When estimating the cost of a construction project, it’s essential to understand the typical construction labor costs involved. Labor costs can vary depending on the type of construction project, but some general guidelines can help you calculate these costs when estimating your projects.
Typical Labor Costs For Construction Projects
According to the construction cost data from RSMeans, labor costs usually make up between 20-35% of the total construction project costs.
Labor costs can be broken down into several different categories, including:
- Wages and salaries
- Payroll taxes
- Employee benefits
- Workers’ compensation insurance
The average hourly wage for construction workers varies depending on the type of construction work. For example, according to the Bureau of Labor Statistics, the average hourly wage for general laborers is $17.98, while the average hourly wage for electricians is $27.57.
Always consider the type of construction workers you’ll need for your project and factor in their hourly wages when estimating labor costs.
How to Calculate Labor Costs for Construction Projects
Take the following steps to calculate your labor costs for construction projects.
Estimate the Timeframe of the Project
Construction projects can often take longer than you initially think, so it’s essential to factor in some extra time when estimating the project’s labor costs. A good rule of thumb is to add 10-20% more time than you think the project will actually take.
This will help ensure that you don’t end up underestimating the labor costs and coming up short later on.
Multiply by Hourly Wages
Once you have an estimate of the number of hours the project will take, you can start multiplying that by the hourly wages of the construction workers you’ll need. As mentioned above, these hourly wages can vary depending on the type of construction work.
For example, if you estimated the project will take 50 hours to complete, multiply it by the electrician’s hourly wage of $27.57, which would give you an estimated labor cost of $1,378.50 for that portion of the project.
Factor in Payroll Taxes
In addition to hourly wages, construction companies also have to pay payroll taxes for their employees. These taxes can include Social Security, Medicare, and unemployment insurance. The exact percentage of payroll taxes will vary depending on the state you’re in, but they typically range from 4 to 8 percent.
For example, if you estimated the project will take 50 hours to complete, and you’re paying your employees $20 per hour, you would need to factor in an additional 4 percent for payroll taxes. This would bring the total labor cost for that portion of the project up to $1,404.
Plan for Paid Time Off
Construction workers are entitled to paid time off, which needs to be factored into the labor costs as well. Depending on the size of your construction crew, this could end up being a significant portion of the overall labor costs.
For example, if you have a construction crew of ten workers and they each take two weeks of paid vacation per year, that’s twenty weeks of paid leave that needs to be accounted for in the labor costs.
Add the Cost of Benefits
In addition to wages and salaries, construction companies also have to pay for employee benefits, such as health insurance and retirement plans. These benefits can add up, so make sure to factor them into the labor costs when estimating a construction project.
The cost of benefits will vary depending on the type and size of the construction company, but they typically range from 10 to 30 percent of total labor costs.
For example, if the total labor cost for a construction project is $100,000, the company would need to budget an additional $10,000 to $30,000 for employee benefits. This would bring the total labor cost for the project up to $110,000 to $130,000.
Don’t Forget about Training Costs
Whenever you hire new construction workers, there will be a training period where they learn the ropes and become productive members of the construction crew. These training costs need to be factored into the labor costs as well.
The cost of training will vary depending on the type of construction work and the experience level of the workers, but it typically ranges from $500 to $1,000 per worker.
For example, if you’re hiring ten new construction workers, the training costs could range from $5,000 to $10,000.
As you can see, a few different factors need to be considered when estimating the labor costs for construction projects. By taking the time to understand these factors, you’ll be able to more accurately estimate the labor costs for your construction projects.