A PRACTICAL GUIDE

TO ESTEMATING
DAYWORK RATES

Bob Jones, FCCA, FCIS, MIMC

International Thomson Business Publishing

London, NW3 3TP.

 Published 1986
This edition published in the Taylor & Francis e-Library, 2005.
“To purchase your own copy of this or any of Taylor & Francis or
Routledge’s collection of thousands of eBooks please go to
www.eBookstore.tandf.co.uk.”
Revised 1988
© International Thomson Business Publishing

ISBN 0-203-21509-5 Master e-book ISBN

ISBN 0-203-27148-3 (Adobe eReader Format)

ISBN 1 85032 010 1 (Print Edition)

A “Building and Construction” Book

 Contents

Introduction Page 1
Chapter 1: Tables of Labour Rates, Turnover and 4
Overheads Analysis, Operative to Staff
Ratios, Sub-Contractors: Labour only
and supply and fix (and their discounts)
Chapter 2: Materials and Plant 11
Chapter 3: Building-up labour rates, Tables of 15
Working Rule Allowances
Chapter 4: The calculation of Daywork rates 36
Chapter 5: Site and office overheads and profit 41
Chapter 6: Additional National Insurance 44

Index 47
 Introduction

When it comes to the addition of costs to the standard

hourly rate bald statements such as 13p for absences,
sickness and time lost through inclement weather, 11p for
the extra cost of non-productive overtime, 100 per cent to
cover site and head office overheads and 5 per cent of
turnover for profit are unacceptable unless they are
supported by detailed calculations capable of being
checked and approved, or disproved.
In this book the foundations of the calculations are
illustrated in tables showing such items as the hours
worked in a year by an operative, compared with the hours
he/she is paid, coupled with detailed descriptions of the
labour-rate build-up with and without overtime, and split
between craft operative and labourer. All these are based
on the current National Joint Council for the Building
Industry wage agreement and working rule agreement.
Tables are used to discuss turnover, site and head office
overheads, profit and operative/staff ratios.
To cater for all eventualities the tables giving the
daywork rates are split into three. Table 2 allows nothing
for overtime, bonus or plus rates, and fares and daily
travelling are provided at their lowest levels, giving and
hourly rate of £9.86, i.e. the addition of 143 per cent to the
standard hourly of £4.05. Table 2A and 2B using the same
basic formula include plus rates and/or bonus and/or
2 A PRACTICAL GUIDE TO ESTIMATING DAYWORK RATES

Working Rule Allowances at increasing levels giving rates

with and without overtime from £10.25 to £13.74 per
hour.
In all rates calculated in this book, 100 per cent of the
total prime cost of labour is included for site and head
office overheads and 5 per cent of turnover for profit. All
rates can be easily adjusted to allow for different levels of
recoveries of site and head office overheads and profits.
It is important to note that an addition of 10 per cent to
the cost of materials is equivalent to 2 per cent on
turnover, or 11.1 per cent of labour. As the profit on
turnover recommended in the book is 5 per cent, (27.78
per cent on labour) any profit added to materials is
unlikely to achieve an adequate recovery of site and head
office overheads or provide a realistic profit.
There are varying views about the importance of the
dayworks labour rate to a major contract. There are those
who consider that dayworks are small and unimportant in
relation to a large contract, and others who have
discovered from experience that dayworks can amount to
significant sums. Some believe that since site and head
office overheads are already covered in the contract price
there is no necessity to recover them again. Another
viewpoint is that site and head office overheads and profit
should be fully recovered on all labour costs, wherever they
arise, because dayworks can erode the time taken to
complete a contract, and cause additions to time-based
site and head office overheads, “Time” being one of the
fundamental elements of profitability.
In addition an important factor in the profitability of a
construction organisation as a whole is the employment of
as much productive labour as is practicable and
justifiable, because it is on the basis of labour, whether
directly employed or “labour-only subcontractors”, that site
and head office overheads are recovered, and a profit made.
At those times labour is in short supply, its use should
be put to maximum effect, and dayworks could interfere
not only with the programme of “Contract A” on which it is
currently employed, but also that of “Contract B” to which
it would have moved had not dayworks on “Contract A”
postponed the transfer.
 INTRODUCTION 3

Nothing is included in examples for lodging or distant

travelling allowances and fares. The current lodging
allowance is £12.12 per night. Lodgings for 12 nights,
spread over two working weeks (78 hours) amounts to £1.
86 per hour. To the foregoing must be added return fares
home each fortnight, say 70p per hour, plus up to 8 hours
each way travelling allowance at the basic rate (say 58p
per hour when spread over 78 hours) and the employer’s
contribution to National Insurance on 58p at 9 per cent
(say 5p)—a total of £3.19 per hour.
National Insurance increases when gross emoluments
reach £155 from 9 per cent to 10.45 per cent. The increase
is applicable to the whole of the gross pay, not merely the
excess over £155. Chapter 6 explains and Table 23
illustrates the effect of this additional cost to the employer
ranging from 5p to 13p per “Worked hour”.

