piece work
- Thread starter pmiller
- Start date
- Status
jdouglas
Member
- Location
- South Carolina
So is piece work and subbing out work the same thing? For example x $ to install sheet E003.
jdouglas said:
there are similarities, but they are not the same thing...
when you sub out work, you (according to the IRS) have no control over when or how they do it. You have a deadline. You pay them in gross dollars and do not withhold any taxes. And you could conceivably sub out the entire project for $X.
in piecework, they are your employees. You control, to the same extent you do with hourly employees, where they go, what tasks they do, when they do them, how they do them, etc. You provide all the material, tools, trucks, etc, just as you would with an hourly paid employee. you cover them with your WC insurance. you withhold payroll taxes, etc. Everything you would do with an hourly paid employee.
Here is where piecework fits into play...
You quote a price for a new house. This house will be roughed by 2 men. They will be the only 2 men on the rough.
When you price this job out, you use unit pricing. You're unit pricing for, example, roughing in a receptacle breaks down to:
Material - $5
Labor - $4
OH/Profit - $8
(these are fictional numbers, just used as an example)
If you pay your guy $20/hr and he roughs in 5 receptacles an hour or 40 receptacles in a day, you have hit your target. He gets $160, which is what you budgeted for labor.
If he roughs in 6 receptacles an hr or 48 receptacles in a day, you get a labor savings of $32. He get's to work harder for his $20/hr
If he roughs in 4 receptacles an hr or 32 receptacles in a day, you now are $32 over labor budget...do this 5 days a week and you are suddenly losing $160/week without realizing it.
Now, if he has good days and bad days, but over the course of a week/month he hits the target, you still break even.
Pay the guy buy the piece, and simply pay him $4/receptacle.
If he does 40 in a day, makes his same $160.
If he does 48 in a day, he makes $192. But it doesn't matter to you, because you still make your same $5/material and $8 OH/P...the only difference to you is that instead of him taking 5 days to install 200 receptacles, he'll now be done in just over 4. He can then go to another job, or take a long weekend. The job is done, you hit your targets, and he made the same money in 4 days, that he would have made in five. He can spend some extra time with his wife and kids.
Now, if he only does 32 in a day...well you don't run over on labor. Because he will only earn $128/day...and it will take him over 6 days to install the receptacles. But outside of the problems with running over schedule, you will not pay more for slow labor.
Not saying it's right or wrong...but it's a different way to look at it.
andinator
Senior Member
- Location
- Lilburn Georgia
Thanks for the help on quotes guys, THis web site is the best. The way it worked at our company was we were paid eleven dollars an hour. Every single one of us. The math was fascinating because the CPA in FLA who did our books would pay us 40 hours at 11/hr and anything over forty at time and a half. The checks could be as high as two grand and the numbers (fractions of hours ) would be taken out to the fourth decimal point. The funny thing is if we were doing service work (non-piece work) we all made $25/hr but it would still be crammed into the $11/hr formula. Shady? well heck ya but we were't complaining
P.S. We also had workmans comp, bennies and bonuses. I ain't positive I got this quotes thing right though.
Last edited:
charlie tuna
Senior Member
- Location
- Florida
again---many good points. on paper and on the cpa's computer screen it's great. now lets consider "human nature".
in the sixties (boy thats along time ago!) i remember contractors doing track homes and the deal was ---two guys pipe a house in one day. that was what they expected. it wasn't called piecework back then. now, if you got your house done early --hay, you went home early. if you got teamed up with the right guy and worked through lunch ---you could be home by 1:30!!
it was going along for a few weeks -- then that nasty old "human nature" showed up. certain guys didn't want to work with those who couldn't jump off the top of a six foot ladder!!! "hay, this guy isn't fast enough!" and certain houses were harder to pipe than others. pipes were left out! pipes weren't being reamed. it really created another problem for the contractor. this type work couldn't afford "total supervision". within weeks, we were back to the standard of basically two men piping one house per day-----and everyone was happy.
there's only a limited amount of work in our industry that piecework could be used on re: production type work. and also consider what type of electrician this creates? will he be able to train for other facits of the industry that are not speed incentivly motivated???????
in the sixties (boy thats along time ago!) i remember contractors doing track homes and the deal was ---two guys pipe a house in one day. that was what they expected. it wasn't called piecework back then. now, if you got your house done early --hay, you went home early. if you got teamed up with the right guy and worked through lunch ---you could be home by 1:30!!
it was going along for a few weeks -- then that nasty old "human nature" showed up. certain guys didn't want to work with those who couldn't jump off the top of a six foot ladder!!! "hay, this guy isn't fast enough!" and certain houses were harder to pipe than others. pipes were left out! pipes weren't being reamed. it really created another problem for the contractor. this type work couldn't afford "total supervision". within weeks, we were back to the standard of basically two men piping one house per day-----and everyone was happy.
there's only a limited amount of work in our industry that piecework could be used on re: production type work. and also consider what type of electrician this creates? will he be able to train for other facits of the industry that are not speed incentivly motivated???????
human nature ruins everything....
now, my personal feeling is this: why do I want to work any harder than the other guy, since we're both getting the same hourly rate?
give my an incentive to do better, but don't expect me to kill myself for the same money as the guy who take 6 cigarette breaks and plays hide and seek for a grand a week.
