TRUE COST PER EMPLOYEE.
The most common labor cost mistake in construction is confusing base wage with true employee cost. A field laborer at $28/hour costs your business $38 to $45/hour once you add burden. An office manager at $55,000 salary costs $75,000 to $85,000 fully loaded.
The wage is the part you negotiate, so it becomes the part you remember. Everything stacked on top of it gets paid out of the same job and rarely gets bid into it: payroll taxes, workers comp, liability, insurance, retirement, and paid days off. That's why a crew can run at the hours you estimated and still finish under margin. The hours were right. The rate charged against them was too low the day the bid went out, and it stays too low on every job you win with it.
WHAT IT MEANS.
True cost per employee is the base wage or salary plus every burden item the business pays on top of it, including FICA, FUTA, SUTA, workers comp, a general liability allocation, health insurance, retirement, and paid time off.
Burden isn't one rate for the whole company. A concrete laborer, an operator, a foreman, and an office manager each carry a different workers comp classification and different benefit cost, so a single blended burden rate charges some jobs too much and others too little. The rate in the bid has to be the rate for the classification doing the work.
WHERE THE WAGE HIDES THE COST.
Using base wage in bids
If you're bidding field labor at base wage, even with a rough burden percentage tacked on, you're likely understating true labor cost. The fully loaded cost of a field employee includes FICA, FUTA, SUTA, workers comp, a general liability allocation, health insurance, retirement, and paid time off. Every one of those is a real dollar leaving the business for every hour worked, and none of them care what the bid said.
Hiring without a true cost calculation
When you hire a new office person at $50,000, you're not adding $50,000 in cost. You're adding $68,000 to $75,000 depending on benefits, workers comp classification, and state taxes. That difference is the whole margin on a small job, and it gets committed in a five minute conversation because the salary figure is the only number in the room.
Employee against subcontractor, compared with the wrong number
The decision to self perform work instead of subcontracting it requires knowing your true employee cost per hour and comparing it against the subcontract rate for the same scope. Without a loaded hourly rate by classification, that comparison puts a base wage on one side and a full price on the other. The base wage always looks cheaper, which is how contractors talk themselves into self performing work they lose money on.
WHAT IT LOOKS LIKE IN DOLLARS.
Start with the base wage or salary, then add the employer share of FICA at 7.65 percent, FUTA at 0.6 percent on the first $7K annually, SUTA at 1 to 5 percent depending on your state and experience rating, and workers comp at 3 to 25 percent of wages depending on classification. On top of that goes the employer contribution to health insurance, any retirement match, the value of paid time off, which is annual PTO days times the daily rate, and any other benefit you pay. Total loaded cost typically runs 30 to 45 percent above base wage for field staff and 25 to 35 percent above base salary for office staff.
A field laborer at $28/hour costs your business $38 to $45/hour once burden is added. An office manager at $55,000 in salary costs $75,000 to $85,000 fully loaded. Those are the two figures a bid and a hiring decision each need, and the base wage isn't close enough to either one to use.
THE RATE THAT GOES IN THE BID.
The loaded rate gets built from the base wage or salary plus the employer share of FICA, FUTA, SUTA, workers comp, the health insurance contribution, any retirement match, paid time off value, and any other benefit the business pays. Field staff typically finish 30 to 45 percent above base wage and office staff 25 to 35 percent above base salary. You get the arithmetic in writing, so the rate can be checked instead of trusted.
SPM builds true employee cost by classification into your ControlQore job costing, with different rates for field laborers, operators, foremen, and office staff. Each job gets charged the rate for whoever worked it. That's what keeps job margin honest, and it stops one high workers comp classification from being subsidized by every other job you run.
When you're weighing whether to hire or subcontract a scope, the loaded hourly rate gets priced against the subcontract number for the same work, including the hours you carry when the crew is between jobs. The output is a figure you can defend rather than an opinion. It also tells you which way the decision goes before you make an offer, not after the first payroll run.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing, no payroll, and no add-ons.
| Last 12 months revenue | Monthly fee |
|---|---|
| Up to $1M | $1,900 to $2,900 |
| $1M to $3.5M | $2,600 to $3,900 |
| $3.5M to $6.5M | $3,800 to $5,700 |
| $6.5M to $9.5M | $5,100 to $7,100 |
| $9.5M to $12.5M | $6,100 to $8,500 |
| $12.5M to $15.5M | $7,400 to $11,000 |
| $15.5M to $18.5M | $9,400 to $13,500 |
| $18.5M+ | Quoted individually |
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions rather than a report.
Your bookkeeper keeps doing the books.
You stop touching the books.
Everything in Core, and we run the bookkeeping and the controllership as well. Nobody in your office is answering coding questions or chasing a reconciliation at month end.
We do the books. No payroll.
Every job shows its margin while it's still running.
Everything in Executive, plus the job costing and WIP platform set up, loaded with your cost codes, and managed for you every month. You never have to learn it.
We do the job costing.
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