Indirect/Direct Labor

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mstrlucky74 said:
Do you consider estimators, PM's and engineers direct or indirect labor?
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we do not have estimators. most of our estimating is done by our salesmen. they are all indirect. if an engineer does the estimating it is considered indirect if it occurs before we get a P.O. an direct if it is after a P.O.

PM and engineering is done by engineering and is always direct although it is not always charged to the customer or included in the project.
 
petersonra said:
we do not have estimators. most of our estimating is done by our salesmen. they are all indirect. if an engineer does the estimating it is considered indirect if it occurs before we get a P.O. an direct if it is after a P.O.

PM and engineering is done by engineering and is always direct although it is not always charged to the customer or included in the project.
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Why does it change during bid phase or after award?
 
mstrlucky74 said:
Care to elaborate CD???
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Sure.
The way I've always been taught is direct/indirect labor is labor related to a specific project where time is charged to that job. I've also called it "productive/non-productive" labor.
Indirect (non-productive) labor is labor that needs to to be added for a foreman/superintendent that will be on the job either partially not working with his tools or completely not working with his tools. His time on the job is spent laying out crews, supervising, time card control, etc. So if he will be spending 50% of his time being non-productive doing these things over a 8 month job, those hours need to be added to your direct (productive) hours.
I don't know Accubid, but I know on the final summary of Conest has a tab to figure your direct labor, indirect labor, and PM time is added separate, and estimating (if required on a large job) is added separate (those PM or estimating hrs will be charged to that job).
A lot of contractors may do that a little different. Like Petersonra said, his estimators manage the jobs they win.
He said his estimators (sales people) are indirect until the point of managing their jobs. I disagree that they are indirect. I would say they are overhead unless they are charging time to jobs when they are wearing their managing cap.
 
We consider Project Managers, Draftsmen, Engineers, etc as well as non productive Foremen and General Foremen Indirect Labor. Incidental labor is the direct labor not accounted for in as a take off item in the estimate, ie time for testing, commissioning, as builts, travel time etc.
 
Nitrohagen said:
We consider Project Managers, Draftsmen, Engineers, etc as well as non productive Foremen and General Foremen Indirect Labor. Incidental labor is the direct labor not accounted for in as a take off item in the estimate, ie time for testing, commissioning, as builts, travel time etc.
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Are you using software that has individual line items for all of these?
Do you just use just leave those lines in your recap blank and just put an overall percentage to cover them?
 
That will be determined on how your organization is structured.

If their salaries can be traced to a specific product or service, then their costs would be considered direct.

There are costs associated with these positions that cannot be traced directly to a specific project, Such as the time to estimate a bid, then losing that bid, which has to be included in overhead costs.

Overhead can be kept lower by making sure these salaries are tied to the projects they work on.

If their time and salaries cannot be tied directly to the project, then all is considered indirect.
 
cdslotz said:
Sure.
The way I've always been taught is direct/indirect labor is labor related to a specific project where time is charged to that job. I've also called it "productive/non-productive" labor.
Indirect (non-productive) labor is labor that needs to to be added for a foreman/superintendent that will be on the job either partially not working with his tools or completely not working with his tools. His time on the job is spent laying out crews, supervising, time card control, etc. So if he will be spending 50% of his time being non-productive doing these things over a 8 month job, those hours need to be added to your direct (productive) hours.
I don't know Accubid, but I know on the final summary of Conest has a tab to figure your direct labor, indirect labor, and PM time is added separate, and estimating (if required on a large job) is added separate (those PM or estimating hrs will be charged to that job).
A lot of contractors may do that a little different. Like Petersonra said, his estimators manage the jobs they win.
He said his estimators (sales people) are indirect until the point of managing their jobs. I disagree that they are indirect. I would say they are overhead unless they are charging time to jobs when they are wearing their managing cap.
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Ok so when preparing an estimate what do you consider a PM & Engineer? Accubid show them on the indirect labor screen...they also show the General Foreman which is what you stated.
 
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