Understanding Labor UnitsUnderstanding Labor UnitsIncrease WorkforceIncrease Workforce

andandProject Management ProductivityProject Management Productivity

withwithSmart EstimatingSmart Estimating

Thursday, February 26, 2009

George Hague, President & CEO

ConEst Software Systems

George HagueGeorge HaguePresident & CEOPresident & CEO

ConEst Software SystemsConEst Software Systems

ElectricianElectrician

ContractorContractor

EstimatorEstimator

NEC Code ProviderNEC Code Provider

Software Design EngineerSoftware Design Engineer

ESTIMATINGESTIMATING

EDUCATIONEDUCATION

COMMUNICATIONCOMMUNICATION

TODAY’S ECONOMYTODAY’S ECONOMY

Construction Recession

Limited Labor ResourcesLimited Labor ResourcesTo increase productivity...To increase productivity...

OPTIMIZE!OPTIMIZE!

of Late 80s - Early of Late 80s - Early 90s90s

No HelpNo Help

EDUCATIONA Small Investment...

...An Astronomical Return

Productivity Increase

little23%

none31%

moderate46%

EDUCATIONEDUCATION = PRODUCTIVITY!PRODUCTIVITY!

Upjohn Institute For Employment Research, 1992

Education Increases ProductivityEducation Increases Productivity

0 10 20 30 40 50

Percentage Response

none

little

moderate 46.2 x 4%

23.1 x 2%

30.8 x 0%

2.3%ExpectedExpected IncreaseIncrease =

If we assume “moderate” = 4% and “little” = 2%

Upjohn Institute For Employment Research, 1992

AnAn EducatedEducated WorkforceWorkforce

Equals aEquals a

PRODUCTIVEPRODUCTIVEQUALIFIEDQUALIFIED

WORKFORCEWORKFORCE

SECURE THE FUTURESECURE THE FUTURE

•Apprenticeship Training•Vocational Schools•Local Association Apprenticeship Education•Workshops•Seminars

FOR MANAGEMENTMANAGEMENT

ANDANDFIELD PERSONNELFIELD PERSONNEL

Use available resources

BUSINESS SMARTSBUSINESS SMARTS

Know Your Company’sKnow Your Company’sStrong Points...Strong Points...

……And Its Weak PointsAnd Its Weak Points

It’s Simple EconomicsIt’s Simple Economics

MarketMarket PROFITABILITYPROFITABILITY

The Ability of Every Company Starts At THE TOP

PresidentPresidentTimely Submittals

Stock Procurement

Field PersonnelField Personnel VS ManagementManagement

Information Flow

What is a Labor UnitWhat is a Labor Unitand How Do We Use Them?and How Do We Use Them?

A Labor Unit is a benchmark A Labor Unit is a benchmark used by a company or an used by a company or an estimator to determine the estimator to determine the labor value of an installationlabor value of an installation

DefinitionDefinition::

A Labor Unit is a BenchmarkA Labor Unit is a Benchmark

• A labor unit is not absoluteA labor unit is not absolute

• A labor unit is a starting pointA labor unit is a starting point

• A labor unit is A labor unit is only a benchmarkonly a benchmark

What makes up a Labor Unit?What makes up a Labor Unit?• Actual InstallationActual Installation 69.0%69.0%• Non-ProductiveNon-Productive 2.5%2.5%• Study PlansStudy Plans 2.5%2.5%• Material ProcurementMaterial Procurement 2.5%2.5%• Receiving & StorageReceiving & Storage 2.0%2.0%• MobilizationMobilization 5.0%5.0%• LayoutLayout 6.0%6.0%• Clean-upClean-up 2.0%2.0%• Punch ListPunch List 5.0%5.0%• Coffee BreaksCoffee Breaks 3.5%3.5%

If three electrical contractors If three electrical contractors produced the same job, would produced the same job, would

all three complete the job in all three complete the job in the same time?the same time?

