Start with the correct base wage
Use the wage that applies to the worker classification, project location and contract requirement. Confirm whether the project is non-union, union or subject to a federal, state or local prevailing-wage determination.
Add employer burden
Employer payroll taxes, workers’ compensation, unemployment insurance, benefits and other required costs sit above the base wage. The exact burden varies by company, trade, location and insurance experience, so estimates should document the source and effective date.
Build the crew rate
Many activities use a crew rather than one worker. Combine the fully burdened rates for each classification, then add foreman or supervision time where appropriate. Separate equipment operators when their cost is carried with labor rather than equipment.
Convert production into hours
Divide the scope quantity by the expected crew output to calculate duration, then multiply the crew size by working hours. Alternatively, apply labor hours per unit. Access, height, phasing, congestion, weather and occupied conditions may reduce normal productivity.
Check overtime and shift rules
Overtime premiums, second-shift requirements, restricted work windows and travel can change both the hourly cost and the hours required. These conditions should be visible assumptions instead of hidden inside a blended rate.
Validate the installed unit cost
Divide total labor cost by the installed quantity and compare it with company history or a trusted benchmark. Investigate major differences rather than automatically replacing the project-specific calculation.