Overhead Support structure Subcontractors Force account executed Work packages Work packages Work packages Work packages Direct costsJob indirect + = Main Office Job Ⓒ