A CORRECT LABOUR RATE IS IMPORTANT

Too high a labour rate could lose estimated work.
Too low a rate could eliminate profits.
A 1p error is equivalent to £17 per annum per
operative, and £1,700 for 100 operatives.
An error of 10p is equivalent to £170 per operative and
£17,000 for 100 operatives.
 Chapter 1
TABLES OF LABOUR RATES
TURNOVER AND OVERHEADS
ANALYSIS OPERATIVE TO
STAFF RATIOS SUB-
CONTRACTORS: “LABOUR
ONLY” AND “SUPPLY AND FIX”
(AND THEIR DISCOUNTS)

Even 50 and more years ago labour-only sub-contraetors

were widely if not exclusively employed on development
sites. In recent years the practice of employing labour-only
sub-contractors on contract work has increased
considerably.
At the present time a bricklayer labour-only sub-
contractor in the home counties working normal shifts can
earn over £300 a week, and in London £350 per week.
Even more can be earned by carpenters and wet
plasterers.
This brings their hourly dayworks costs to a basic £7–£9
per hour before adding site and head office overheads and
profit. Additions of 61.1 per cent of overheads and 11.1 per
cent for profit would bring their dayworks rates to the
exhorbitant totals of £12 to £16 per hour.
Site and head office overheads must be recovered in one
way or another, and a profit made. There are few means in
which this can be done for dayworks when employing
labour-only sub-contractors, and the best answers seem to
be to give a fixed or measured-work price for variations
whenever possible or employ direct labour on dayworks.
The usual profit provision in respect of “Supply and fix
subcontractors”, whether nominated or domestic, is no
more than a discount of 2.5 per cent. This is equivalent to
 TABLES OF LABOUR RATES TURNOVER AND OVERHEADS ANALYSIS 5

TABLE 1: TURNOVER, SITE AND HEAD OFFICE OVERHEADS,

PROFIT AND OPERATIVE/STAFF RATIOS

12 times 2.5 per cent, equals 30 per cent per annum in

terms of interest/discount earned.
In Table 1, sub-contractors account for 40 per cent of
turnover, and when the 2.5 per cent is applied to that 40
per cent, sub-contractor’s discounts provide the equivalent
of 1 per cent of turnover (40×.025 equals one), or 5.6 per
cent of labour costs.
Sub-contractors discount is a reward for prompt
payment. Whether it is taken into consideration in
reducing the overheads recovery on labour by 5.6 per cent
in computing the percentage additions for site and head
office overheads and profit is for decision by each
construction organisation.
The above percentages and those which follow are
applicable to the full prime costs of labour, including
employer’s National Insurance, public holidays, bonuses,
6 A PRACTICAL GUIDE TO ESTIMATING DAYWORK RATES

plus-rates, travelling allowances, fares, and any other

Working Rule Allowances to which operatives may be
entitled in the circumstances of a particular contract. They
are not to be applied to the “Standard Hourly Base Rate”.
Some contractors treat as site overheads items which
others include in their head office overheads, e.g. contract
managers, site agents, surveyors, buyers, storekeepers and
clerks.
In this book site and head office overheads are combined,
which should provide better comparisons between the
large and smaller contracts.
In all construction work a reasonable average ratio of
operatives to staff is between 5 and 6 to 1. General foremen
would be included among operatives, otherwise working
directors and all other site and head office personnel would
be included as staff. In the case of jobbing, small works
supervisors might be included with operatives, not only for
the purposes of calculating the ratio, but also for charging
clients.
In national contractors organisations the operative to
staff ratio can sometimes be lower than 3 to 1. Where the
ratio differs from between 5 and 6 to 1, it is usually due to
the inclusion in staff of personnel only indirectly concerned
with construction, such as architects, negotiators, property
salesmen, personnel, marketing, training and safety
officers, plant and joinery managers, and among
operatives, services staff such as mechanics, off-site
drivers and joinery machinists and bench hands.
Pro rata to their value, the administration attaching to
dayworks is considerably more than for measured work.
There are variation orders, instructions to and the
supervision of operatives, requisitions and buying,
dayworks sheets to be drafted, checked, fair-copied and
signed, agreements with clients representatives, and the
extra clerical and accounting procedures which are
involved. It follows that the overheads attaching to
dayworks are akin to those for small works and jobbing,
for which typical overheads recovery rates are:—

• Work up to a total prime cost of £100…125 per cent.

