Firstly, let’s define the need to use composite crew rates. If you are using a cost estimating software, you do not need to determine a crew composite rate, the software does it for you. But, you still need to set-up your crew(s) for your construction activities. Setting up the correct crews for your construction activities, allocating the proper construction equipment and tools, and choosing the correct production rate is the core of cost estimating. For detail on how to set up typical crew rates for various trades and construction activities, please see posts in category “Crews.”

Now, let’s look at how we arrive at our composite crew rate. Firstly, the labour composite unit rate is used with unit rate cost estimating. We use composite labour rate and material, equipment and temporary construction materials to calculate an activity composite unit rate.  You can find composite unit rate tables under category “Unit Rates.” Please see more unit rate related articles under “Unit Rates” category.

Before we begin establishing the composite crew unit rate we need to establish the following:

1. Labour unit rates for each trade we will be using in the cost estimate. If you are a cost estimator with a construction company, the labour rates you will use are the ones in the labour agreement. If, on the contrary, you are a cost estimator working for other than a construction company (engineering, architectural, project owners, etc.) then you will wonder how and where to find such information. Check the category “Resources” for places where you can go to get labour rates information.
2. Determine the activity list. See article “Know the Project Scope of Work” (Category: Detail Cost Estimate”) for details on how to build the activity list.
3. Determine the crew(s) you will use in your cost estimate, for each activity.
4. Determine OT and shift premium based on the construction schedule. This is an adjustment that is most likely done once the cost estimate is complete and a construction schedule is developed.
5. Living out allowance. If the project requires hiring trade persons who are not local, living out allowance should be added to the cost estimate. It can be added to the composite crew rate, or as an overhead. I always choose to add this cost to the overhead. The living out allowance is based on specific skill level and not necessarily on a crew. For example, we consider that all trades up to a certain skill level will be out of town. Everybody else will be local.

With all these steps completed, we can start developing the composite crew rates. I keep a database of composite crew rates for activities. Anytime I start a new cost estimate; I reference to this database. I cannot emphasise the importance of the various databases enough a cost estimator should keep. As important as the actual data in the database are the qualifiers and notes. Therefore, a baseline should be defined for each database.

A crew is made up of only direct labour. Each cost estimate should have its definition of what constitutes direct labour. According to Business Dictionary, direct labour is “Employees or workers who are directly involved in the production of goods or services. Direct labour costs are assignable to a specific product, cost centre, or work order.” Most construction companies consider field personnel with a rating of the superintendent and higher, as part of the overhead costs. In all my cost estimates as well, all personnel that is not directly involved in a construction activity is part of the overhead. Note that equipment operators are part of the crew. If you are using an all inclusive construction equipment rate in your cost estimate, the equipment operators should not be included in the crew.

For an illustration on how to determine a composite crew rate, I am using a cast-in-place slab on grade textured finish, activity. The formwork would be included in other activity. The individual labour rates are for illustration only. Specific labour rates depend on the location of the project, labour relations, and compensation structure specific to the individual construction company.

The work day is 8 hours, Monday to Friday, for a total of 40 hours per week.

Concrete Placing Crew – Slab on grade, textured finish
Description	Qty	Rate/hr	Total Cost
Foreman	0.5	$    49.00	$            24.50
Labourers, skilled	2	$    32.00	$            64.00
Cement Finishers	4	$    44.00	$          176.00
Total crew composite rate			$            40.69

The above crew composite rate is based on 70% productivity. For details on how I calculate the baseline productivity for individual crews, see articles under Crews category.

Each crew member spends time on material receiving and handling, site movement, breaks and clean-up. Therefore, we should assume that the rate of $40.69/hr represents a 70% productivity.

A typical average productivity for a concrete placing crew is 70%, based on industry cost data.

This average does not take into consideration abnormal variations. The abnormal variations are further accounted for by using the average productivity factor determined specifically for each project. See “How do You Estimate Labour Productivity” article on this site for details on how it is done.

Let’s assume we evaluated the project we are doing the cost estimate for and the productivity factor is 60%. This means that a loss of 10% should be accounted for. The revised crew composite rate becomes $40.69 x 110% = $44.76/hr.

Once we determined the base composite crew rate, in the same fashion, we can further account for any additional costs: overtime, shift premium, etc.

Do not forget to update your database with new activities, crews and crew composite rates.

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