For many integrators, accurate estimating of labor costs on a project can be more of an art than a science. That difficulty is expounded when there are intangible obstacles placed in front of you that can potentially ramp up your labor costs. The result is “goodbye labor profit!”
Indeed, achieving a high percentage of profit on your labor is vital, especially as the influx of consumer-grade products erodes the integrator’s profit margin on equipment. According to data drawn from D-Tools Cloud, integrators achieve between 51% and 56% profit margin on their labor on every size project, whether it is a quick TV mount or a massive whole-house mansion job. Thus, estimating labor costs accurately is crucial, especially on large home construction projects.
Within both D-Tools System Integrator and D-Tools Cloud, integrators have the option to access intelligent itemized labor estimates based on product categories and add a “difficulty rating field multiplier” to the labor. When enabled, each category receives a curated labor estimate that is automatically applied to the items within that category. The amounts and types can always be overwritten at the category and/or item level.
Integrators can identify the labor type (i.e., installation, programming, staging, materials management, recycling). These labor types can then be enhanced using the software’s built-in difficulty rating field multiplier. The software automatically sets the difficulty multiplier at 100%, but that can be increased when integrators are facing a potentially daunting installation challenge.
So, what are some potential indicators that can require increased labor? Here are 7 warning signs to look out for.
1. High Ceilings
The presence of high ceilings in a home is certainly aesthetically pleasing, but for integrators it can necessitate the use of scaffolding. That means the integrator has to rent, erect and then remove scaffolding for the installation of products like intelligent lighting fixtures, wireless access points, motorized shades and in-ceiling loudspeakers. That not only introduces additional direct costs but also increases the time required for installation. Tasks performed at height are inherently slower and more challenging, further extending labor hours. These factors can be incorporated into labor estimates using the difficulty multiplier in D-Tools software to ensure that the projected costs align with the reality of the project.
2. Older Homes
In an existing home project, the age of the home can be a major challenge. Older homes can have poor or inadequate electrical supply or wiring, tight attics or crawlspaces, structural impediments and even ornate finishes that require special care. These challenges often require additional troubleshooting and problem-solving time, which must be factored into labor cost estimates. If not anticipated, these difficulties can lead to significant budget overruns and missed profit targets.
For example, if an older home’s electrical infrastructure can’t support the power needs for the home theater, home network or audio system, you possibly will need to upgrade the electrical panel. Even tasks as simple as installing a door or window contact for an alarm system in a dried out or brittle door jamb or window casing in an old home can require extra time and precision, which means more labor time. There are also extreme situations where it’s difficult to get the equipment to a certain part of an older edifice. There have been instances in which integrators had to remove second or third floor windows, rent a crane, and then lift their pre-configured racks and giant flat panel displays to the appropriate level because the stairwell access is too narrow.
3. Occupied Homes
It’s always tricky working in an existing home that is occupied, but it can be especially challenging if technicians are restricted from entering certain parts of the home. For example, if you’re not allowed in the nursery during working hours because the baby is taking a nap, that slows down the timetable.
One integrator relayed a story about a project in the Hamptons on Long Island that was an extreme case. The homeowners occupied the home from Thursday night to Sunday night and did not want any technicians there during those days. They also did not want to see that any equipment or signs that work was in progress while they were there. That required the integrator to work Monday through Wednesday only, then spend Thursdays “cleansing” the jobsite of any evidence of his crews or work in progress. That meant the team had to patch holes in the drywall, sand and paint. Then open those same holes back up the following Monday.
4. Large Projects
Needless to say, the potential for delays is greater on a larger project. That slowness is often not due to anything the integrator does, but other contractors’ schedules, such as electricians, plumbers, or HVAC specialists. If they are off schedule, it can cause delays in your timetable. That means you might get stuck paying your technicians to show up to the jobsite only to find out they can’t do any work that day. That can suck your profit dry.
5. Concrete Construction
Concrete homes can be a challenge. They have become increasingly popular due to their hurricane resistance and high insulation factor. However, for piping and wiring they create pan impediment. All the wiring needs to be run in conduit inside the poured or block concrete, which means pre-planning for all end points is vital. If the homeowner decides to move the placement of the TV, it means lots of manpower. So, it might be a good idea to add a difficulty multiplier to concrete-constructed homes.
6. Restricted Access
Common in high-rise condo projects, there can be restrictions on the number of contractors allowed on the jobsite at any given time due to safety regulations or logistical constraints imposed by the HOA, homeowner or GC. That can wreak havoc on your scheduling and potentially your labor profitability.
Similarly, in some new construction high-rise projects, there are assigned elevator access times. These are especially common in projects where some floors of the high rise are already occupied while others are still under construction. Integrators and all other contractors are then limited to only certain elevators. One integrator shared that his team routinely waited up to 1 hour to access the elevator up to the jobsite floor.
When fewer technicians are allowed on-site, tasks that could be completed in parallel must be done sequentially, extending the project timeline. This constraint not only delays project completion but also increases labor costs due to the prolonged engagement of workers. Effective project management and scheduling are critical in such scenarios, but they must be planned from the outset to avoid cost overruns. Adding a difficulty percentage to your labor with those situations can give you some slack.
7. Limited Parking
Inner-city projects that do not have adequate parking for your vehicles add labor time, and that means more money. Technicians often have to park blocks away and then lug their gear to the jobsite. That is time not spent doing the actual installation that you are paying the technicians. Moreover, the vans become vulnerable to receiving parking tickets or even worse, getting broken into because they are parked out of eyesight. If the job requires toll roads over bridges or through tunnels, that adds even more costs. Inner-city projects should certainly be considered for adding a difficulty percentage into your D-Tools labor estimates.
In conclusion, accounting for the level of difficulty in labor cost estimation is vital. By thoroughly evaluating potential obstacles, companies can create more accurate and realistic labor estimates. Using the difficulty multiplier in D-Tools SI and D-Tools Cloud can help mitigate those increased labor costs.
Precise estimates help in achieving the desired profit margin, maintaining financial health, and ensuring project success. Proper estimation and planning not only safeguard against financial losses but also enhance the company’s reputation for reliability and professionalism in managing complex home construction projects.