 TABLES OF LABOUR RATES TURNOVER AND OVERHEADS ANALYSIS 7

TABLE 2: EXAMPLE OF A DAYWORK RATE FOR A CRAFT

OPERATIVE (WITHOUT OVERTIME)

• Work with a total prime cost between £100 and £1,000…

100 per cent.
• Work with a total prime cost between £1,000 and £10,
000… 75 per cent.

and an average of 100 per cent is used in compiling the

dayworks rates in Tables 2, 2A and 2B. This compares
with the 61.1 per cent for major works, being 33.3 per cent
head office overheads plus 27.8 per cent variable site
overheads.
The 100 per cent is applied to the total prime cost of
labour, including the employer’s contributions to National
Insurance, public and annual holiday pay, non-productive
8 A PRACTICAL GUIDE TO ESTIMATING DAYWORK RATES

pay, and all working rule allowances. In the case of jobbing

it is applied also to the costs of Supervisors.
TABLE 2A: EXAMPLES OF CRAFT OPERATIVE DAYWORK
RATES: WITHOUT OVERTIME

Line 5: Additional National Insurance. When gross emoluments

reach £155 the Employer’s National Insurance contribution
increases from 9% to 10.45% ON ALL EMOLUMENTS (See
Chapter 6 and Table 23). The Line 5 calculation is on each week’s
work of 39 “Paid hours” at the above plus rates. 9% is already
accounted for in Lines 1 to 4, and the addition in Line 5 is at the
uplift of 0.0145% on the whole pay.
 TABLES OF LABOUR RATES TURNOVER AND OVERHEADS ANALYSIS 9

TABLE 2B: EXAMPLES OF CRAFT OPERATIVE DAYWORK

RATES WITH OVERTIME AND PLUS RATES, BONUSES AND/
OR WORKING RULE ALLOWANCES

Line 6: The calculations are for 52.5 “Paid hours” at the basic
rate of £2.845, with the plus rates in Line 4 added. Then the 39
hours GMB (£15.015) are added to give a “Gross Pay” total for the
week. That total is multiplied by 1.045 per cent, being the
increase in National Insurance (The 9 per cent is in Lines 1 and 4
already). The increase is then divided by 48 “Worked hours”.
10 A PRACTICAL GUIDE TO ESTIMATING DAYWORK RATES

The profit margin in Table 1 is 2 per cent of turnover,

and is equivalent to 11.1 per cent of labour. Such low
margins may be unavoidable in highly competitive
situations, but are inadequate for dayworks, on which a
margin of 5 per cent of turnover is considered reasonable,
i. e. 27.8 per cent of labour.
As a percentage of turnover (2.25 per cent) the cost of
absenteeism, sickness, inclement weather time and non-
productive overtime is calculated on the following basis:
13p per “worked hour” for absenteeism, sickness and
inclement weather time; 11p per “worked hour” for non-
productive overtime, being the difference between the cost
of a craft operative who works overtime and one without
overtime. (Tables 4 and 5.)
13p plus 11p equals 24p and the effect of this is as
follows:—in a contract of £1m the all-inclusive labour costs
could be £180,000. This sum could employ a mixed labour
force of 20 craft operatives and labourers (three craft
operatives to each labourer) at an average cost to the
employer, with overtime, of £9,000 each.
The “worked hours” of an operative including overtime is
2,051 hours per annum (see Table 1). If 2,051 is
multiplied by 20 operatives they together work 41,020
hours.
 Chapter 2
MATERIALS AND PLANT

The “Definition of prime cost of daywork carried out under

a building contract” provides that direct purchases of
materials shall:—

• include costs of delivery to the site

• allow cash discounts of up to 5 per cent to the
contractor
• be net of trade discounts (which the contractor should
allow to the building owner)
• be exclusive of VAT, provided it is recoverable by the
contractor: otherwise VAT forms a part of the cost
chargeable to the client.

Materials ex stores are to be charged at current market

price plus any appropriate handling charges (which are not
defined).
If materials constitute 20 per cent of turnover (see
Table 1) then a 10 per cent addition to them is equivalent
to 2 per cent of turnover, or 11.1 per cent of labour costs.
Thus if 10 per cent is added to materials, then a reduction
of 11.1 per cent could be made in the percentage added to
labour costs for site and head office overheads and profit,
in Tables 2, 2A, 2B and 3.
12 A PRACTICAL GUIDE TO ESTIMATING DAYWORK RATES

TABLE 3: PERCENTAGE ADDITIONS TO £3.22 (BASE

RATE PLUS GUARANTEED MINIMUM BONUS) TO COVER
LABOUR OVERHEADS SITE AND HEAD OFFICE
OVERHEADS AND PROFIT

Plant dependent on its type and the use to which it is

put could be provided for in various places in a priced Bill
of Quantities, e.g. Bill rates, Preliminaries or Site
Overheads. The “Definition of Prime Cost of Daywork
carried out under a building contract” states:—

“Where plant is specifically brought on site for day

work the prime cost of that plant is recoverable under
Section 5. Where plant which is on site is used for
daywork then contractors may have been asked in the
tender documents to agree that the prime cost of such
plant will be in accordance with the RICS schedule of
plant charges, which refers solely to rates of plant
which is on site. Where contractors are required to
recover prime cost under the RICS Schedule they
should bear in mind the need to compensate for
changes in the rates shown in the Schedule. Such
TABLE 4: SUMMARY OF COSTS PER “WORKED HOUR”
MATERIALS AND PLANT 13
14 A PRACTICAL GUIDE TO ESTIMATING DAYWORK RATES

compensation could take the form of quoting a

specific percentage increase on the RICS rates or,
alternatively, including for this when arriving at the
percentage on plant prime cost. Each RICS rate
should be considered carefully, bearing in mind it
may be used many months later to value prime cost
on daywork, the need to ensure by an adequate
percentage that it will more nearly reflect plant costs
when incurred on daywork is obvious”.

