Understanding the variables that impact labor costs in construction projects can assist you in better budgeting and project planning. This article explores factors such as labor shortages, prevailing wage rates, weather conditions, and client constraints which can significantly affect labor costs.
Key Insights
- Labor shortages can force contractors to hire workers at an overtime rate, increasing project costs. Furthermore, subcontractors may also face labor shortages, potentially impacting project timelines and costs.
- Prevailing wage rates vary from city to city and state to state, and this discrepancy can substantially impact labor costs. Contractors must be aware of these rates as they are bound to use them in their projects.
- External factors like weather conditions and client constraints can also affect labor costs. For instance, rain delays may necessitate additional protective measures, increasing costs, while client constraints like noise restrictions may require after-hours work, also leading to higher labor costs.
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So, factors that can have an impact on labor costs. Labor shortages, if there's a lot of work going on in the area, you may have a hard time finding labor at the rate that you had priced out the project for or that you wish to price it out for. If there is a labor shortage, you might be forced to actually hire people on to perform the work at an overtime rate.
So be careful and make sure that labor is going to be available for that. If you're outsourcing to a subcontractor, it's the subcontractor's responsibility to provide the labor, but if they too have a labor shortage, it's going to have an impact on your project. So just be aware of that.
Prevailing wage rates and labor burden. Note that this changes from city to city, from state to state, and it may or may not have an impact on your costs, but you must be aware of the prevailing wage rates. You'll be bound to utilizing those rates on your project.
Rain delays or other weather conditions. Some parts of the country are extremely affected by weather conditions, and you have to factor this into your total schedule. Where you have a lot of rain, there might not only be rain days or rain delays, but the costs associated with protection during these rainstorms might require additional covering of portions of the project until things dry up a little bit.
It could also create havoc on your job site if things get a little muddy, so at times you may have to provide aggregate or something around your project to make sure that you have complete access by your equipment all the way around the building at all times. Compressed schedule. This often occurs, let's just say that you have extreme rain delays or weather delays or other factors that perhaps put a delay on the project that's compressing the overall schedule.
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There's a lot of different reasons for a compressed schedule, but keep in mind that you can only put so many people in a given area at one time. The more people who you add to it, sometimes could retard the overall productivity. So be careful about the compressed schedule, and note that more hours may be required instead of just adding more people.
So in other words, go from an eight-hour day to a 10-hour day or possibly a six-day week, but keep in mind that productivity typically drops the more hours people are working per week. Client constraints. Let's say that you're doing a remodel of an existing office building, and the business has to remain open at all times.
So therefore, the client constraints require a certain amount of restriction to noise. It might require you to work after hours to do certain noisy tasks. It might require dust barriers and the like, so that the business can continue to operate while you're doing the construction.
So to recap the labor costs, understand that labor is a cost category of several that we'll discuss here, but it also has more variables than all the other cost categories that we'll be reviewing. So stay on top of your labor pricing and all the factors that can have an effect on it.
