Using Labor Costs to Inform Better Estimates in Construction

Understanding and managing labor costs is pivotal for winning bids and ensuring project profitability. Zak Krauss and Brandon Manning discuss the importance of labor cost analysis in construction estimating and how it can be the difference between a profitable project and a financial loss.

Labor Costs and Bids – A Dynamic Relationship

Labor costs form a crucial part of construction bids. As Manning explains, estimating labor costs accurately is vital—not just to stay competitive but also to avoid underbidding and suffering losses. This process includes not only calculating the direct costs but also considering potential overruns. “What if he really needs 150 hours?” Manning asks, highlighting the need for a buffer in estimates that accounts for the unexpected.

Krauss emphasizes the different implications of labor costs for general contractors versus subcontractors. For general contractors, it’s about planning and projecting the workforce needed. Subcontractors must delve deeper into the specifics—analyzing how much work a crew can accomplish daily and the cost implications. This detailed tracking ensures that bids are competitive and that they align closely with the crew’s actual performance capabilities.

Both stress the necessity of ongoing analysis and refinement of labor cost estimates. By routinely reviewing project outcomes, companies can fine-tune their estimates for future bids. It’s about collecting data on crew performance, dissecting the hours spent on specific tasks, and using this information to bid more intelligently.

In the video, “Using Labor Costs to Make Better Estimates,” Krauss and Manning share insights into leveraging labor cost data to make more informed bidding decisions. They reveal that the key to successful bidding lies in understanding your crew’s capabilities and costs and ensuring this knowledge informs every estimate. The goal is to bid within a competitive range while safeguarding profitability.

For construction businesses looking to sharpen their bidding strategies and financial foresight, Krauss and Manning’s expertise is invaluable. Reach out to them for guidance on how to incorporate labor costs into your bidding process effectively and use this data to secure profitable projects consistently.