PERGAMON Building and Environment 4 (1999) 43-48, A method for estimating labour requirements and costs for international construction projects at inception D. G. Proverbs*, G. D. Holt, P. O. Olomolaiye Schoo! of Engineer and the Bult Excironment, University of Wolverhampton, Walfruna Street, Wolterhampton, WY 1SB.U-K, Received 2 September 1997; revised 8 October 1997; accepted 8 Oxtober 1997 Abstract At project inception stage, a quick and reliable method of estimating labour resource requirements and cost, is desirable, This paper presents a fresh approach in that ambition. During inception, while design information is at a premium, cost forecasts should bbe within 20% of the final cost of the building. The method presented achieves this by utilising the productivity rates of contractors’ planning engineers for a ‘typical’ building type (in this instance, a concrete framed high-rise structure is featured). The estimated labour resource requirements for such a building constructed in France. Germany and the UK sre calculated. Planned productivity rates form the basis of the estimate, these being used 0 generate a “Labour Estimate Factor’. This Factor is defined as the man-hour requirements per square metre of the building's gross floor area. Respective national all-in wage rates are then applied to forecast estimated budget costs, for construction in each international location. The calculations are based on a “typical” design, hence, they ‘are applicable to other buildings of similar type and form. Armed with relevant data, resource estimates could similarly be generated fr alternative international locations, and, for different classifications of “typical” building forms. The process will be of interest to practitioners and clientsjeustomers of the international construction industry. «° 1998 Elsevier Science Ltd, All rights reserved ‘Kevwords: Cost planning: Labour resources Productivity rates International comparison; In sit conerete construction 1. Introduction Knowledge of productivity rates is an essential part of the construction management process {1], such knowl- edge being necessary for any study of construction pro- ductivity. One of the most important applications of productivity rates is in the area of construction planning and scheduling. Other uses include estimating, account- ing and cost control. Indeed, Koehn and Brown (2] used them to generate international labour productivity factors, while also suggesting Ways in which they could subsequently be applied to determine comparative inte national construction costs, Perhaps the most important application of accurate productivity rates is in the area of resource management, Here, planning engineers often maintain a ‘basic library’, such rates being adjusted for each project taking into consideration specifi site factors and conditions, that may impact the productivity of con- struction operations. In their recent study of productivity rates, Christian * Corresponding author. 10197-0186/99/S—sce fromt matter © 1998 Elsevier S PH:S0360-1323(97)00064-4 and Hachey [3] found ‘substantial agreement” between the average rates measured in the field and those used by planning engineers. Hence, the productivity rates used by planning engineers can provide useful data on which to assess the (past and therefore predicted future) per- formance of construction contractors, both nationally and internationally, They also provide a basis on which estimates of construction (labour) times and costs can be formed. This paper presents the findings of an inter- national study of contractors’ productivity rates, from which & novel approach to estimating labour require- ‘ments and costs at the inception stage is proposed, for typical buildings in three different European locations, During the inception and feasibility stages, (when only the floor area and building ‘type’ might be known), cost prediction must necessarily be “crude” [4]. It is usual to anticipate that such estimates should be within +20% of the final cost of the building. Application of the est mating tool presented herein has indicated an accuracy well within such constraints and could therefore be of ‘much use to quantity surveyors, estimators, and potential clients of the (European) construction industry. Jonce Ltd, All rights reserved“ DG. Proverbs) Building and Environment 34 (1999) 43-48 11. Cost planning In cost planning, an estimate, cost forecast, of cost plan, is only as reliable as the data upon which it is based. Numerous sources of data are available for such purposes, and include contractors’ own (historical) cost- ing data, For example, when reviewing the costs of a project at final account stage, a contractor may divide the total cost (£) by the gross floor area (gfa) in order to determine the cost in £/m? as a unit cost for the project under review. Other sources of cost planning information, include the use of Elemental Cost Analyses such as those provided by The Building Cost Information Service [5] or the use of standard costs of functional units, such as the ‘cost per bed’ for hospitals. or the ‘cost per room’ for hotels, It is not until the subsequent (more detailed) design stages, that detailed elemental costs perhaps derived from price books such as Spon {6} or Laxton (7 can be accurately forecast. At inception, the client is normally onty able to provide outline data on which the project cost can be forecast. Typically, the building type and approximate floor area is all that will be known, and hence preliminary cost advice is unlikely to be more accurate than within 20% of the final cost of the building Unit rate estimating is generally « more analytical tech- nique, and uses predetermined output rates for labour and plant, in conjunction with a price per unit for materials. to calculate a rate per unit (m, m?, m’,ctc.) for any measured item of work. Such methods cannot be applied until detailed design information is available, In contrast to these “traditional” approaches, the meth- odology presented here uses.a form of unit rateestimating that could be utilised during the earliest stages in the design process. Unit rate estimating requires the estimator to consider basic resources (i. quantities and costs of labour, plant, and materials) that form part of pricing any construction work. Labour cost represents a considerable proportion of the final cost of a building, usually between 40 and 60% [8]. Obviously, therefore, a reasonably correct and accurate assessment of the cost of labour is fundamental to the accuracy of any estimate, However, it is generally recognised that the labour element is probably the most difficult component to estimate with any reasonable degree of accuracy [9]. Ashworth and Skitmore [10] referred to estimators’ standard labour productivity rates as being contained in a “black book’, and suggested that, such data were rarely amended or revised. It is therefore apparent that the estimation of labour costs can be sub- ject to considerable uncertainty The examples of estimating labour requirements and costs presented in this paper concentrate on in situ, high- rise concrete frames, utilising productivity rates provided by contractors’ planning engineers. It is intended that the ‘method be applicable for project inception; when all that is needed in order to derive the estimate is an approxi- mation of the gf 2. An overview of the research methodology The investigation concentrates on productivity rates used by planning engineers in France, Germany and the UK, and provides an innovative methodology for pre~ dicting man-power resource requirements for high-rise concrete buildings. A comprehensive description of the research methodology may be found in Proverbs et al [11, 12}, and therefore only an overview is now presented. To standardise the study, a high-rise in situ concrete framed model building was designed (refer to Proverbs et al, [13] for details), This, the principal research instru- ment, was complemented with a structured questionnaire via which various planning considerations, including resource utilisation, productivity rates and construction methods could be analysed. These research documents (model project drawings and questionnaire) were dis- tributed to the planning engineers of contractors within the countries concerned, who were asked to assume that, the model was 4 potentially ‘live’ project. The ques- tionnaire concentrated on productivity rates of in situ concrete operations, namely: reinforcement fixing: for- mwork erection; and placing concrete, These operations were analysed with respect to three separate elements. these being: beams, columns, and floor slabs. The esti- mating methodology presented is bused on this data 2.1. The research survey In the UK, questionnaires were distributed amongst the top 40 contractors as listed in Building [14] and 110 other companies selected from the Register of British Industrv and Commerce {15}. From this total of 150 firms, positive responses were reveived from 31 contractors: representing & 21% response rate. The same (but trans- lated) documentation was distributed to 75 contractors in France, chosen trom the Syndicat Natinal duu Béton Armé, des Techniques Industrialisées et de I’ Entreprise Générale list of members [16]. Completed questionnaires were received from 14 contractors (19% response). Simi- larly, translated questionnaires were dispatched to 5S German contractors, identified with the assistance of the major contractors’ federation in Germany, Hauptterband der Deutschen Bauindustrie e.V., and yielded 10 (18%) positive response In view of the international nature of the research, and the exaggerated difficulties in securing participation from, foreign companies, (ie. French and German planning engineers are even less likely to respond to an inves- tigation which originates from another country), the research team considered the response to provide a rep- resentative sample of contractors, sufficient in size experience and resources to undertake such a project represented by the model, Table | provides an indication of the size and diversity of the participating companies