there are ups and downs to everything...take my math above for example...is it fair to pay two mechanics $20/hr each, when one does 32 rough ins a day and one does 48? is it fair not to pay them both the same?
now, my personal feeling is this: why do I want to work any harder than the other guy, since we're both getting the same hourly rate?
give my an incentive to do better, but don't expect me to kill myself for the same money as the guy who take 6 cigarette breaks and plays hide and seek for a grand a week.
there are ups and downs to everything...take my math above for example...is it fair to pay two mechanics $20/hr each, when one does 32 rough ins a day and one does 48? is it fair not to pay them both the same?
peter d
Senior Member
- Location
- New England
emahler said:
Ahh....now we've drifted into the topic of merit pay. Having worked for a very large commercial "merit shop" for just over a year, I think it's totally fair to pay someone based on what they can produce without error or rework. Why should the lazy guy who makes mistakes constantly and costs the company money be rewarded?
- Location
- Massachusetts
emahler said:
Your assuming 'you' will get the same rate, I do not assume that.
- Location
- Massachusetts
emahler said:
I would say they have one boneheaded boss or the fast one is a sucker.
andinator
Senior Member
- Location
- Lilburn Georgia
iwire said:
There's the rub.. In piecework the fast one ain't the sucker-he's the one making two grand
- Location
- Massachusetts
andinator said:In piecework the fast one ain't the sucker-he's the one making two grand
Until the day he is for example recovering from a cold and can't move his normal speed.
IMPO piece work is attractive to company owners the way low income housing is attractive to landlords.
High turnover, no money wasted on 'upkeep'.
Maybe we should pay public school teachers 'by the piece' the more students they cram in the room the more they get paid....I am sure standards would not slip. :wink:
How about cops....pay by the 'bust', I am sure no ones rights would get trampled. :grin:
andinator
Senior Member
- Location
- Lilburn Georgia
Well said I-wire...I said in a previous post I'm to old for the game myself. It is definitely for the in shape
- Location
- Windsor, CO NEC: 2017
- Occupation
- Service Manager
Here's another aspect to consider: I feel that an owner of a business is due all profit from a job, and if he shares some of that back with his employees, it's his/her decision (as was discussed in the bonuses thread awhile back, I don't want this to steer off topic). They're due this for the uncertainties of running a business.
If they run a good business, they make a good profit, and drive fancy cars and eat steak.
Now, once you place an employee on piecework, then I believe a large amount of the uncertainty just disappeared for the owner. Let's say the GC screws up and schedules all trades to begin the same day, and changes things around all the time, and all that jazz, things many of them love to do. This normally reduces some profit from the bottom line, but overall the company still makes money.
It's similar to a V-8 engine with an occasional stumble in one cylinder. The engine can't run well on 7 cylinders, but an occasional miss on one cylinder is all but undetectable from the driver's perspective. There's safety in numbers, so to speak. The engine will not die because of a stumble. The engine is the company as a whole.
The jobs that tend to wick a little profit out are (hopefully) outweighed by the jobs that compensate for them.
The piecework employee, on the other hand, can be living paycheck to paycheck, and that one miss can mean the bills didn't quite get paid that week - owners/companies are generally not in that position. A consistent paycheck makes for easier planning when it comes time to pay the bills, IMO.
If they run a good business, they make a good profit, and drive fancy cars and eat steak.
Now, once you place an employee on piecework, then I believe a large amount of the uncertainty just disappeared for the owner. Let's say the GC screws up and schedules all trades to begin the same day, and changes things around all the time, and all that jazz, things many of them love to do. This normally reduces some profit from the bottom line, but overall the company still makes money.
It's similar to a V-8 engine with an occasional stumble in one cylinder. The engine can't run well on 7 cylinders, but an occasional miss on one cylinder is all but undetectable from the driver's perspective. There's safety in numbers, so to speak. The engine will not die because of a stumble. The engine is the company as a whole.
The jobs that tend to wick a little profit out are (hopefully) outweighed by the jobs that compensate for them.
The piecework employee, on the other hand, can be living paycheck to paycheck, and that one miss can mean the bills didn't quite get paid that week - owners/companies are generally not in that position. A consistent paycheck makes for easier planning when it comes time to pay the bills, IMO.
peter d
Senior Member
- Location
- New England
iwire said:
Cmon Bob, that's ridiculous. There is a world of difference between a police officer's job and a guy stabbing in $ .35 receptacles in a tract home.
- Location
- Massachusetts
peter d said:
Thanks Pete
Of course there are differences, there are also similarities.
The promise of more money for more 'production' often leads to 'cheating'.
iwire said:
well, if he is productive enough on his good days, he'll cover himself on the off days.
kind of the same way that the company does with hourly guys...if you are ultra productive one day, the company makes more money...if you are off, the company gives that money back.
with piecework, you have that money, not the company. you have the responsibility to use your money as you see fit...
then again, i'm not in favor of the government taking my social security money and investing it in a bad investment...i'd rather have that money to invest myself. same idea.
georgestolz said:
george, i've found that too many hourly guys are also living paycheck to paycheck.
with piecework or commission, it's up to the individual to put aside some money for the rainy day...you make $2k this week? put aside for that $700 week. That's what your boss does....the week you produce $5k pays for the week your produce $2k...
- Status