Developing Labor Units

Labor-Unit Manuals

You must purchase a comprehensive labor-unit manual that contains at least 10,000 labor units. Excellent labor-unit manuals are available in both book form and electronically from NECA and www.MikeHolt.com. Also, be sure to stick to labor units shown in a single manual for the entire job because they are developed in a coordinated manner.

There is no perfect set of labor units that can be applied to all jobs by all electrical contractors. With experience and historical data, you will develop techniques to help you adjust the labor units so they represent your productivity under specific job conditions.

How to Develop Your Own Labor Units

You will really not develop your own labor units, what you will develop is the “labor-unit adjustment” you will apply to adjust the labor units you are using. To determine your “labor-unit adjustments,” compare the estimated hours of a job against the actual number of hours it took. After tracking a few jobs, you will learn what your “adjustment” is for the next job, based on the labor units that you are using.

Author’s Comment:?If you do not manage your job properly, your actual labor hours will likely exceed the estimate. If your labor-unit adjustment reflects your inefficiency, your bids will not be as competitive as they can be.

Your Labor Units as Compared to Your Competitors

Productivity in the installation of electrical equipment is affected by many factors, and the most significant is project management. If the actual labor exceeds the estimate, the primary cause is usually a deficiency in project management. This is because management determines the labor budget, the level of supervision, and whether the labor force is skilled and motivated enough to be sufficiently productive. Management is also responsible for having the proper tools and material on the job at the right time.

• Project Management Information: The estimate must provide the estimated labor hour/cost budget for each phase of the job (slab, rough in, trim). With this information, the electricians in the field have a basis to know how many hours it should take to complete a given portion of the project. If you and the field workers do not know how long it should take to complete a project, you will never know if your labor is productive, and you will not be able to move the project to completion in a profitable manner. It is also a good idea to assign tasks to your workers that they like to do and at which they excel. They will be happier and more productive.
• Labor Skill Level: Labor units are based on the assumption that highly trained, skilled, and motivated electricians are completing the task and your customers expect as much. Some electrical contractors “save money” by using an unskilled and unmotivated labor force (which is less productive and more prone to costly errors), while other electrical contractors cultivate a highly skilled and motivated team that will get the job done. The labor cost of any on the job training (OJT) is your responsibility and those costs should not be passed on to your customers. The skill and motivation of your labor force will affect your labor productivity. You know the saying, “You get what you pay for.”
• Training: Do you have an ongoing training program? Do you send your employees to school to learn about changes to the National Electrical Code? Are your field and office staff taught and shown ways to become more productive and customer responsive? If you fail an inspection, do you review the Code violations with the electricians so they will not make the same mistakes again? Be sure your employees are properly trained in advance in all aspects of their job including safety, the proper use of tools, the NEC, and efficient work practices. The investment in training is offset by increased labor productivity, reduced down-time due to accidents or injuries, and reduced callbacks or rework.
• Experience: With experience, workers can complete a project more quickly. If you estimate jobs with which you have experience, you should have a more competitive labor unit, as opposed to jobs with which you have little or no experience.

Example: In tract housing, experienced electrical contractors can beat the labor units used in this textbook by as much as 40 percent and still make money, whereas a commercial electrical contractor (having never done houses) will be lucky to break even, without any labor-unit adjustment.

• Material and Tools: To complete a project efficiently, you must have the material and tools, and all pertinent information, on the job when they are needed. If they are not, then your labor force will be wasting your money trying to find something to do. Whose fault is this? Remember, labor units are based on a skilled electrician utilizing the most current labor-saving tools. If you do not provide proper tools and the training on the safe use of those tools, your labor force will not be as productive.

Author’s Comment:?Make sure the tools are always properly maintained and are in a safe working condition.

• Supervision/Project Management: If you want to make money, be sure you use a qualified management team to manage the job according to the estimate. Your managers need to remain conscious over the overall job schedule and able to communicate and coordinate with other trades and developer management.

Knowing Your Competitors’ Labor Units

It does not help you to know the labor units your competitors use because your style of management, your organizational strengths and weaknesses, and the skill of your labor force are all unique to your company. To be competitive, you must continue to strive to improve efficiency and effectiveness as an electrical contractor. Do not worry about your competitors, you have enough problems of your own to work on.

The above content is extracted from?Mike Holt's Electrical Estimating Program.

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Mike Holt is an author, businessman, educator, speaker, publisher and?National Electrical Code? expert. He has written hundreds of electrical training books and articles, founded three successful businesses, and has taught thousands of electrical code seminars across the US and internationally. His company, Mike Holt Enterprises, has been serving the electrical industry for over 40 years, creating and publishing books, DVDs, online training and curriculum support for electrical trainers, students, organizations, and electrical professionals.?

Mike has devoted his career to studying and understanding the?National Electrical Code?and finding the easiest, most direct way to share that knowledge with others. He has taught over 1,000 classes on over 40 different electrical-related subjects to tens of thousands of students. His knowledge of the subject matter, coupled with his dynamic and animated teaching style, has made him sought after from companies like Generac, IAEI, IBEW, ICBO, NECA, and Fortune 500 companies such as IBM, Boeing, Motorola, and AT&T. He is a contributing Editor for?Electrical Construction and Maintenance?Magazine (EC&M) and formerly Construction Editor to?Electrical Design and Installation?Magazine (EDI). His articles have been seen in?CEE News,?Electrical Contractor?(EC)?International Association of Electrical Inspectors?(IAEI News),?The Electrical Distributor?(TED) and?Power Quality?Magazine (PQ).