General Inquiries

Labor Burden - What to Inlcude?

  • 1.  Labor Burden - What to Inlcude?

    Posted 9 days ago
    ​​I'm curious what everyone includes in their burden costs. Do you just stick with taxes and insurance costs as it directly relates to the employee, or do you include other items, like general liability insurance, general licensing, etc.


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    Stephanie Delorme
    Project Accountant
    Silver Creek Contracting LLC
    Umatilla OR
    (541) 626-2060
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  • 2.  RE: Labor Burden - What to Inlcude?

    Posted 9 days ago
    Stephanie:

    I'm sure you'll get a wide variety of responses on this.  You didn't state whether you were asking from an accounting or estimating perspective, so I'd suggest that your accounting burden should closely mirror the process used in estimating / pricing your work, regardless of which items are included.
    Your question focuses on labor burden items and I've seen burden rates adjusted to include the employment tax related items as well as some costs for general liability, holiday and PTO adjustments, company health insurance participation and retirement participation.

    Another common burden factor relates to company cost allocations for company owned equipment usage (internal rental rates).  The burden factors for equipment could include insurance coverage costs, fuel, shop / warehouse burden, etc.  Again, I think a method in the accounting system should mirror the methods used in the estimating system.

    Please reach out to me if you want to discuss further.

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    Steve Tenney
    BerganKDV
    Des Moines IA
    (515) 697-4546
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  • 3.  RE: Labor Burden - What to Inlcude?

    Posted 9 days ago
    I'm also interested in what others are including in Labor Burden & Fringe. I'm wondering about companies who don't burden General Liability Ins and what the reasoning is.  I agree that accounting methods of burdening should match estimating methods so that the job costing reports show the same rate the estimators are using to bid. But I wonder exactly which components people are "burdening" in an automated function of posting payroll. How often are they reconciling that expense posted to the liability accounts where the invoices are coded. Alternatively, do they credit an expense account rather than keeping it as a liability? How do methods vary depending on the type of work (%Labor %Equipment %Material % Subs) and pricing methods?

    In my past experience with a sub contractor where labor was a major component of our job costs and the pricing of our work was 40% T&M 10% Cost Plus, 30% Lump Sum  & 20% Unit rate; we burdened our labor with the many of the components our Cost Plus customers (major petro-chem companies) defined in their Labor Rate Build-up Schedules which is used to estimate.
    Below are all of the Labor Rate Components:
    Statutory: FICA, SUI, FUI, Medicare, WC
    Benefits: Med/Dental, Life/Disability, PTO, Hol, Sick, Retirement, SKILLS, TRAINING & CERTIFICATION, PRE-HIRE SCREENING FOR FITNESS & DRUGS, EMPLOYED  HEALTH & DRUG TESTING
    Safety: PERSONAL PROTECTION EQUIPMENT, SAFETY TRAINING (required and optional)
    Misc: SMALL TOOLS & EQ (less than $1,200), consumables
    Insurance: General Liability, Excess/Umbrella, Pollution, Auto Insurance
    We burdened all labor hours with a rate for each of these costs and reconciled it quarterly to the liability accounts.  We did not include equipment costs as we had separate equipment rate tables because each job varied so much with it's equipment demand.



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    Deanne Donovan CPA
    CFO
    Team Nelson
    Woodinville WA
    (425) 217-2514
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  • 4.  RE: Labor Burden - What to Inlcude?

    Posted 8 days ago
      |   view attached
    See attached...

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    Jordan Anderson ,CCIFP, CRIS
    Controller
    Holchemont, LTD
    McAllen TX
    (956) 686-2901
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