Calculating Labor Burden for HVAC Installation Projects

All,

Please review and let’s start moving forward with achieving the below steps. 

Sammie and Patsy, is this something we can set aside some time to get started on? Can we move forward with the “plug in” we need for Sage?

Calculating the burden labor rate for a mechanical contractor involves considering various factors and costs associated with employing labor. Here is a numerical order to help you calculate the burden labor rate for your company:

1. Determine Direct Labor Costs: Calculate the total cost of direct labor, including wages, salaries, and any other compensation paid to your employees.

2. Calculate Payroll Taxes: Determine the amount of payroll taxes you are required to pay for your employees. This includes Social Security, Medicare, and federal/state unemployment taxes. Calculate the percentage of payroll taxes based on your jurisdiction’s regulations.

3. Include Employee Benefits: Consider the cost of providing employee benefits such as health insurance, retirement plans, paid time off, and any other benefits offered by your company. Calculate the total cost of these benefits as a percentage of direct labor costs.

4. Account for Workers’ Compensation Insurance: Determine the cost of workers’ compensation insurance, which provides coverage for work-related injuries or illnesses. Calculate the workers’ compensation insurance premium as a percentage of direct labor costs.

5. Include General Liability Insurance: Consider the cost of general liability insurance, which provides coverage for damages or injuries caused by your company’s operations. Calculate the general liability insurance premium as a percentage of direct labor costs.

6. Account for Training and Development: Include the cost of training and development programs for your employees. This may include apprenticeship programs, safety training, or other skill enhancement initiatives. Calculate the training and development costs as a percentage of direct labor costs.

7. Calculate Overhead Costs: Determine the overhead costs associated with employing labor, such as office space, utilities, equipment, and administrative expenses. Calculate the overhead costs as a percentage of direct labor costs.

8. Add all Costs: Sum up the costs calculated in steps 2 to 7 and add them to the direct labor costs calculated in step 1.

9. Determine the Burden Labor Rate: Divide the total costs calculated in step 8 by the total direct labor hours worked by your employees. This will give you the burden labor rate per hour.

By following these steps, you can calculate the burden labor rate for your mechanical contracting company. Remember to review and update these calculations periodically to account for any changes in costs or regulations.

Thank you, 

Thomas Bessinger

Cell(803) 518-6179
Inverter Mechanical Piping Solutions

2330 Main St Suite 300 Columbia, SC 29201

SC license M103893

impsHVAC.com