NONO

How can aHow can astandard set of labor units work standard set of labor units work

for all three companies?for all three companies?

• Study company’s job history Study company’s job history and job costing recordsand job costing records

• The estimator must become The estimator must become familiar with the company’s ability familiar with the company’s ability to produce work compared to the to produce work compared to the labor unitslabor units

• FactoringFactoring

The Successful Electrical The Successful Electrical Contractor…….Contractor…….

• Keeps accurate records of job costsKeeps accurate records of job costs

• Is constantly revising factors Is constantly revising factors

• Uses a standard set of labor units for Uses a standard set of labor units for consistencyconsistency

How can several estimators use the How can several estimators use the same database of labor units if each same database of labor units if each estimator has individual concepts as estimator has individual concepts as

to what the labor unit represents?to what the labor unit represents?

• Units are standard as to listing but individual Units are standard as to listing but individual as to interpretationas to interpretation

• His or Her own interpretation of its meaningHis or Her own interpretation of its meaning

• FactoringFactoring

ExampleExampleTwo estimators are using the same labor unit to Two estimators are using the same labor unit to install a loadcenterinstall a loadcenter

Estimator #1Estimator #1 uses a 4-hr labor unit to uses a 4-hr labor unit to represent the entire installation including represent the entire installation including mounting, terminations, and installation of mounting, terminations, and installation of breakersbreakers

Estimator #2Estimator #2 uses 4-hrs for the panel plus uses 4-hrs for the panel plus labor units for each breaker installed for a labor units for each breaker installed for a total of 6-hrstotal of 6-hrs

Which estimator is correct?Which estimator is correct?

Applying Job Costing FactorsApplying Job Costing Factors

Corrected hrs 2.0Corrected hrs 2.0Corrected hrsCorrected hrs 2.02.0

Estimator #2Estimator #2

Total estimated hrs 6.0Total estimated hrs 6.0

33.3% factor 33.3% factor 0.330.33

Estimator #1Estimator #1

Total estimated hrs 4.0Total estimated hrs 4.0

50% factor50% factor .5.5

Company history documents a 2-hour installationCompany history documents a 2-hour installation

It would be impossible to relate to It would be impossible to relate to all influences that affect laborall influences that affect labor

• Job degree of difficultyJob degree of difficulty

• Installation degree of difficultyInstallation degree of difficulty

• The company’s ability to perform The company’s ability to perform against the labor unitagainst the labor unit

Here are three principal factorsHere are three principal factors

Job Degree of DifficultyJob Degree of Difficulty

Type of projectType of project•ResidentialResidential

•CommercialCommercial

•InstitutionalInstitutional

•IndustrialIndustrial

•SpecialSpecial

NECANECA Labor UnitsLabor Units

XX

XX

XX

InstitutionalInstitutionalSchools, Hospitals, Institutions, JailsSchools, Hospitals, Institutions, Jails

IndustrialIndustrialManufacturing Facilities and Power PlantsManufacturing Facilities and Power Plants

SpecialSpecialSewage & Water Treatment Plants,Sewage & Water Treatment Plants,

Mines & FoundriesMines & Foundries

Most DifficultMost DifficultDifficultDifficultNormalNormal

XX

XX

Construction TypeConstruction TypeResidentialResidentialSpeculation & High-end Homes & ApartmentsSpeculation & High-end Homes & Apartments

CommercialCommercialOffice , R&D, Stores, Malls & TheatersOffice , R&D, Stores, Malls & Theaters

Installation Degree of DifficultyInstallation Degree of Difficulty

• WeatherWeather

• Contractor Contractor

• Sub-ContractorSub-Contractor

• Mounting ElevationsMounting Elevations

• WeightWeight

• OccupancyOccupancy

• DuplicationDuplication

Weather Weather

Labor units are Labor units are established for the most established for the most favorable conditionsfavorable conditions

Temperature variances Temperature variances affect productivity affect productivity