The effect of a percentage addition on the daywork rates

for plant costs in reducing the percentage addition on
labour (for site and general overheads and profit) will for
most contracts be difficult to pre-assess.

Road Haulage Workers Agreement

The agreement between the Building Employers
Confederation and the Transport and General Workers
Union, with effect from the 27th June, 1988, is:—

The gross vehicle weight is to include that of a trailer,

where applicable.
Halfpennies are to be raised to a whole penny, where
applicable.
Death benefit and accidental death benefit is up to £6,
500.
Subsistence allowance is £15 per night.
 Chapter 3
BUILDING-UP LABOUR RATES
TABLES OF WORKING RULE
ALLOWANCES

It is stated elsewhere in this book that construction

operatives are no different to those in other industries,
services and professions: they are sometimes absent from
work through sickness or for any number of other reasons.
These absences will vary from person to person, trade to
trade, area to area and company to company. There are
construction organisations which maintain records of
absenteeism, and in some cases the incidence has proved
extensive.
The effect of sickness and absenteeism, of course, is that
certain fixed overheads such as public holidays, annual
holiday stamps and the CITB levy are borne by a smaller
number of working hours than would be the case if there
were no absences.
The first requisite to building-up a reliable hourly cost of
labour is to determine the average hours of work per
annum to be expected from operatives. Table 6 shows how
the standard working hours, 39 per week, equals 2,028
per annum, then reduce to 1,704 after deducting annual
public holidays and example provisions for sickness,
absenteeism and inclement weather time.
Table 5 shows that the cost of such absenteeism, etc.
(on the basis of Table 6) is a substantial 13p per hour. It
follows that it is of fundamental importance to calculate
within each company the incidence of sickness,
16 A PRACTICAL GUIDE TO ESTIMATING DAYWORK RATES

TABLE 5: ADJUSTMENT OF THE “STANDARD HOURLY BASE

RATE” TO “WORKED HOUR”
(To take into account 35 hours lost through inclement weather,
and 63 hours lost due to sickness and absenteeism)
A. THE STANDARD HOURLY BASE RATE

B. ADJUSTMENT OF STANDARD HOURLY BASE RATE TO 1,

704 “WORKED HOURS”

absenteeism, and inclement weather time, as a

prerequisite to building-up a reliable estimate of the hourly
cost of Labour.
 BUILDING-UP LABOUR RATES TABLES OF WORKING RULE ALLOWANCES 17

TABLE 6: THE CALCULATION OF “WORKED HOURS" (Without

Overtime)

Table 7 is an example of overtime hours, worked and

non-productive. Table 7 is an extension of Table 6.
Table 8 shows how the figures in Tables 6 and 7
reconcile with one another, and goes on to agree them with
the 1,802 hours used in the calculation of the “standard
hourly base rate” which is set out in Table 5.
Table 4 cannot be prepared until Tables 9 to 12 are
completed. Table 4 then shows the annual and hourly
costs of a:—

• Craftoperative (withoutovertime) £4.33

• Craftoperative(with overtime) £4.44
18 A PRACTICAL GUIDE TO ESTIMATING DAYWORK RATES

TABLE 7: CALCULATION OF “OVERTIME HOURS"

• Labourer (without overtime) £3.70

• labourer (with overtime) £3.78

In addition to summarising the costs of craft operatives

and labourers, Table 4 shows that the cost of non-
productive overtime for a craft operative (in the examples
provided) is 11p per “Worked hour” (£4.44 less £4.33). The
cost of overtime for labourers is 8p (£3.78 less £3.70).
Table 9 contains a straightforward calculation of the
cost of “Worked hours” and “Non-productive overtime” at
the current National rates of pay. In these calculations:—
 BUILDING-UP LABOUR RATES TABLES OF WORKING RULE ALLOWANCES 19

TABLE 8: THE RECONCILIATION OF “WORKED HOURS” AND

“PAID HOURS ”, AND GMB AND SICKNESS RULES

• the “Worked hours” and “Non-productive overtime” are

taken from Tables 6 and 7.
• Guaranteed Minimum Bonus is calculated on 35 hours
inclement weather time, as well as 1,704 “Worked
hours”
• Inclement Weather Time is not costed in this Table at
basic rates, but only at GMB rates. GMB is costed at
Basic Rates in Table 10.