from each countryDG. Proverbs Building and Environment 34 (1999) 43-48 45 Table 1 Size of participating firms Number and percentage of contractors uk France Germany Companysizet No. & No. No. % Small 38 S387 00 Medium 44520 S 3872 no Large 9 0 4 e700 Total Tn a ) Small: Annual turnover <£50 million (sterling): Medium: Annual turnover >£50-< £450 million (sterling): Large: Annual turnover > £450 milion (sterling) 3. Analysis of the survey data The following analysis is based on the aggregated sur- vey response (ie, 55 European contractors). It sum- marises the findings for each of the three concrete ‘operation elements and focuses on the method by which such data is utilised to estimate labour resource require- ments and costs for three international locations. Plan- ning engineers were requested to provide their productivity rates for three operations (formwork erec~ tion, reinforcement fixing and placing concrete), each of which was split into three elements (columns, floor slabs and beams), as defined by the model drawing. By deter- mining a mean productivity rate for each element of construction, for each country, the necessary labour requirements for the project in each international location can be estimated. There now follows a detailed example of the proposed method for one particular coun- try, followed by a succinct presentation of results for the two remaining locations. 3.1. Labour resource estimate Productivity rates for the three main operations (plac- ing concrete, reinforcement fixing and formwork erec tion}, comprised three elements (beams, columns and floor slabs). Therefore, a combined total of nine pro- ductivity rates was determined. For each of these nine elements a ‘mean’ productivity rate (MPR) was cal- culated to represent each nationality’s productivity for that particular element of work, e.g. a mean productivity rate for placing concrete to beams in the UK. For each country the three elements of each operation were then combined (o yield an ‘overall mean’ MPR (designated MMPR). This represented the nation’s mean, productivity rate for that operation, e.g. placing concrete in the UK. Hence for Germany, the MPRs for each element, and the MMPR for each operation are presented in Table 2 Table 2 MPR and MMPRs for German conttactors MPR: Floorshibs MMPR Beums Columns Placing Conerste = 105.28 O88. Lan tmanchourim’) Fining Reinforcement 18.02 18.51 1498 nr {man housjtoane) Erecting Formwork 1321098 Lor (enan-hourim’) Therefore, it can be seen that the MPRs indicate pro- ductivity levels for each ‘element’, whilst the MMPRs, indicate productivity levels for each “operation”. So for German contractors involved in high- rise in situ concrete construction, a rate of 2.48 man-hour per m’ is the MPR for placing concrete to columns, whilst a rate of 1.47 man- hour perm’ (MMPR) represents the average production output for placing concrete to buildings of this type. In that the model building is a “generic” example of high-rise conerete frame construction, labour require- ments can be estimated based on MMPRs, and nor- malised proportions (see below) of the three operations Since the gfa is likely to be known at inception stage, it is assumed that it will provide the basis on which to evaluate the labour (cost) estimate, However, the method presented could quite easily be adapted for other known, ‘quantities, such as reinforcement, formwork, or indeed. for net floor areas, if so desired. The first step is to normalise the quantities of each operation for the given gfa. Hence, extracted from the model, total quantities of the three operations are as follows: 848.69 m° 6616.40 m* 94.50 tonnes Placing conere Erecting formwork Fixing reinforcement Ifthe total of each operation is divided by the total gfa contained in the model (4037.88 m’): e.g. for formwork: (6616.40 m*/4037.88 m? = 1,639 m’ of formwork per m? of gfa, and this is repeated for cach operation, then the nor- malised values are as Follows: Placing concrete Erecting formwork Fixing reinforcement 0.21 mm? 1.639 mm? 0.0234 tonne/m? If cach of these values is then multiplied by it’s cor-46 DG. Proverbs) Building and Eniromnent 34 (1999) 43-48, responding MMPR, and the resulting indices totalled, an overall Labour Estimate Factor (based on gfa) is gener- ated. This ‘Labour Estimate Factor’ can then be used to estimate man-hour requirements for any concrete framed building (of a similar nature) if the gfa is known. Hence, for Germany, the ‘Labour Estimate Factor’ (based on sgfa) for the model project is presented in Table 3 Therefore, German contractors require 2.465 man- hours to complete a m? of the gfa (including all associated reinforcement, formwork and concrete placing) for high- rise buildings of this type. Hence for the model building, adopting this ‘Labour Estimate Factor’, an estimated (2465 hx4037.88 m? gfa) 9953.37 man-hours are required to complete all aspects of concrete work con- tained in the structural frame. AS a means of validating this overall labour estimate, the “actual” total man-hour for German contractors can be