DAVIS-BACON ELECTRICAL CONTRACTOR JOB COSTING — CLASSIFICATION RATES, FRINGE, AND CHANGE ORDERS.
Davis-Bacon electrical job costing has three differences from private work: fully burdened labor rates vary by classification and include fringe, change orders must be priced at prevailing wage rates including fringe, and crew composition should optimize the allowable apprentice ratio. Using private work labor rates or a blended journeyman rate on a Davis-Bacon project produces inaccurate job costing and underpriced change orders.
SPM builds classification-specific labor cost codes for electrical contractors doing prevailing wage work, tracks fringe separately from base wage, and prices change orders at the correct Davis-Bacon rates.
THREE FINANCIAL CONTROL DIFFERENCES BETWEEN PREVAILING WAGE AND PRIVATE ELECTRICAL WORK.
Fully Burdened Labor Rate Is Higher and Must Be Calculated by Classification
On Davis-Bacon electrical work, the wage determination specifies a base rate and fringe for each work classification: journeyman wireman, apprentice by year of apprenticeship, foreman, general foreman. The fully burdened labor rate for job costing is base wage plus cash fringe (or the bona fide benefit credit), plus payroll taxes and workers comp on the base wage plus cash fringe. Each classification has a different fully burdened rate. Estimating all classifications at the journeyman rate underprices foreman and general foreman hours and overprices apprentice hours. Use classification-specific rates in both the estimate and the job cost structure.
Change Order Pricing Must Use Prevailing Wage Rates
Change orders on Davis-Bacon projects must be priced at the applicable prevailing wage rates for the work classification performing the change order scope. If the change order requires journeyman wireman labor, it is priced at the journeyman wireman Davis-Bacon rate plus fringe plus burden. Using private work labor rates on a prevailing wage change order is underpricing the change order by the fringe differential — typically $8–15/hour depending on the wage determination. On a change order with 80 journeyman hours, that is $640–$1,200 in underpriced fringe.
Apprentice Ratio Requirements Affect Crew Composition and Cost
Most Davis-Bacon wage determinations specify an apprentice-to-journeyman ratio that must be maintained on the project. When the required ratio allows 1 apprentice per 3 journeymen and the project crew is 10 journeymen, the contractor can deploy 3–4 apprentices at the lower classification rate. When the crew composition does not take advantage of the allowable apprentice ratio, the project is paying journeyman rates for work that could legally be performed at apprentice rates. Optimizing the apprentice ratio within the wage determination is a legitimate cost management strategy on Davis-Bacon electrical projects.
HOW TO SET UP COST CODES THAT PRODUCE ACCURATE FINANCIAL DATA.
The compliance and financial control connection: The certified payroll system and the job cost system are two separate records of the same labor cost. When they reconcile — the same hours, the same classifications, the same rates — the job cost is accurate and the certified payroll is defensible. When they diverge, there is either a compliance problem or a job cost accuracy problem. Build them to reconcile from the start.
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