http://www2.remodeling.hw.net/management/finances/labor-burden/labor-burden.aspx?view=rss&id=Query_tcm1765809http://www2.remodeling.hw.net/job-costing/cutting-costs.aspx?rssLink=Cutting+CostsBy now your 2009 budget should be nearly complete — how does it look? Are you making the money you, as owner, need to make?http://www2.remodeling.hw.net/finance/opening-the-books-fortifying-the-bottom-line.aspx?rssLink=Opening+the+Books%2c+Fortifying+the+Bottom+LineDon’t be afraid of open-book management, says one remodeler whose profits, productivity, and staff cohesiveness are stronger as a result of showing his employees the numbers – right down to his own compensation. http://www2.remodeling.hw.net/labor-burden/finding-employees-hidden-costs.aspx?rssLink=Finding+Employees%e2%80%99+Hidden+CostsIndustry consultant Leslie Shiner shares tips on how to add labor burden into your employees' hourly rates.http://www2.remodeling.hw.net/finance/tracking-labor-costs.aspx?rssLink=Tracking+Labor+CostsOver the years I’ve asked clients and colleagues how they estimate labor costs. The answer is usually the same: They define one number that represents hourly labor costs, including burden, and apply it throughout their estimates, no matter who does the work or what the tasks are.http://www2.remodeling.hw.net/overhead/over-your-head.aspx?rssLink=Over+Your+HeadVariety can be a good thing, but remodeling companies that want to measure their performance against standards need to be on the same page.http://www2.remodeling.hw.net/overhead/labor-pains.aspx?rssLink=Labor+PainsTracking direct costs looks easy, but labor presents some sticking points. What, for instance, is to be done with labor costs for a production manager who spends part of each day on more than one jobsite?http://www2.remodeling.hw.net/gross-profit/totally-gross.aspx?rssLink=Totally+GrossWe write a lot about gross profit in this magazine, but judging from some of our survey results, a lot of readers are still fuzzy on the concept. The calculation is simple — gross profit equals revenue minus direct costs — but as with so many other financial concepts, the devil is in the details.http://www2.remodeling.hw.net/labor-burden/fully-burdened-labor.aspx?rssLink=Fully+Burdened+LaborWhen remodelers fall short of planned margins, it's usually caused by labor overages. Some of the problem can be traced to things like having to replace work that wasn't done right the first time, or employees who take 45 minutes for a 30-minute lunch. But underestimating the cost of labor is the major culprit.http://www2.remodeling.hw.net/insurance/would-you-like-insurance-with-that.aspx?rssLink=Web+Extra%3a+Would+You+Like+Insurance+With+That%3fIt's inherent in the concept of total compensation that the cost of employee benefits will limit employee wages. Health insurance, in particular, is so expensive that the hourly cost to most remodelers is equal to as much as $4 per hour. So what do you do if an employee declines coverage and then asks for the money to be applied to wages?http://www2.remodeling.hw.net/compensation/total-compensation-money-isnt-everything.aspx?rssLink=Total+Compensation%3a+Money+Isn't+EverythingDo you know how much you really spend on your employees? More importantly, do they know? In the final installment of our benefit series, REMODELING explores the idea of total compensation -- the true cost (and value) of employment at your company.http://www2.remodeling.hw.net/labor-burden/beast-of-burden.aspx?rssLink=Beast+of+BurdenWho has the higher labor burden rate — one of your higher- or lower-paid employees? Would it be smarter to hire a new employee or to pay overtime to an existing employee? The answers may surprise you, says Diane Gilson, CPA and president of Info Plus Accounting.http://www2.remodeling.hw.net/overhead/focus-on-the-few.aspx?rssLink=Focus+on+the+FewRemember Pareto's Principle? Also called the 80/20 rule, it says that 20% of the input provides 80% of the value. Stated another way, 20% of your activities account for 80% of the results. Last month we applied the rule to job costs control. Now let's use the 80/20 rule to help develop an annual overhead budget.http://www2.remodeling.hw.net/markup/markup-redux.aspx?rssLink=Markup+ReduxWhen it comes down to it, the real point of being in business is to charge enough money for every job so that the company is making a profit on every project. That means contractors need to know what their overhead is on a monthly, quarterly, and annual basis, as well as knowing — almost down to the penny — what the costs are for each project.http://www2.remodeling.hw.net/remodeling/benchmark-labor-limb-o.aspx?rssLink=Benchmark%3a+Labor+Limb-oFigure out how to get accurate labor estimates and your company will have a real leg up on the competition.Most remodelers will agree that if they had better control over labor costs, they would be more profitable. The typical remodeling company starts the job with a suspect labor price, and the situation proceeds downhill from there.http://www2.remodeling.hw.net/labor-burden/the-pitfalls-of-pricing-labor-only-jobs.aspx?rssLink=The+Pitfalls+of+Pricing+Labor-Only+JobsWhen pricing labor-only jobs, be sure to allow for labor-specific contingencies. Watch out, too, for situations like a decrease in the proportion of billable hours per employee and lost time due to startup inefficiencies if this job is a "first of its kind" for your company.http://www2.remodeling.hw.net/overhead/pricing-labor-only-jobs.aspx?rssLink=Pricing+Labor-Only+JobsPresumably you already have an accurate burdened-labor figure, but make sure you're including both "hard" and "soft" costs for each employee (see "The Labor Burden"). The result is $20.34, which will cover overhead when added to the hourly labor charge.http://www2.remodeling.hw.net/compensation/good-form-comprehensive-compensation.aspx?rssLink=Good+Form%3a+Comprehensive+CompensationHalsey Platt, of Walter H.B. Platt Builders and Cabinetmakers, estimates that at least 50% of his new hires have previously worked for him as subcontractors. So Platt developed a "total compensation worksheet," which shows prospective employees the value of the package they'll receive.http://www2.remodeling.hw.net/carpentry/labor-projections.aspx?rssLink=Labor+ProjectionsLast month, we used a spreadsheet to calculate how much a lead carpenter should produce in a month. In the following examples, we'll assume a revenue growth goal of $500,000 (to a total of $2 million) and the same "givens" as last month.http://www2.remodeling.hw.net/gross-profit/the-cost-of-unpaid-time-off.aspx?rssLink=The+Cost+of+Unpaid+Time+OffMost companies know that scheduled downtime, like vacation and holidays, costs money, and they figure it into their labor burden. Halsey Platt recently discovered that absenteeism is a bigger drain on his company's profits than he'd ever imagined.http://www2.remodeling.hw.net/labor-burden/how-much-does-an-employee-cost.aspx?rssLink=How+Much+Does+an+Employee+Cost%3fEven if you accurately estimate the hours required to complete a project, you may be losing money if you're not charging enough for labor.