EA5: The Role of Labor Productivity in Construction Estimating

Why labor hours matter more than labor rates

In construction estimating, many new estimators focus almost entirely on material pricing — but labor is usually the most variable and risky part of the estimate. Labor costs can make or break profitability, especially in self-perform scopes like concrete, drywall, carpentry, and sitework.

The key is understanding labor productivity.

What Is Labor Productivity?

Labor productivity is a measure of how much work a crew can complete in a given time, typically expressed as:

• Labor hours per unit (e.g. 0.18 labor hours per SF of drywall)

• or Units per labor hour (e.g. 5 linear ft of pipe installed per hour)

This tells you how long a task takes — and therefore, how much it costs.

Labor Productivity vs Labor Rate

Many beginners make the same mistake:

“My labor rate is $65/hour, so I’ll multiply that by the crew size.”

Wrong.

The rate is important — but the hours are everything.

Example:

• Task A takes 10 hours at $55/hr → $550

• Task B takes 3 hours at $85/hr → $255

The higher labor rate is more cost-effective because productivity is improved.

Where Do Productivity Rates Come From?

Estimators can source productivity benchmarks from:

• RSMeans labor tables

• Historical project records

• Union labor standards

• NECA / MCAA / SMACNA productivity data

• Crew Time Sheets from past jobs

• Internal estimating databases

Great companies track their own labor performance — and get stronger every year.

Factors That Affect Labor Productivity

Labor productivity is never fixed — real-world conditions influence it:

• Weather (heat, cold, wind, rain)

• Overtime fatigue

• Trade stacking

• Rework

• Accessibility

• Long travel paths

• Scaffold or lift work

• Poor coordination

• Material delivery delays

• Drawing changes

• Working shifts or nights

• On-site working space

If you only price labor by a standard rate, you’re estimating a perfect world.

And construction is never perfect.

How to Apply Labor Productivity in an Estimate

1. Start with a base rate From RSMeans or historical data

2. Adjust for:

• Project type

• Height of work

• Access

• Schedule pressure

• Weather season

• Labor availability

3. Calculate total labor hours

Example – installing metal studs:

0.025 hours/SF × 22,000 SF = 550 labor hours

4. Multiply by labor burdened rate

550 hours × $58/hour = $31,900

Then add:

• Overhead

• Profit

• Risk allowances

Now your estimate reflects reality, not assumptions.

Pro Tip from Estimating Academy

When reviewing subcontractor bids, don’t just compare dollar amounts.

Ask them:

“How many labor hours did you carry?”

If they can’t answer, the number is not reliable.

We teach students to reverse-engineer

Sub bids based on labor productivity.

It’s one of the fastest ways to:

✔ Catch mistakes

✔ Spot low-ball numbers

✔ Protect your GMP