The totals of Table 9 are carried to Table 4 (summary of

costs per “Worked hour”).
The next stage is to enter lines 2 to 9 of Table 10. Line 1
cannot be inserted until Lines 2 to 10 are culculated, and
TABLE 9: COSTS AT BASIC RATES PLUS GUARANTEED MINIMUM BONUS OF “WORKED HOURS” AND
“NON-PRODUCTIVE OVERTIME” (Add 19.5p per week for London and Liverpool)
20 A PRACTICAL GUIDE TO ESTIMATING DAYWORK RATES
 BUILDING-UP LABOUR RATES TABLES OF WORKING RULE ALLOWANCES 21

TABLE 10: LABOUR OVERHEADS FROM THE PAYROLL

22 A PRACTICAL GUIDE TO ESTIMATING DAYWORK RATES

TABLE 11: NON-PAYROLL LABOUR OVERHEADS

TABLE 12: BASIS OF CALCULATIONS FOR NATIONAL INSURANCE, EMPLOYER’S AND PUBLIC
LIABILITY INSURANCES, AND THE PROVISION FOR REDUNDANCY PAYMENTS
BUILDING-UP LABOUR RATES TABLES OF WORKING RULE ALLOWANCES 23
24 A PRACTICAL GUIDE TO ESTIMATING DAYWORK RATES

until Table 12 (Basis of Calculation of National Insurance)

is completed.
TABLE 13: LABOUR OVERHEADS ON PLUS RATES, BONUS
PAYMENTS, AND TRAVELLING AND OTHER WORKING RULE
ALLOWANCES

Enter into Table 12 the basic pay totals (to be found in

both Tables 4 and 9). Then enter from Table 10 the tool
money, sick pay, public holidays, guaranteed time and
travelling allowances. Total Table 12, and apply to the
totals:—
 BUILDING-UP LABOUR RATES TABLES OF WORKING RULE ALLOWANCES 25

TABLE 14: WORKING RULE ALLOWANCES: GENERAL

• Employer’s contributions for National Insurance @ 9 per

cent. Carry this amount to Line 1 of Table 10 (but see
Chapter 6)
• Employer’s and Public Liability Insurance @ 1.5 per
cent. Enter the amount in Table 11
• Redundancy Provision at 1 per cent, to be entered in
Table 11.
26 A PRACTICAL GUIDE TO ESTIMATING DAYWORK RATES

TABLE 15: WORKING RULE ALLOWANCES PAYMENT FOR

WORK IN DIFFICULT CONDITIONS HEIGHT, DEPTH, DIRTY,
NOISY AND PERCUSSIVE MONEY

Table 10 can now be totalled, and that total copied in

Table 4 (Summary of Costs per “Worked hour”).
Enter into Table 11, “Non-payroll Labour Overheads”,
the CITB Levy, total the Table, and carry that total to
Table 4 (Summary of costs per “Worked hour”).
When bonuses, plus rates, travelling allowances, etc. are
paid additional to the amounts provided in the foregoing
rates, not only does that extra cost arise, but also a further
 BUILDING-UP LABOUR RATES TABLES OF WORKING RULE ALLOWANCES 27

11.5 per cent of that extra cost, to cover additional National

Insurance, employer’s and public liability insurances, etc.
(See Table 13).

TABLE 16: WORKING RULE ALLOWANCES EXTRA PAYMENTS

FOR CONTINUOUS SKILL AND RESPONSIBILITY AND FOR
INTERMITTENT RESPONSIBILITY
28 A PRACTICAL GUIDE TO ESTIMATING DAYWORK RATES

Tables 14: Working Rule Allowances: General, 15:

Payment for work in difficult conditions, 16: Extra
payments for continuous skill and responsibility and for
intermittent responsibility and 20: Travel allowances and
fares, summarise the available allowances which could
affect the Dayworks rate.
Table 17 lists head office overheads which relate to
personnel, motor cars, premises and general. It also lists
categories of staff and gives outlines of other major
overheads. See also chapter 5.
Table 18 summarises those headings in the “Definition
of prime cost of daywork carried out under a building
contract” which it is intended should be covered by a
percentage addition to the “Standard Hourly Base Rate”.
Table 19 provides an example schedule of site overheads
which are based on the length of time taken to carry out
the work, i.e. excluding “once-for-all” costs such as
mobilisation and demobilisation.
Without the reminder of a list such as this it may be
difficult to envisage the range of costs which the
 BUILDING-UP LABOUR RATES TABLES OF WORKING RULE ALLOWANCES 29

percentage addition needs to embrace in respect of Site

Overheads.
TABLE 17: HEAD OFFICE OVERHEADS
30 A PRACTICAL GUIDE TO ESTIMATING DAYWORK RATES
BUILDING-UP LABOUR RATES TABLES OF WORKING RULE ALLOWANCES 31
32 A PRACTICAL GUIDE TO ESTIMATING DAYWORK RATES

This list could be extended considerably, dependent on the size

and ramifications of each construction organisation. Note in
particular the exclusion of bank charges and interest paid.

