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By Steven Fechino

There are a few ways restoration contractors provide labor to their projects; they can hire unit price subcontractors, or a mason can use company employees. In both cases, a company earns the money to pay for all expenses based on work invoiced from field productivity.

In restoration, flashings are done every day. An experienced project estimator or manager can usually tell how much a project will cost the client just by linear foot amounts. This article is not to teach how to estimate, but rather discuss all the costs associated with the actual flashing on a project.

This article will show an example of a basic crew cost using your company’s employees. However, we are not considering materials for this example and many other individual project circumstances that could possibly affect the daily cost for a particular company or crew.

Let’s say I am a small company that has a small office, very small office staff, and a few pieces of equipment. Here is one way you can see what your actual daily labor expenses are so that the field production can keep things running smoothly.

For the purpose of this article, I will assume a bricklayer makes $30.00 an hour and a helper makes $18.00 an hour. Anyone reading this can adjust their cost based on their actual labor cost accordingly.

This example is for the person who may be new to estimating or unfamiliar with computing their actual daily cost for their company. Any assumptions below do not represent any actual percentages from a real company.

Computing Daily Costs:

Brick layer — $30.00 per hour

Helper — $18.00 per hour

Total $48.00 per hour x 8 hours per day
= $384.00 per day

Other Expenses:

Overhead: Assume 20% of bid.

This is the percent of annual billings that will cover what it takes to run the business. Expenses to this category include office personnel salary, the expense of having an office, telephone and internet services, to list a few.

Equipment: Assume 12% of bid.
This will cover the trucks, forklift, fuel, maintenance, scaffold, and hand tools.

Specific project-related expenses that are not defined as a line item:
When used, you can assume 10% as an average once everything is all added up.

(Note: These assumptions are based on specific specialty conditions of the project. These can be things that only experience can dictate. There is no available site space for lay area, shared crane expenses, bad contractors, unrealistic schedule, or even a difficult design team. This item is not a constant, but job-specific.)

Burden: Assume 30% of bid.
This will cover workers compensation insurance, additional benefits, if offered to the employee, state and federal payroll taxes, and unemployment expenses.

Profit:
The percentage you want to make on the project. I will not calculate this for this example.

Now it is time to calculate burden into the labor cost. Burden is only calculated to the direct labor cost; you would not want to add equipment and overhead to burden. For this example, here is the calculation:

$384.00 per day x 1.30 (30% burden) = $499.20 per day

If I add equipment and overhead, I calculate:

$499.20 (labor and burden) x 1.12 (equipment) x 1.20 (overhead) = $670.92 per day

(Note: We did not calculate specific project conditions for simplicity.)

In order to break even, you need to make $670.00 per day before profit.

When estimating a job, typically, the estimator would calculate materials, assign a labor rate and all other expenses to determine unit price and the price of the project. That is what I would normally recommend for the process. For the purpose of understanding the day cost, I will show how to calculate the day cost and what it would take to make money knowing your day cost. It is not normally done this way, but if you do not know what your day cost is, it is almost impossible to start in this business from the field and know how to price work accurately.

Knowing our day cost is $670.00, we can determine what it will take to make this work. Say you are doing a simple brick job. Production is set at 580 bricks per day per 1:1 crew. First, we will use the example of a brick production for simplicity. Second, I will calculate a flashing cost once you can see the process.

Day cost: $670.00 day cost per crew 1:1 / 580 brick installed per day for brick crew 1:1 = $1.16 per brick installed.

Day cost: $670.00 day cost per crew 1:1 / 80 linear feet of flashing installed per day for brick crew 1:1 = $8.38 per linear foot of flashing installed.

Your project has 2,900 linear feet of flashing to install. $8.38 cost per linear foot based on estimate x 2,900 linear foot on project = $24,302.00 labor, equipment, burden, and overhead. Next, add your profit of “X” percent and you now can identify the cost of your project before profit and make adjustments accordingly before you submit your bid.

When I learned to estimate, part of what I was given to work with was a bunch of formulas to use to calculate specific materials from square footages. I initially had no idea what the burden or overhead actually covered. Once you understand all your fixed costs, the next toughest thing to estimate is production. Production is not always based on previous production costs that took place on the best day ever or the worst day ever. They are not based on the best crew or the worst crew. They are based on what a normal crew can do in a day. This is the concept that has always worked for me.

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