calculated using the MPRs for each element and mul- tiplying these by the corresponding quantity contained in the model. The sum of each of the nine elements will provide the predicted number of man-hours as estimated by the planning engineers themselves. Hence, based on, the MPR's presented in Table 2, and extracting the quan- tities from the model for each element, the actual pre- dicted total of man-hours (assuming average productivity for German contractors) is given in Table 4 ‘Actual total man-hours for construction in Germany (8808.97 man-hour) is comparable to the estimated figure (9953.37 man-hour) calculated using the “Labour Esti- mate Factor’ (of 2.465 man-hour/m? of gfa) previously presented. The difference between these figures is 11 Table 3 Labour estimate factor for German contractors Column ‘Nosmalised values Pacing conerete Erecting formwork Fixing reinforcement 0.21 m'im? 1,639 mim" 0.0234 tonne im? Table 4 Actual predicted man-hour for the ‘average’ German Contractor Beams Columns Quantity Placing conerete 169.68 i416 na Erecting formwork 160075 2113.00, 97176 Fining reinforcement 939 17281 616 and therefore well within the original parameter of 20%. Hence, based on the productivity of labour in each country, an estimate of total man-hour requirements is obtained, using only the gfa as a means of calculation {n Germany, this ‘Labour Estimate Factor’ is calculated as 2.465 man-hours/m? of gfa, whilst in France and the UK itis 2.396 and 3.636 man-hours/m’, respectively. One can elicit therefore, that contractors in France are the ‘most productive at high-rise concrete construction (ie. demand fewer man-hours to complete one m” of gfa) compared to those in Germany and the UK. Indicative of high-rise concrete construction, the ‘Lab- our Estimate Factors’ could be reasonably applied to other, similar structures in each country. Indeed, if the research process was repeated for other building forms, “Labour Estimate Factors’ for each of the main building types (eg. structural steel, masonry construction etc.) could be generated 3.2. Labour cost estimate Having established an estimate of the likely man-hour requirements for each country, it is desirable to obtain an approximation of the associated costs. This then facili- tates an international comparison of construction (lab- our) costs, which could, for some clients/customers help to decide on the whereabouts of further international projects. Furthermore, quantity surveyors and estimators, need to establish reasonably accurate budget costs as early as possible in a project’s inception, this quick cost estimating procedure could be used as soon as the gf of Column 2 Labour Estimates Indices MMPRs (column txcolun 2) var (0.309 man-hour 07 1.754 man-hour 0.402 man-hour Labour Estimate Factor: 2.465 man-hourim? of aft a Floor slabs Man brs Quantity Man brs Total sie 603.68 ss.00 393.02 1065.76 088 27068 49.44 n1g.02 77S 119.68 1466.31 Acti overall total man-hou 808 97DG. Proverbs Building and Environment 34 (1099) 43-48 0 the building has been decided (normally established very early on in the development process). Considering the three main operations involved in in situ conetete construction, namely fixing reinforcement. erecting formwork and placing concrete, and utilising national all in-rates for skilled and semi skilled labour recently published {7}, an all-in-rate per m’ of gfa can be determined. This should therefore represent construction (akasesscants in euch intestatienah tection, Adopting national *skilled” labour rates for reinforce- ment and formwork operations, and semi-skilled” rates for concrete placing, the findings for Germany are now presented, Using the labour estimate indices previously determined, an alin rate per my of gfa area can be ges crated as shown in Table 5. Therefore, labour costs per m? of gfa, are £6.53 for placing concrete, £39.17 for erecting formwork and so on. The total of these three labour rates will provide a ‘gross estimate of the labour costs for constructing the frame, per m’ of floor area; in the case of Germany £54.67, Pex sn of gfe, Then, dy sailing this rake with the, gross floor area (4037.88 m’) a total estimated budget, labour cost for the entire project is obtained. Hence, in Germany, labour costs equate to £220,763.01; this based ‘on the productivity of an ‘average’ contractor. Asa means of testing this estimate for accuracy, a more detailed ueceutn can te obra, taeed on he MPRS and quantities of each construction element contained in the model. The results for German contractors are presented in Table 6, Note that the quantities and MPRs foreach element have been presented earlier, and are now omitted for clarity. Tae s German labour coss perm’ of gfe For each operation Labour estimate indices Pacing conerete Erecting formwork Fining reinforcement (0.309 man-hourim pa 1.754 man-hourim gl 0.402 man-hourim? fa Tate's Actus} labour cos (in Germany) For each operation and projec overall Beams Columns Placing concrete £3764.52 3842.70 Erecting formwork 3658.85 £2546007 Fixing reinforcement £47, 