Be sure to calculate the man hour costs before hiring a crew for a flat-rate project.
Labor costs include wages paid to workers for doing a certain amount or hours of work. Often you may need to make a choice between contractors when one company explicitly quotes an hour rate while the other proposes a flat rate to complete the same amount of work. To properly compare such offers and find out the best deal, you need to calculate costs per man, per hour. As an example, calculate such costs if three men accomplished a project for a flat rate of $15,120 working seven business days, eight hours a day.
Instructions
1. Multiply the number of days by the number of working hours per day to calculate the total number of hours. In our example, the number of hours is 7 days x 8 hours/day = 56 hours.
2. Multiply hours by the number of workers to compute a man-hour value. In our example, man-hours needed to complete the project is 56 hours x 3 men = 168 man-hours.
3. Divide the total labor cost by the man-hours value calculate the man-hour rate. In this example, the man-hour costs is $15,120 / 168 man-hours = $90 per man-hour.
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