We’ve previously looked at how construction costs compare across different locations, and different building types. But an overall cost number only tells you so much. It’s useful to dive a little further and see how that money gets spent. How much is going to the framer? How much is for the foundations? How much is for plumbing? Let’s take a look.
When it comes to construction costs, I agree that having a detailed breakdown is way better than just having an overall cost estimate. Having a detailed project breakdown can be beneficial for construction companies as this allows them to spot discrepancies for each factor that affect construction costs enabling them to address it accordingly. Trackunit also published an article https://trackunit.com/articles/construction-project-breakdown/ wherein they gave a detailed construction project cost breakdown along with other useful tips that can help provide construction businesses with more accurate construction cost estimates.
Hi! New to your site ... An observation about onsite labor as a % of total construction costs. In calculating it as near-50% for both the construction cost estimator and the Bohannon budget, aren't you leaving out the cost of all the subcontracted-out work and the overhead budget? If you include them, "labor" is 25%. This makes sense and is similar to what BLS studies of apartment and SFH construction found in the early 1970s and what the Economic census of construction finds in its massive study every 5 years: construction worker pay + an estimated share of fringe benefits is approximately one-quarter of total net construction receipts. See page 8 of this NAHB breakdown of the Economic Census data ... https://www.nahb.org/-/media/NAHB/news-and-economics/docs/housing-economics-plus/special-studies/2021/special-study-home-building-census-july-2021.pdf
For the Bohannon budget, the subcontractor budget will include both materials + labor - (basing this on the fact that things like electrical and plumbing materials were either not budgeted or budgeted extremely tiny amounts, so the material must be accounted for elsewhere.) If you compare just the direct expense on labor vs direct expense on materials, you get roughly 50%.
For that census data breakdown, I would need to look closer into the source material. In general I would expect cost breakdowns from estimating guides/NAHB (which mostly aligns with the estimating data, though in practice there is probably a lot of variance) to be more accurate than high level government summary statistics.
Yeah I'm digging into this now (labor fraction is pretty important when figuring out what makes sense as a method for efficiency improvement). Thanks for the pointers to this.
With electrical, you have a much larger quantity of electrical/data systems being installed. The combination of power hand tools and easier (in some cases) installation, is negated by the greater amount of materials to install.
When it comes to construction costs, I agree that having a detailed breakdown is way better than just having an overall cost estimate. Having a detailed project breakdown can be beneficial for construction companies as this allows them to spot discrepancies for each factor that affect construction costs enabling them to address it accordingly. Trackunit also published an article https://trackunit.com/articles/construction-project-breakdown/ wherein they gave a detailed construction project cost breakdown along with other useful tips that can help provide construction businesses with more accurate construction cost estimates.
Appreciate it... Very concise showing estimates from past and those current...
Hi! New to your site ... An observation about onsite labor as a % of total construction costs. In calculating it as near-50% for both the construction cost estimator and the Bohannon budget, aren't you leaving out the cost of all the subcontracted-out work and the overhead budget? If you include them, "labor" is 25%. This makes sense and is similar to what BLS studies of apartment and SFH construction found in the early 1970s and what the Economic census of construction finds in its massive study every 5 years: construction worker pay + an estimated share of fringe benefits is approximately one-quarter of total net construction receipts. See page 8 of this NAHB breakdown of the Economic Census data ... https://www.nahb.org/-/media/NAHB/news-and-economics/docs/housing-economics-plus/special-studies/2021/special-study-home-building-census-july-2021.pdf
For the Bohannon budget, the subcontractor budget will include both materials + labor - (basing this on the fact that things like electrical and plumbing materials were either not budgeted or budgeted extremely tiny amounts, so the material must be accounted for elsewhere.) If you compare just the direct expense on labor vs direct expense on materials, you get roughly 50%.
For that census data breakdown, I would need to look closer into the source material. In general I would expect cost breakdowns from estimating guides/NAHB (which mostly aligns with the estimating data, though in practice there is probably a lot of variance) to be more accurate than high level government summary statistics.
Fair enough re: the Bohannon budget's subcontracting costs. But check out this source some time. See page 18 and surrounding pages ... https://fraser.stlouisfed.org/files/docs/publications/bls/bls_1892_1976.pdf
For single-family see: https://fraser.stlouisfed.org/title/labor-material-requirements-construction-private-single-family-houses-4762
This is super interesting, thanks.
I wish that the BLS still did studies like this! But do go check the Economic Census. Compare the ratio of material costs to construction worker wages in any number of the 6-digit NAICS specialty trades industries and estimate the total value of construction wages + fringes : total net value of construction (they max out around 36% of net value of construction work). You'll see what I've been talking about. The ratio for GCs' construction labor is of course lower. I'd be interested in your thoughts ... https://data.census.gov/cedsci/table?q=EC1723BASIC%3A%20Construction%3A%20Summary%20Statistics%20for%20the%20U.S.,%20States,%20and%20Selected%20Geographies%3A%202017&g=0100000US,%240400000&n=23%3AN0600.23&tid=ECNBASIC2017.EC1723BASIC
Yeah I'm digging into this now (labor fraction is pretty important when figuring out what makes sense as a method for efficiency improvement). Thanks for the pointers to this.
With electrical, you have a much larger quantity of electrical/data systems being installed. The combination of power hand tools and easier (in some cases) installation, is negated by the greater amount of materials to install.
This is a good point - any chance you're familiar with any estimates for how this has changed over time?