← Estimating process

Estimating process

Building up labour rates.

The all-in labour rate is more than the hourly wage. It includes employer's NI, pension contributions, CITB levy, travel allowances, holiday pay, and tool money. Getting this right is vital — labour is the largest cost on most projects.

Who this guide is for

Estimators building up rates from scratch, contractors checking their labour cost assumptions, and subcontractors pricing labour-only packages.

Rate components

The all-in hourly rate includes: basic wage, overtime allowance, employer's NI (13.8%), workplace pension (3%), CITB levy (0.35–0.5%), holiday pay, sickness pay, travel and subsistence, and tool or clothing allowances. Also include supervision and training costs spread across the workforce.

Miniature example

All-in rate for a bricklayer (per hour):
Basic wage £25.00, NI (13.8%) £3.45, Pension (3%) £0.75, CITB (0.5%) £0.13, Holiday pay £1.20, Travel £1.00. Total all-in rate: £31.53/hour.

Common mistakes

• Using gross wage without on-costs — the estimate will be significantly understated
• Not splitting productive hours from total paid hours — a 40-hour week may only yield 35 productive hours
• Using the same all-in rate for all operatives when skilled and unskilled rates differ significantly