All-In Labour Rate Build-Up - Estimating

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All-in Labour Rate Build-up

February 26, 2016March 11, 2018 Vikas Khaitan


During the estimating process, direct labour hours are calculated using quantities from
material take-offs and estimating norms. There is then the need to convert the direct labour
hours (h ps://vkestimating.wordpress.com/2015/12/09/key-quantities-and-direct-labour-
hours/) to construction cost. The simplest method is to multiply the direct labour hours with
an all-in labour rate including direct labour, indirect labour, mob/demob, small tools, site
accommodation, contractor’s field management, consumables, construction equipment and
other related costs.

The all-in labour rate is purely an estimating parameter and is not something that is
measured during actual execution. Total construction cost could be collected from historical
projects and very rarely the corresponding total direct labour hours could also be found
from historical project close-out reports. Because of this, most companies have very li le
data on all-in labour rates and generally only 1 or 2 data points for any specific country /
region. The estimators end up making judgements as to the best possible all-in rate to use.
For presenting to the client, the backup to the scarce historical data is generally left out
mentioning the confidentiality of the information. Some benchmarks are provided, but it
always remains a bit vague as to what the historical all-in labour rate included or excluded.

All-in Labour Rate buildup Example (free estimating resource)


(h ps://vkestimating.files.wordpress.com/2016/02/20160226-all-in-labour-rate-buildup-
example-rev0.xlsx)
In the a ached file, I have generated a tabulation to help create a backup to the all-in
labour rate and substantiate the rate to be used in any estimate. This is just an example
working, and needs to be modified to suit the specific region / country / project
type / project size / currency.

In any typical major onshore oil & gas project, there is generally a mix of local and
international labour. The mix can considerably vary depending on the type of project and
available skills in the local labour force. I have presented probable working for both local
and international contractor in the a ached example file, showing the possible differences.

Also the all-in labour rate will vary between different disciplines – civils, piping, electrical,
mechanical etc. The a ached working is for a typical average all-in labour rate for a
country with an average labour cost. The percentages presented are anecdotal and to be
used as guidance only.

This working is suitable to present as a backup to the all-in labour rate used in any estimate
and clearly tabulates all the elements included in the rate. This also helps the team to
understand what might not be part of the all-in rate and might need additional handling in
the overall estimate.

This tabulation, along with any historical data that can be obtained, will help to make the
estimates more transparent and generate confidence in the estimates produced.

Labour Estimate all-in labour rate, Free estimating resource, Labour Estimate,
Labour rate, labour rate build-up

4 thoughts on “All-in Labour Rate Build-up”

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3. ROBERT STACEY
April 20, 2019 / 08:01
Hi Vikas, I used this article as a basis to highlight to an insurance loss adjuster the
difference between a schedule of rates $/hr for labour supply compared to the build up
of an EPC all-in-rate

Reply
VIKAS KHAITAN
April 21, 2019 / 09:34
Hello Robert, glad to know that you could use the blog. Hope you have adjusted the
example working for your specific project

Reply

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