Cost of Man Day

 Dear Readers,

Let us discuss how to calculate the Man Day cost. MD refers Man Day; it is a unit of measurement for workforce.

Eight-Hour working is called One shift and one person working one shift (8 Hours) is called one man day. 

If the work gang comprises 10 workmen and working one shift is equal to 10 MD and if the gang works 6 days then it is 60MD.

In construction industry over time has existed. It is subject to the nature of job. Normally 3 Hours overtime is regular in all sites. However, benefits will not be applicable on overtime wages.

During MD rate calculations terminal benefits are subject to the duration and local site environment

MD rate arrives from

             ABW (Average Basic Wages)

             Over Time Wages 

             PF & Admin. Charges of employer portion

             Terminal benefits 

There are several laws in India which govern the maximum overtime hours allowed in India and also provide for an overtime calculation formula in India. Based on the industry one works for; the overtime payment rules vary. Some workplaces may be governed by the central laws while the other might be a subject of state laws.

Levels of a Project Schedule

 Dear Readers,

The project's success relies on various activities, with effective scheduling being crucial. A project schedule refers to a tool used to communicate the timeline of a project, including its tasks, dependencies, assigned resources, and milestones. It serves as a roadmap for the project.

Key components of a project schedule are Project Milestones, Timeline, Tasks, Dependencies, and resources. Schedules are typically developed from the top down, like a pyramid. Starts from Level-1 (L1), Level-2 (L2), and will go up to Level-5 (L5).

L-1 Schedule = (Level 1) Management/Milestone Level Schedule 

L-2 Schedule = (Level 2) Master Schedule 

L-3 Schedule = (Level 3) Project Level Schedule 

L-4 Schedule = (Level 4) Control Level Schedule 

L-5 Schedule = (Level 5) Detail Level Schedule or Look-ahead Schedule

L1 may be a short table of milestones corresponding to "Top Management Summary." 

L2 is a Master Schedule. It provides an integral plan of the Project activities for Project management. It is a "Project Management Summary." 

L3 is a Project Level Schedule. It is a summary of activities from the level 4 schedule 

L4 is a Control Level Schedule. It covers the whole project and doesn't go into the task-level detail, but should provide enough of a breakdown for clients to see what is happening at every step.

L5 is a Detail Level Schedule. It shows the lowest level of detail necessary to complete the Task. These schedules are temporary documents based on the 'Look-ahead' schedule and used to coordinate work in an area. 

The schedules above help communicate the project plan and timeline to all stakeholders. They guide the project team through the sequence of activities and deadlines during execution, while also serving as a baseline to track progress, spot delays, and make adjustments as needed.

Common formats used to prepare and monitor the project schedules are Gantt chart, WBS & CPM

Gantt chart: A popular visual representation that uses a horizontal bar chart to show the timeline of tasks and their dependencies. 

Work Breakdown Structure (WBS): It is a hierarchical chart that breaks down a project into smaller, more manageable tasks, helping to map dependencies. 

Critical Path Method (CPM): A technique to identify the longest sequence of tasks that determines the minimum project duration. Any delay to a task on the critical path delays the entire project. 

Thank you for reading this article. I hope you found it beneficial and helpful as a beginner in the construction industry. If you found this article useful, please don't forget to share it with your friends and colleagues.

Overtime (OT) for Construction Works

Dear Readers,

Construction Industry is the major employment creator for the (manpower) workforce. It is directly linked with country growth and infrastructures development. To meet the project schedule, extended working hours are the integral part of construction activities. 

If work time exceeds the fixed hours, employees be entitled to overtime payment rules for such hours or part of hour. This is paid at a higher rate than regular working hours. Also an Employee can work different work shifts according to their working hours, if available. But, the essential point is that employee need to be productive and complete their tasks then only overtime will be considered.

There are several laws in India which govern the maximum overtime hours allowed in India and also provide for an overtime calculation formula in India. Based on the industry one works for, the overtime payment rules vary. Some workplace may be governed by the central laws while the other might be a subject of state laws. Knowing employee rights may empower the working class.

In Construction Industry practice 11 hours daily work time inclusive of overtime and excluding lunch break. a person is entitled to be paid overtime wages twice his ordinary rate of wages in case he/ she is required to work for more than 9 hours a day or more than 48 hours in a week. The wages mentioned here is equivalent to the basic wages along with allowances, but does not include any bonus or other overtime wages. In case a worker is paid on a ‘piece rate’ basis, time rate will be calculated on the basis of previous month and the amount of overtime wages will be calculated accordingly. 

In any case, the overtime payment rules do not regard the gross salary. But if there is no statutory obligation and the employer wishes to reward the hard-working employees voluntarily, overtime payment rules in India do not restrict the same. In such a case, whether overtime is paid on basic or gross in India is the employer’s choice.

Rate Analysis for Construction Works (Part-2)

 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

Terminal Benefits of Construction Labour

Dear Readers,

Even though, the construction industry is the second largest employer in India, after agriculture. The casual nature of jobs in the unorganized construction sector can lead to poor working conditions, low salaries, and less job security. Construction projects are often located in remote sites, can be unpredictable, and there is a high chance of encountering unforeseen problems like weather. 

Terminal benefits are final entitlements of an employee upon termination of an employment contract. It is nothing but Money paid to an employee whose employment has been terminated because of a closedown or downsizing. 

Below Table shows the industrial practice of Terminal benefits for construction Workmen. A contingency has been included, which will be tailored to your requirements.

Please note that, if you leave the company on your own accord before the expiry of the notice period, you will not be eligible for retrenchment compensation as per the retrenchment notice already issued.

For costing, estimating, or rate analysis purposes, terminal benefit calculations are crucial to avoid significant crises. Calculating necessary cost provisions periodically and maintaining them can prevent financial crises and last-minute surprises.

For More Details about Basic Wages Click ABW

For More Details about Man Day & Man Hour Click Here

For More Details about Labour Welfare Click Here

For More Detail about Labour Law in India Click Here