Best appraised based on Best appraised based on training & experiencetraining & experience

Contractor & Sub-ContractorContractor & Sub-Contractor

•Coordinates work well or notCoordinates work well or not

•Responds timely to RFI’sResponds timely to RFI’s

•Keeps a clean & conducive work placeKeeps a clean & conducive work place

Mounting ElevationsMounting Elevations

• Ceiling HeightsCeiling Heights

Today's standard is motorized man lifts Today's standard is motorized man lifts Rolling staging over 10’ add 5% per foot Rolling staging over 10’ add 5% per foot for one ground man & one top sidefor one ground man & one top side

• Floors of a BuildingFloors of a Building1% per floor starting with the 31% per floor starting with the 3rdrd floor floor

WeightWeight

• Obtain weight data on special equipmentObtain weight data on special equipment

• Hours per pound are not consistentHours per pound are not consistent

• Develop criteria using job experience dataDevelop criteria using job experience data

• Equipment manufactures are a good source for Equipment manufactures are a good source for labor requirements on special equipmentlabor requirements on special equipment

OccupancyOccupancy

• The standard labor unit should The standard labor unit should be increased by 50% up to 100 be increased by 50% up to 100 % in occupied areas% in occupied areas

DuplicationDuplication

• Fixtures in the same concentrated areaFixtures in the same concentrated area

• Parallel conduit runsParallel conduit runs

• Multiple conductors in a racewayMultiple conductors in a raceway

• Breakers in the Same Distribution Breakers in the Same Distribution EquipmentEquipment

• Bus duct in one areaBus duct in one area

Company’s Ability to Perform Company’s Ability to Perform Against the Labor UnitAgainst the Labor Unit

• Submittals approved in a timely mannerSubmittals approved in a timely manner• The right material in the right quantities at The right material in the right quantities at

the right timethe right time• Tools & equipment on the job when neededTools & equipment on the job when needed• Drawings are accurate & marked up Drawings are accurate & marked up

including documentationincluding documentation• Job progress properly trackedJob progress properly tracked• Company supported educationCompany supported education• Office provides timely administrative supportOffice provides timely administrative support• Work coordinated with GC & all tradesWork coordinated with GC & all trades

UsingUsing InformationInformation As AAs A

Management ToolManagement Tool

JOB:JOB: 200 Hours200 Hours

MM TT WW ThTh FF

5 5 5 5 5 == 200

INFORMATION

JOB:JOB: ??????? Hours??????? Hours

MM TT WW ThTh FF

6 6 6 6 6 == 240

ManagingManaging WithoutWithout InformationInformation

NONO INFORMATION

JOB:JOB: 200 Hours200 Hours

MM TT WW ThTh FF

4 4 4 6 6 = = 192192

CreativeCreativeInformation ManagementInformation Management

Managing With InformationManaging With Information

Managing Without InformationManaging Without Information

Creative Information ManagementCreative Information Management

M T W Th F

M T W Th F

M T W Th FM T W Th F

5

44

= 200

= 240

= 192192

6

5 5 5 5

6 6 6 6

44 44 66 66

AccuracyAccuracy

EstimatingEstimating ComputersComputersAND

A Natural Fit!A Natural Fit!

Cuts Time in Cuts Time in HalfHalf!!

ComputerizedComputerizedEstimatingEstimating

Computerized EstimatingComputerized Estimating

Communication - Report DevelopmentCommunication - Report Development

ProjectProjectManagementManagement

MaterialMaterialProcurementProcurement

SummarSummaryy

InIn

COMMUNICATIONCOMMUNICATION

COMPUTERIZATIONCOMPUTERIZATION

EDUCATIONEDUCATION

EducateEducateProject ManagersProject Managers

with

Educate EstimatorsEducate Estimatorswith awith a

with

EducateEducateFieldField PersonnelPersonnel

&&

ThanThankkYouYou