It has been stated elsewhere that though many of the

headings may appear to relate only to large contracts, not
a few of the services, techniques and operations listed are
needed also on smaller sites, where they are carried out by
visiting staff who are required to wear a number of
different hats, and whose costs are usually charged to
head office overheads.
 BUILDING-UP LABOUR RATES TABLES OF WORKING RULE ALLOWANCES 33

TABLE 18: SCHEDULE OF ADDITIONS TO THE “STANDARD

HOURLY BASE RATE" FOR INCIDENTAL COSTS, OVERHEADS
AND PROFIT
34 A PRACTICAL GUIDE TO ESTIMATING DAYWORK RATES

TABLE 19: AN EXAMPLE SCHEDULE OF SITE OVERHEADS

WHICH ARE BASED ON THE LENGTH OF TIME TAKEN TO
CARRY OUT THE WORK, I.E. EXCLUDING “ONCE-FOR-ALL”
COSTS SUCH AS MOBILISATION AND DEMOBILISATION
NOTE: Only larger contracts would require full-time staff and much of
the equipment and services listed in the schedules below. However,
smaller contracts, even minor works demand many of these skills,
equipment and services and they are of necessity performed by versatile
staff, often charged not to the contract but to Head Office Overheads. In
such instances the latter are increased in cost and Site Overheads
correspondingly reduced.
 BUILDING-UP LABOUR RATES TABLES OF WORKING RULE ALLOWANCES 35

TABLE 20: DAILY TRAVEL ALLOWANCE

 Chapter 4
THE CALCULATION OF
DAYWORK RATES

Two methods are considered here for calculating Labour

Rates. Both need to be carried out separately for craft
operatives and for labourers plus for the statistics shown
in Lines 1 to 11 of Table 21 and in both cases the
calculations could be carried out for a building business as
a whole, or for individual sites, or regions or areas.
The first method is to calculate rates per “Worked hour”
in the manner described in Chapter 3 and on the forms
illustrated in Tables 4 to 13. For this purpose pro formas
could be prepared and photo-copied (no special printing
should be necessary) and also it unlikely calculations
would be required “Without overtime”.
The second method known as the payroll method is
contained in Table 21. It is intended to’be additional to
and a check on method one, and is nothing more than an
extract of the payroll and unlikely to take as much as half
an hour a week to prepare after experience of it and
provided the payroll is divided into sections to facilitate the
production of the required figures, i.e. separate payroll
sections and totals for craft operatives; labourers; and
others (from general foremen to apprentices, and all in
between who are not craft operatives or labourers) showing
absenteeism, sick days and non-productive overtime
clearly on the payroll (or on the time sheets from which the
payroll was prepared).
 THE CALCULATION OF DAYWORK RATES 37

Table 21 is intended to be produced weekly by those

responsible for payroll preparation. Pro formas of the table
could be prepared and photo-copied.
Photo-copies of the completed forms could be made for
distribution to those concerned, as the information they
contain is of considerable interest.
The cost per “Worked hour” in Line 22 is valid only after
building-up the cumulative records for a period of several
months, during part of which there have been public
holidays. Line 22 shows:—

• a cost per “worked hour” of £5.39 in week 42, because

there was that week a public holiday, and some
guaranteed time was paid
• the average cost up to and including week 41 was £4.28
• the £5.39 is smoothed out, in the cumulative f igures, to
£4.30 in week, 42, and £4.31 in week 43. This is due to
the cumulative effect of the figures of weeks 1 to 41 (in
the brought forward totals, in columns 3 and 4).

Next list/add the hours of absenteeism and sickness,

separately, from the payroll or from time sheets.
After inserting these in Lines 2 and 3, add them to the
cumulative total (column 3) and insert the answer in
column 7, e.g. 50 in column 6 added to 1,830 in column 3,
equals the 1,850 in column 7.
The averages are “Hours per operative for the year to-
date” and are obtained by dividing the hours by the
number of operatives, e.g. Line 2, column 7, shows 1,850
lost through absenteeism, i.e. by 98 operatives in 43
weeks, divide the 1,850 by the average number of
operatives (98, in column 8), the answer to the nearest
whole number is 19, in Line 2, column 8.
Sick days, converted into hours, are treated in the same
manner as absenteeism.
list/add the “paid hours” on the payroll, and insert the
answer in Line 5, e.g week 42,4,200 hours, placed in
column 5.
Make cumulative totals by adding the hours in column 5
(4,200) to the brought forward total in column 3 (162,191)
and place the answer in column 7 (166,391).
38 A PRACTICAL GUIDE TO ESTIMATING DAYWORK RATES

To obtain the average “Paid hours per operative per week”

in colums 4, 6, 8, etc. two divisions are required:—

• Line 5, column 7, equals 166,391

• Divide by the number of weeks (42) equals 3,961.69
• Dividing 3, 961.69 by the average number of men (98,
Line 1, column 8) gives the answer 40 to the nearest
whole number. The 40 is placed in Line 5, column 8.

