Architects, Engineers & General Contractors-Labor Force Indicator
The Hanover Insurance provided this unique Risk Management Tool: The Labor Force Indicator that can help you better understand whether there is enough labor to complete the job on time, and avoid construction delays that could lead to liability. A description of the line items and how each entry applies to your final determination is at the bottom of this blog.
Most, if not all, construction projects have time sensitive completion dates. Project owners rarely, if ever, tolerate projects that are not completed on time. With so much riding on project completion, project owners are always focused on construction schedules and manpower levels. As the calendar inches closer and closer to the contract completion date, they become more and more concerned.
The Labor Force Indicator is a simple, but effective, tool for evaluating whether the contractor has the onsite labor force needed to complete the project on time. The math behind the Labor Force Indicator is based on approximating two key labor cost parameters. First, is the labor cost associated with the remaining construction contract dollars? The second is a composite labor rate, which is representative of the construction trades that will be involved in completing the remaining construction. The other variables needed to use the Labor Force Indicator are derived directly from the remaining construction timeline.
Here is the description of each variable in the Labor Force Indicator:
|A||Remaining Construction Dollars (Obtained for the contractor’s pay application)|
|B||Labor Percentage (Approximation. Most often ranges from 40% to 60%)|
|C||Labor Dollars ( Percentage calculation)|
|D||Composite Labor Rate/Hr (Varies by region and union participant.)|
|E||Remaining Labor Hours (Labor Dollars divided by Composite Labor Rate/Hr)|
|F||Remaining Work Days (Calculated using the remaining contract time)|
|G||Labor Hours/Work Day (E divided by F)|
|H||Labor Hours/Day/Craft ( Most often an 8 hour work day)|
|I||Approximate Daily Labor Force (G divided by H)|