Jobsite labor is typically one-half of a contractor's expense on a project. Naturally that will vary with the type of material and equipment specified. Your supervision, office coordination, value engineering and prefab capabilities can double those costs or cut them in half. We will show you how to score those other critical functions in this year's future articles, but now we want to score your jobsite employees.
Our oldest and most widely used system is “piece work.” Employees are paid by the number of pieces they install. Their supervisor counts or measures their work and turns in documentation of those quantities to their office. Good employees love it!
Keeping score is automatic, but what you do with that score can be quite complicated:
- 1. You can pay your lead man as a labor-only subcontractor. He can then hire and pay each of his helpers as he determines his or her performance. You must have proof that he pays all taxes, worker's compensation and insurance coverage, as well as time-and-a-half over 40 hours per week.
2. You can have the helpers on your company's payroll and the lead man establishes their rates.
3. You can establish the helpers' rate and the lead man chooses which employee he wants in his crew.
With piecework and all jobsite scoring, we highly recommend color-tracking. Each employee uses a different color pencil to color and date the items he or she installed on the jobsite plans or shop drawings. In addition to tracking his or her progress, this creates the ever-so-critical familiarization with the blueprints and puts that employee's name on his work.
Don't Use EstimatesFar too many contractors measure and score their jobsite employee's productivity by comparing weekly cost codes from their time sheets with labor budgets from their estimate. This system is very unfair and demotivating. Webster's dictionary properly defines the word “estimate” as a “guess.” That is all anyone can do before the project is actually being built.
There are dozens of influential unknown factors that can greatly affect jobsite productivity: poor supervision, poor scheduling, lack of cooperation, bad weather conditions, ground water, rock, unstable earth, poor deliveries, improper tools or equipment, inspection delays, poor design, theft and vandalism, labor shortages, etc.
Our “8-for-8” scoring system also uses your estimated labor budgets as a guideline, but we are able to accurately incorporate all of those negative factors into every single day's evaluations. Each morning, before starting to work, your employees value-engineer today's task with their experienced foreman to determine that “better way.” They then establish a realistic “8-for-8” goal for that one day's work.
At the end of that day, your foreman counts or measures what each employee performed (including quality) with that employee. They will agree that was eight hours worth of production, six or seven hours, or nine or 10 hours. Your foreman simply documents a small six, seven, eight, nine or 10 beside that employee's hours on his or her time card. I hope you are also color-tracking and dating their performance on your jobsite blueprints.
These time cards will go to your payroll department first to process the weekly paychecks. They will then go to whoever administrates human resources and wages. At the end of each month you can total these numbers to accumulate their average performance:
- If that average is near to eight hours work for your eight-hour paycheck, you and your employee will agree he is being paid properly for what he performed.
- If the productivity is closer to nine or 10 hours work, you need to raise the wage accordingly.
- If his productivity is only six or seven hours work for your eight-hour paycheck, you do not cut his wages. You simply discuss the situation and give him one more month to improve or receive a wage reduction.
Of course, your foreman should be an experienced craftsman with the ability to properly judge employees' work because he or she has “walked a mile in those moccasins.”
Establishing WagesAs you may have guessed, we also have a large majority of contractors who do not know or understand what an eight-hour wage should be. Average wages vary throughout the United States and Canada, depending on local economy.
Typically, wages are higher in cities than in rural areas and higher in the northern states, but there are many exceptions. Your wages for each and every employee on your payroll can be determined by one very simple factor - the cost to replace them. If you lose that employee, you will soon discover what it costs to replace him or her. You need to consistently shop around your market area, just as you do with everything else that you purchase, to be sure you are paying a fair and equitable wage.
Your “cost to replace” wage for union employees is determined by collective bargaining. You cannot pay one union employee more or less than that rate unless he or she is a foreman. Your only reward for above-average performance is to provide more hours and, one hopes, year-round employment.
On prevailing rate Davis-Bacon projects, that posted wage is only the minimum that you must pay. You are permitted to pay incentive wages to encourage and compensate for above-average productivity. Likewise with registered apprentices. Without a scoring system, you can easily understand why above-average employees would have no reason or incentive to consistently produce or stay on your payroll.
In addition to productivity, you should keep score on each employee's willingness to learn and teach new skills, which can be tracked with a database skill inventory. The employee's contributions to value-engineering, availability for extra work hours, attendance at company functions and recruiting good employees, should also be recognized, appreciated and documented. This all requires very little extra effort on your part, but promotes very much extra effort on their part.