Hours deducted from “Paid hours”

List/add from the payroll (or time sheets) separately, in
hours:—

• Public holidays
• Non-productive overtime
• Guaranteed Time

and insert the answers into line 6, 7 and 8 respectively, in

the column for the week, e.g. Week 42, column 5.
Add these amounts to those brought forward, in column
3, and place the answers into column 7.
If it is required to know the average hours per operative
for non-productive overtime or guaranteed time, divide the
cumulative total hours (e.g. 4077, Line 7, column 7) by the
cumulative average number of operatives (98, Line 1,
column 8) to obtain 41.60, then divide 41.60 by the Week
number, 42, to gain the answer of one hour per operative
per week.
“Worked hours” are obtained by deducting the hours in
Line 11 from those in Line 5, in all columns.
To obtain the average number of “Worked hours” per
operative divide the worked hours, e.g. 152,874 in column
7, Line 12 by the average number of operatives—98 in Line
1, column 8 to obtain 1,559.94, then divide 1,559.94 by
the Week number (42) to optain 37, which is placed in line
12, column 8.
The costs in Lines 13 to 16 should be taken directly from
payroll totals:—

• Line 13, Taxable Pay

• Line 15, Employer’s National Insurance
 THE CALCULATION OF DAYWORK RATES 39

• Line 16, Holiday Pay Stamps

Line 17 is for non-payroll overheads listed in Table 11 at a

cost of 12p per “Worked hour”. Multiply the “Worked
hours” in Line 12 by 12p, and place the answers into Line
17.
Total columns 13 to 20 and place the answers into Line
21 (Total costs).
Divide the total costs (Line 21) by the “worked hours”
(Line 12) to obtain an average hourly cost in Line 22—both
per week and cummulative for the year to-date.
Where lodging allowances, and/or distant travelling
allowances and/or distant fares and expenses are included
in the costs in Lines 13 to 15, they would upset the
average. Therefore:—

• the distant travelling hours should be listed/added and

placed in Line 9 as a deducation from “Worked hours”.
• the costs of distant travelling hours (At the operative’s
rate) plus National Insurance on that cost, plus the
costs of fares and expenses should be entered as a minus
in Line 19.

Changes in pay and conditions in the building industry for

the most part take effect at the end of June of each year.
This is a good time to start each year afresh with Week No.
1.
In the ensuing weeks, until a reliable cumulative average
is built-up, care needs to be taken in using the Dayworks
Rate.
 40 A PRACTICAL GUIDE TO ESTIMATING DAYWORK RATES

TABLE 21: LABOUR STATISTICS CRAFT OPERATIVES

 Chapter 5
SITE AND HEAD OFFICE
OVERHEADS AND PROFIT

Overheads consist mainly of directors and staff

emoluments and services to them. Typical constituents are:
—

The foregoing excludes interest paid, which varies too

much to include in an average such as the foregoing.
It is apparent that overheads are in the main of a fixed
nature, and can be substantially reduced only by
dispensing with staff. They can be recouped only by
carrying out work, and it is important to the continued
existence of a construction organisation and the welfare of
all who are employed in it that all such work embraces an
ovehead recovery. Table 17 provides a list of the main
headings of head office overheads. As expressed elsewhere
in this booklet, what to some construction organisations is
a site overhead is to others a head office overhead. When
site and head office overheads are combined, they should
42 A PRACTICAL GUIDE TO ESTIMATING DAYWORK RATES

prove to be on much the same scale in both types of

organisation.
Table 19 is an “example schedule of site oveheads which
are based on the length of time taken to carry out the work,
i.e. excluding “once for-all” costs such as mobilisation and
demobilisation”. This list is a reminder of the extent of site
services, whether they are provided by direct postings of
staff to a site or visits by head office staff.
As site overheads are determined separately for each
contract, it is stated in the introduction of this book that
any work additional to the contract merits a pro rata
recovery of those site overheads which vary with time.
Dayworks may or may not extend the contract time, but
they might cause extensions of the periods in which staff
and equipment are posted to a site, or call for extra visits
by head office staff which may not otherwise have been
required. They might also reduce savings in contract time
which might otherwise have been made.
The considerable annual total of head office overheads
must be fully recovered before any possibility of a profit
can arise. Profit, in any e vent, is the interest on the money
invested in the organisation, and it is always a speculation
whether the profits (i.e. interest) from competitive contracts
will prove to be more or less than those which could be
earned by investment, say, with a Building Society. It is
likely that adequate interest will not be earned if justifiable
head office overheads are not recovered to the proper extent.
In Table 1 there is an example of turnover which shows
as a part of its build up:—
Preliminaries and Site Overheads which are:—Of a “one-
off’ nature, 5 per cent; variable with time, 5 per cent; head
office overheads, 6 per cent, and these total to 16 per cent
of turnover, or 88.8 per cent of labour costs.
However, by deducting the 5 per cent for “one-off’ site
overheads, the remaining 11 per cent of turnover is
equivalent to 61.1 per cent of laobur costs.
In Tables 2, 2A, 2 and 3 the addition to labour costs for
site and head office overheads (combined) is 100 per cent,
considerably more than the minimal 61.1 per cent referred
to in the preceding paragraph. The reason for this
suggestion, as stated in Part One of this booklet, and in
 SITE AND HEAD OFFICE OVERHEADS AND PROFIT 43

