Masonry Magazine June 1999 Page. 10
Man-Hours & GR's
On the jobsite, value comes in many different forms. First, there's the value associated with the actual amount of time that your worker is on site, performing his task. This value is commonly known as man-hours. Man-hours are the amount of time expressed in hours that it takes a worker to perform a particular job. For instance, an electrical estimator might assign 1 1/2 man-hours to each duplex receptacle that is installed. If there are 30 receptacles shown on the plan, the estimator multiplies the 30 (the quantity) times the 1 1/2 (1.5) times his hourly billing rate for that trade (let's use $40/hr) to get a direct labor cost of $1,800 for installing receptacles. He continues on assigning man-hour units to different work items such as switches, light fixtures, etc. until he eventually compiles his total direct labor cost for the job.
Another value at risk out on the site are general requirement (GR's) costs. GR's is the (very real) cost to perform work out in the field that's not accounted for in the direct material and labor estimates. These values are items such as supervision, mobilization in and out, trucking and freight, temporary utilities, phone bills, and much more. Strict discipline and control needs to be exercised by all workers in the field to insure that these GR costs don't get out of hand and escalate into profit-killers. So, armed with these definitions, let's examine a few ways that the profit line item can be squandered in the field.
Productivity and Profit
Let's discuss the relationship between man-hours and profit. Suppose an estimator calculates that his carpenter will take seven man-hours each to install a frame, door, and the all of the door's hardware. Let's also assume (for the sake of argument) that our estimator is experienced and has done his homework - gathering man-hour estimates from industry standards and his company's own experience and historical data - and that his estimate is a reasonably correct.
Well, you probably see where this is going. Once on site, our carpenter actually took 81/2 MH's instead of the seven estimated. No big deal - it's just a 1 1/2 hour difference we'll make it up. Well, did I mention that there were 92 of these doors? Or that our estimator (and his company) has long committed to the owner at the original quoted (lump-sum) price and can't ask for more money? In the blink of an eye we watch (92 doors X 1.5 ΜΗ X $34.00/hr) $4,692 march right out the door (sorry - bad pun).
Searching for Solutions
Now, you don't need to be a mathematical genius to see that this is no way to make money in construction. But what do you do? Well, like so many things in life, there's no one simple solution to controlling jobsite profitability. Many factors come in to play that affect the overall profit motive and a true solution is actually a lot of little solutions. Often, the contractor's most effective weapon lies in the ability of the superintendent and/or construction manager to be able to recognize, address, and (hopefully) correct what I like to call "profit-depleting environments." Profit-depleting environments are those situations (and atmosphere) that offer fertile