A buddy of mine is seriously considering jumping into the small business foray. I have been trying to give him all the resources that I can.
I remember a thread a while ago (maybe back at WebX?) about burden, and someone had a very comprehensive list of their burden breakdown. It may have been Sonny or Mike Smith, but maybe I’m just getting old. If anyone has this handy could you post or email to me. Thanks.
Jon Blakemore
Replies
Do Jon a favor and post it!
I looked for the same one .. for the same reasons ...
and although lots good info was provided ..
never found the one post that I was looking for ..
Bet we have the same one in mind ...
Jeff
Buck Construction Pittsburgh,PA
Artistry in Carpentry
you inspired me to update mine.. here's the latest...
this is a Quattro Pro file.....so i'll convert it to a readable format...
Labor Burden & Payroll Costs
item % subtotal
Social Security .062
Medicare .0145
Fed. Unemployment .001 .0775
RI Unemployment .0856
RI Job Development .0021
RI TDI .0003 .088
Workmen’s Comp
Carpentry (5645) .1883
Const.Supt(5645) .048
Xpns Constant($160/$114K) .001404 .237704
less Experience Mod.($1970/16419) -.11998 -.11998
General Liability(985/47000) .020957
Auto Ins/Payroll($4423/$114K .038798
Downtime: 20hrs/2000hrs
Training,shop maintenance .019841 .02
5 days /252 days
Warranty Work .02
Payroll & Office support
clerical /field labor .05
Job supplies(252 days x 1 hr/day) .063
Supervision (252 days x 1 hr/day) .063
________________________________________________________
total % burden to be added to FIELD LABOR 52.6%
hope that helps.. a lot of these items are arbitrary... but certainly defensible
Mike Smith Rhode Island : Design / Build / Repair / Restore
Thanks Mike, that was exactly what I was looking for.
I see that you are up to 53%? Did you tack on a few points as per Sonny? I thought you were at 47% or something like that.
Anyways, thanks again.
Jon Blakemore
2 years ago i was at 47... last year i was at 50... i think '04 will be the year of the 53%.....
did you see that article by Irv Chasen in JLC... about distributing Overhead ot labor ?
Irv was one of my original gurus on pricing for homebuildingMike Smith Rhode Island : Design / Build / Repair / Restore
Jon I do recall Sonny making a post like you are describing way back when and I wouldn't be at all surprised if Mike has done that too. I'll leave it for those two to try and dig up their old posts on the topic. I gave a quick search through both here on line and through what I've saved to my disk and couldn't find their stuff without a more intensive search.
However I would highly recommend reading two JLC articles by Shawn McCadden: Calculating Labor Costs February 2002 (which is all about calculating burden) and Margin Math 101 December 2002 (which is about the markup/margin you apply after you have figured out burden (variable overhead) to recover for you fixed overhead (cost of doing business). And they are both Free so you don't need to be a JLC online suscriber to read them.
If you buddy has a computer you might want to have him check out this too. I made a freeware download of a Burden Cost Calculator that parallels the calculation methods that Shawn McCadden wrote about in his Calculating Labor Costs article.
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Good stuff.
Estimating...the most dangerous job in construction.
I downloaded a copy of your spread sheet program--Very Nice!
However, the General Liability...Mine is not 2.? % Why no change for this field?
In general the one thing I find most fascinating is the Productivity Factor. In brief, the difference between the amount of time I guy gets paid---40 hrs per week and the time you can actually apply his efforts to a job---about 34-36. The other time is spent getting tools out, bathroom breaks and small stuff time not directed at the job/project.
I generally use 85% as a factor. Not to add more questions to this boiling caldron of questions, but are you aware of a good rule of thumb?
Jack.
Put all your eggs in one basket...and watch that basket! Mark Twain.
Got Pegs?-"....
However, the General Liability...Mine is not 2.? % Why no change for this field?" Holy cow Jack! That's like that because that is a mistake! A bug! That field was supposed to be green colored and modifiable and was at one time. Somehow the other week when I fooled around coloring the fields to help indicate which ones were locked and which ones we open for data entry I must have locked that one up by mistake. Thanks for spotting that. I just fixed it (took less than a minute) but I have to run out now so I'll have to upload the fixed versions to the web site this evening when I get back. I'll Prospero mail ya to let ya know when the fixed versions are uploaded.
Thanks again for spotting that. I guess no one else has said anything since 2.1% is sort of close enough and thankfully doesn't make a huge dent in getting the figure to use for a burdened cost whereas workers comp does make a big difference. I'm working on a Fixed Overhead Margin calculator to go along with the Burden calculator and when I get the two working together and completed the user will have the option of recovering for General Liability as part of Labor Burden or as part of Fixed Overhead/Margin since depending on the company one method might be more accurate or better than the other.
"In general the one thing I find most fascinating is the Productivity Factor. In brief, the difference between the amount of time I guy gets paid---40 hrs per week and the time you can actually apply his efforts to a job---about 34-36. The other time is spent getting tools out, bathroom breaks and small stuff time not directed at the job/project.
I generally use 85% as a factor. Not to add more questions to this boiling caldron of questions, but are you aware of a good rule of thumb?"