Table 1, is that the administrative costs attaching to

Dayworks are more akin to those which apply to Small
Works than those applicable to large contracts, Therefore
it is suggested an overhead recovery is needed which is
comparable to the average obtainable on Small Works, as
described in Chapter 1, i.e. 100 per cent.
 Chapter 6
ADDITIONAL NATIONAL
INSURANCE
When taxable pay exceeds £140 per
week

When an employee’s taxable pay reaches £155 additional

National Insurance is payable by the employer not only on
the excess above £155 but on the entire taxable pay. Up to
a weekly gross pay of £155, National Insurance is at the
rate of 9 per cent on all pay. When gross pay reaches
£155, the National Insurance rate becomes 10.45% on
all pay.
The foregoing £155 includes not only paid hours, but
also bonus, plus rates, travelling time, tool money and all
Working Rule Allowances except those not taxable (e.g.
Fares).
Table 22 shows the range of National Insurance
contributions.
Throughout this booklet the “non-contracted-out” rates
have been used.
“Contracted-out” rates are for employees who are in any
approved company pension scheme.
Table 23 illustrates the effect of paying National
Insurance at 10.45 per cent, instead of 9 per cent, when
Gross Taxable Emoluments in a week reach £155.
In this book the calculations already contain 9 per cent.
Table 23 shows how much needs to be added to the costs
per “Worked hour” in the book for Gross Taxable
Emoluments ranging from £160 to £350 per week. It does
this for weekly “Worked hours” of 39, 42, 44, 46 and 48.
 ADDITIONAL NATIONAL INSURANCE 45

TABLE 22: NATIONAL INSURANCE RATES

*10.45% of all earnings

*10.45% of all earnings

† Used in this booklet

It will be observed that the additions to the hourly rates

are substantial, ranging from 6p to 13p.
46 A PRACTICAL GUIDE TO ESTIMATING DAYWORK RATES

TABLE 23: ADDITIONAL NATIONAL INSURANCE

GROSS TAXABLE PAY includes plus rates, bonus, tool money,

public holiday pay, daily travelling allowance, and all other
taxable Working Rule Allowances.
All throughout this book, “Worked hours” excludes non-
productive hours.
 INDEX
Absenteeism costs 13, 19
Additional National Insurance
51
Additions to standard hourly
rate 5
Building-up rates 19
Calculating daywork rates 45
Costs at basic rates 25
Costs per worked hour 17, 20,
46
Daywork additions 26
Daywork costs 45
Daily fares 43
Daily travel allowance 43
Demobilisation costs 26
Depreciation 9
Drivers’ wages 18
Employers’ liability 24
Employers’ liability insurance
24
Employers’ National Insurance
24
Extra payment for skill 9, 26
GMB 23
Gross labour costs 48
Guaranteed time 46
Head office overheads 7, 8, 35
Holiday pay stamps 27
Hourly base rate 11
Inclement weather costs 20, 24
Labour only sub-contractors 6
Labour overheads 16, 27, 39
Labour rates (without
overtime) 11
Labour rates (with overtime) 12
Labour statistics 48
Materials and plant 15
Materials percentage additions
15
Mobilisation costs 26
National Insurance calculation
29
National Insurance (additional)
51
Non-payroll overheads 28, 47
48

Non-productive overtime 13
Non-taxable time 47

Operative ratios 9
Overheads 27, 38, 49
Overtime hours 22

Paid hours 46
Payroll 17, 45
Plus rates 30, 39
Prime cost, definition of 15
Prime cost of laobur 5, 8, 10
Public holidays 19, 27

Rates build-up 25
Redundancy provision 29

Sickness costs 11, 23

Site overheads 7, 8, 26, 39, 41
Staff ratios 9
Standard hourly rates 20, 39
Sub-contractors discounts 8

Taxable time 13
Travel allowances 27, 30, 39,
43
Travelling hours 27
Turnover 8

Variation orders 9

Worked hours 13, 17, 23, 45

Worked hours (calculations)
13, 21
Working Rule Agreement 32,
33, 34
Working Rule Allowance 30, 31