Dear Readers,
This is continuation of my previous post.
Basic Components of Rate Analysis is L+M+P and OHP shall be added further.
L = Labour
M = Materials
P = Plant & Machinery
OHP = Over Head & Profit
Let us discuss about calculation of Labour cost. Labour cost always denoted in the name of Man Day cost " MD Cost". Man Day Costs consists of ABW, Over time charges and Terminal Benefits. While calculating labour wages, we should always consider the terminal benefits. It is directly linked with basic wage.
For Labour wages, it is always preferring to consider minimum wages declared by state government or central government, which is followed by the particular project.
Generally, government declare / revise the minimum wages every six months.
Labour wages are categorized as follows
High Skilled (Millwright Fitter, Fabricator, Foreman, IBR Welder etc.,)
Skilled (Fitter, Carpenter, Mason, Grinder, Gas Cutter, Rigger etc.,)
Semi-Skilled (Khalasi, Driller, Asst. Fitter etc.,)
Un Skilled (Helper, Male Coolie etc.,)
Generally, wage hike will be 3% subject to inflection and other government factors
Based on the above factors wages to be considered in rate analysis. (If the duration is more than six months, take the average wages consider the wage revision)
If the particular work duration is 20 months, then it may take two revisions
Consider 3% revision on basic wages every time and take the average of 3 rates.
If the privilege rates are higher than government minimum wages, then you may consider market rate and workout the average.
From the above example it is noticed that present rate of High skilled rate is Rs. 338.96, However, for rate analysis purpose we may consider Rs.349.23.
To determine the labor cost, it is essential to understand the Average Basic Wages (ABW) and Terminal Benefits
To know more about ABW Click Here.
To Know more about Terminal Benefits, Click Here
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