I've actually been researching that where ever and whenever I get a chance to. Both in my company, other companies we work with , my consulting clients and just reading and researching stuff where ever I can find it. What I have found is there is no hard fast rule we can follow but if you were to look at a histogram of what works for various contractors you find the majority fall into the range of 75-85%. Trades like electrical and plumbing make up the lower part of that group (and can go even lower) while carpentry generally makes up the top part of that distribution.
There is also a variation relating to how much non-billable "management" a person performs. Back in 2002 I personally was working at something like just 29% of my time being billable task labor. A close friend of mine who I worth with closely his billable time in 2002 was something like 2 or 3%. All he does is sales and management, zip in the way of production. That 2-3% accounted for time he was on a few of his more difficult projects laying them out with a transit.
The one hard thing that is absolutely true however is that no one, no trade operates at 100% efficiency so if someone is basing their figures on that they are cheating or screwing themselves out of some money somewhere.
Did you see the stuff in the topic here Billable hrs to non-billable hrs ratios. I started that trying to see what other people were experiencing or using for productivity ratios but I have a hunch there weren't that many posts because there are a lot of contractors who have never even looked at that as being important!
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No problem on the GL %. I'd love to see your fixed cost sheet when complete!
The 2.1% is a little higher and it seems close. Mine however(and I'm not complaining)is around $375 per person/carpenter. Insurance is, and most likely will be, a pain in the hammer holder for ever. As a friend of mine says....If no one had insurance, no one would need insurance....As a Timber Frame shop our productivity and billable time is a little tricky. To us all time is Billable---some to a T&M Job, some to a Bid Job and some to the shop or "sharpen the saw time".
How about a little chat on how Productivity applies to Carpentry...field, or in my case, the shop & field. I would begin by recommending a book by ELIYAHU M. GOLDRATT called THE GOAL. This can be a little long winded so get the Tapes for easy listing in the car. It discusses the concept of Production & Capacity. And the balance thereof. In short, you CAN NOT balance them. You should however shoot for production at around 80-85% of Capacity. (I used to be in manufacturing) This way you can absorb spikes in the schedule and grab the "out of the blue" hot jobs that come along. As for factors, I use 2000 hours as a base year and wrap the other 80 into non productive time & vacations/holidays. (50 weeks x 40 hrs per week). I have also divided the hours into 10ths, which makes the math easier. So a day might look like this:
Start time: 8.0 (nobody gets to work at 8 and starts working at 8:01)
Set up time .2 (get tools out, plan/assign guys to tasks)
Lunch .7 (30 minutes is too short, 60 too long)
Clean up .3 ( put tools away, sweep up, THINK about the next day)
Go home...after whatever made sense to do that day. Some days are not all 8's.
Just the above (while simple) gives 125 hours of overhead time per year.
Well, I'm just rambling, but you get the idea.
Question: In my case, perhaps yours, would you direct bill travel time from the shop to the customer site? Say on a T&M project. (sure you could account for it in a bid.)
Jack
jack.... about two years ago we used to have running book reviews on business..
i think Sonny introduced the"The Goal".... anyways... interesting book.... lot's of good books surfaced in those discussions...
anyone remember " who moved my cheese", "the millionaire next door", "think and grow rich", " the e-myth"... and one of my favorites...
"Guerilla Marketing"Mike Smith Rhode Island : Design / Build / Repair / Restore
Yup. Good stuff. I've not read most of them--The E-myth is top shelf if you get it---but I have heard of them.
One I highly recommend that I just finished is The Working Life, the promise and betrayal of modern work. by Joanne Cuilla. (check the spelling of her)
This book outlines the concept of work and how we as a cultural world evolved to the 8-5 Monday to Friday routine.
Working as a craftsman has it's ups and downs----but it's the life for me. In the spirit of Guerilla Marketing---"My job is to help the customer give us all their money".
Did you find my cost/time perspective on the mark?
Be well.
Jack
yes .. i've used 1600 hours production vs. 2000 paid for quite some time now..(80%)
. the missing 400 hours most always shows up on the time card... and i don't begrudge paying it.. it's my job to keep the efficiency up... i just think it's like the fog of war.. especially in remodeling...
i mean is 80% good or terrible.... am i lazy and incompetent? are we better organized that our competition or worse ?
hmm.. how about .. " what it is is what it is " and just bid the jobs accordingly
Mike Smith Rhode Island : Design / Build / Repair / Restore
Mike,
"hmm.. how about .. " what it is is what it is " and just bid the jobs accordingly"
Great advice. Too many try to change the facts, or ignore them. They are fighting an uphill battle... while on the down escalator. Collect your data and charge accordingly. That's the only way to do it.
Jon Blakemore
LOCATING THE FILE
Hi,
I'm clicking on the link you provided and it's bringing me to an error page. Can you provide me the link for the spreadhseet. I can't wait to check it out.
Thanks,
Penny
Penny
That post you used the link from was written in 2004.
However, Jerrald Hayes is still alive. See if there isn't a contact button at that Paradigm 360 site. It's Jerralds site.