Prime Cost Of Labour – How much should you charge?
You will already have an idea of what to charge, this maybe based of a particular mode of operation, i.e. One operative in a Company van, it maybe you charge £25 to £35 per hour.
There are many factors that determine what you should charge, but the basic calculation is cost divided by actual productive hours.
So if the salary is £33,000 you should then add on Employers NI currently 13.8%, and perhaps training, H&S equipment, Transport costs per annum, fuels maintenance etc.
Let say that adds up as follows;
£33,000 of wage cost
£4554 NI @ 13.8%
£2000 For lease of a VAN say
£4000 running costs say
£150 H&S and consumables
£44,204 Total say £45,000 #1
Divide this by productive hours say 52 weeks -(4 weeks holiday + 2 weeks training) = 46 weeks x 40 hrs say = 1840 hrs #2
calculation 1 ignoring travel time etc.
#1 £45,000/ #2 1840 hrs = £24.45 per hour
calculation 2 allowing 3 hrs per day none productive (say travel, loading, organising) ; 46 weeks x (40 hrs-(5 days x3 hrs))= 46 weeks x 25 hrs = 1150 hrs #3
#1 £45,000/ #3 1150 hrs = £39.13 per hour
The second scenario is where you allocate a team to a project, and the operatives provide their own transport and you pay the JIB rates.
You can download an excel sheet RICS/ECA Prime cost of labour 2015 to help calculate this see menu of the right hand side, this is based on J.I.B 2015 labour rates.
Remember that the prime cost of labour is calculated on the ECA/RICS basis, and you may add uplift for other incidental costs. The sheet allows you to adjust productivity factors for different grades of operative to provide an overall gang rate. Do remember though that if the blend of labour grades become unavailable you may end up with a lower or higher gang labour rate labour. Electrical estimating involves determining your labour rate, taking into account various commercial risks. You should always calculate your own labour rate to know how your future order book may impact on it.