183.29 £23,798.42 Foreach element (ie. beams, columns and floor-slabs) the cost has been derived from multiplying the MPR by the quantity in the model and the relevant wage rate (ic. either for semi-skilled or skilled labour). Here again, actual labour costs as predicted by the planning engineers are comparable to that using the quick method previousy Gescribed. Sn fact, the difference represemis a divergence of just 11%, which is well within the limits of accuracy sens emesis 1h he inception KAGE K-RSKGR. If the quick estimate procedure is repeated for France and the UK, gross costs for labour are estimated at £31.70 and £45.97 per m? of gfa, respectively. This, therefore facilitates a comparison of construction (labour) costs, for che model building in each focation. Hemioe, costs are estimated at: Germany £220,763.01; France £128,000.00; and the UK at £185,621.34, Assuming the model building to be typical of high-rise concrete framed structures, these budget labour costs could be reasonably adopted for obtaining estimates of similar structures. As soon as the afa ofa planned project is identified an estimate of labour ‘wosts cole quite sinnply be deternvines. ‘The methods presented herein have been utilised 10 estimate labour and cost requirements based on ‘average’ productivity. However, by adopting judicious contractor selection procedures clients and developers may be able to secure contractors who achieve superior performance U8), The quick estimating, wah cole wate easly te adapted to reflect any anticipated changes in contractor performance. In such instances, the labour indices would need t0 be recalculated. but on this occasion, instead of using the MMER values, the values representing the most productive rates for each operation would need to be [National all in wage Labour costim? rates per of git Semi skilled as £21.13 £653 Skilled £22.32 9.17 Skilled «@ £22.38 £8.98 Total labour costs of gla = £54.67 Floor slabs Total labour cost £11.26229 £18,869.51 £26.34225 £32.747.19 73034 28 £144.015 99 Actual overall labour costs = £195,632.6748 D.G. Proverbs Balding and Environment 34 (1999) 43-48 substituted. The subsequent “Labour Estimate Factor’, would then be representative of high productivity, and labour requirements and costs could be derived indicative of such improved performance. Werea more conservative estimate required, them similarly the least productive MPRs could be utilised. 4. Summary Based on the MPRs provided by contractors’ planning, engineers for a typical conerete framed structure, labour resource requirements and anticipated construction costs, in three European countries have been calculated. Based on information likely to be available at inception, (ie. an, approximation of the gft of a building) this estimate was found to be within the level of accuracy normally expected at this stage. Initially, the quantities of each operation were normalised to be representative of the gfa of the model building, Multiplying the MMPRS (for each operation) by the normalised quantities of each oper- ation, labour estimate indices were derived. The sum total of these three indices (referred to as a ‘Labour Estimate Factor’), then represents the total number of man-hours required to complete one m’ of gf, and the relative proportions of reinforcement, formwork and concrete work, therein. For German contractors, of average” pro- ductivity, this ‘Labour Estimate Factor’ was 2.465 man- hour/m? of gfa. By applying this factor to the model project, German contractors were estimated to require 9953.37 man-hours to complete construction of the frame. This compared favourably (ie. a disparity of just 11.5%) with the projected figure derived using a more accurate elemental break-down of the structure. Taking the process a step further, estimated (labour) cost per m’ of gfa were also determined. Utilising respec- tive national all-in wage rates for skilled and semi-skilled workersin each country. comparable estimates forlabour costs were derived for each international location. These estimates were also found to be acceptable in terms of desired degree of accuracy at inception. The procedure described herein for in situ conerete frame construction in France, Germany and the UK, could conceivably be developed in a number of ways, Estimates could be determined to represent highly pro- ductive contractors from each country, or if desired, the most inefficient firms. There is also scope to extend the research to other countries, enabling a wider inter- national comparison to be achieved. Another possibility. is the development of further design models to represent other “typical” forms of construction (such as domestic masonry, high-rise structural steel frames, etc.) then, if the original research process was repeated using models of each building form, standard Labour Estimate Factors and costs per m’ of gfa, could also be developed, rep- resenting each major construction form in any chosen international location References [1] Herbsmnan Z, Elis R. 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