Roles Of Direct And Indirect Labor
I responded in an earlier article to a writer asking about an “ideal, one size fits all” estimator and expressed that in my opinion, none probably existed although there are some very good products on the market. I do not endorse specific products so am offering some basic guidelines that I hope will be of assistance in your arriving at a realistic bid.
We need to define some key words. I define DL (direct labor) as all work that is considered “hands on” in servicing the contract. This can include any worker who is performing labor at the site. If you decide to include travel time between sites on the same contract, you can time study how much to include. I do not recommend your calculating travel time to different contract sites in the same way since it may be important to defend your costing elements. What are examples of Direct Labor? I suggest vacuuming, sweeping/dust mopping, dusting, damp mopping, servicing rest rooms, hauling trash, washing windows/glass panels, buffing, burnishing, scrubbing/stripping/recoating, carpet cleaning and any other tasks directly related to servicing the contract.
I define IDLH (indirect labor hours) as any work NOT directly connected with servicing the contract. Examples include supervision, training, payroll, customer visits, quality control inspections, paperwork and other tasks not related to the direct labor involved in work. Some will dispute my definitions and include driving vehicles, delivering supplies, inventory control, laundry, clerical work and other tasks they consider to be directly involved in the contract. That is OK so long as you are consistent in what you define a DLH and IDLH.
Whether you agree with my definitions is not as important as your having your own and consistently going by them so that you can compare outcomes. Consult with accounting to determine what is considered the best approach to take. Remember that most people calculate productivity by dividing the total SF by the total DLH as a baseline for comparison of similar accounts so be consistent so you can have valid comparisons.
Your comments and feedback are always appreciated. I hope to hear from you soon. Until then, keep it clean...
Mickey Crowe has been involved in the industry for over 35 years. He is a trainer, speaker and consultant. You can reach Mickey at 678-314-2171 or CTCG50@comcast.net.