Cost Estimating

Where Did That Unit Rate Come From? Building a Labour Rate You Can Defend in a Bid Review

Published: September 5, 2026  |  By: RHCES Engineering Team  |  12 min read

A bid reviewer stops on one line: slab formwork, ₱340 per square metre. Where did it come from? The estimator finds the same figure on the last job, and the one before that, nudged once for inflation. Nobody can name the gang, the output, or the day it was measured. The rate survives because nobody can disprove it. Then the labour cost lands somewhere else.

A rate you cannot take apart is a rate you cannot defend or reuse. Below is the chain from a daily record to one you can, worked to the end on slab soffit formwork. Peso figures are illustrative; replace them with your own payroll and measured output.

Why this trips people up

A unit rate is a ratio of two numbers owned by two people who rarely compare notes. The timekeeper logs eight men for twelve days; the quantity surveyor logs a pour by pour area; the two meet only at month end, for payment rather than productivity. Nothing asks what one gang put up in one day. The inherited rate meanwhile looks reasonable because it sits near the last, so the error surfaces later as a variance blamed on the crew.

The chain from a daily record to a unit rate

Strip out the adjustments and four links remain: the gang, its cost for a day, what it measurably completed per day, and the division of one by the other.

Gang day cost = the sum, over every grade in the gang, of (number of that grade × daily wage of that grade). Output = quantity completed ÷ gang days spent. Unit rate = gang day cost ÷ output. Everything else is an adjustment to one of those three.

Measure output per gang day, not man-hours per unit

Published references quote man-hours per unit: fine for comparison, poor for measurement. Recording it honestly means splitting the leadman's day between the slab and the columns, and placing the helper who moved decks after lunch. Those splits are guesses; a gang day is observable, so measure that and convert.

Man-hours per unit = (number in gang × hours worked per day) ÷ output per gang day. Rearranged, output per gang day = (number in gang × hours per day) ÷ man-hours per unit.

Non-productive time is part of the rate

Rain stoppages, wet-time standby, toolbox talks, waiting on the crane, remedial work on a panel set out wrong: these are hours you paid for, and the money must come back somewhere. Two honest places exist.

Both are defensible; doing both is the classic error. Bury a rain allowance in a depressed output and price standby again in the preliminaries, and you pay for the same idle day twice. Do neither, and every rain day comes straight out of margin.

A reviewer can fairly ask which stoppages belong in the rate. A crane breakdown may be recoverable under a plant hire contract, or a one-off on a machine since replaced: recurring causes belong in the rate, non-repeating ones in a risk allowance.

The learning curve is real, the borrowed exponent is not

The first cycle is slower than the fifth: the crew is still learning the panel layout, the props are not sorted into sets, the deck is read off a drawing, not from memory. Expect that, but do not reach for a formal learning-curve exponent borrowed from a textbook unless you have fitted one to your own cycle records; the exponent varies enormously with the work and the crew. Safer: price the first cycle or two at a lower output measured on your own jobs.

A workflow you can repeat

Worked example: erecting slab soffit table forms

Illustrative wages throughout. The gang is 1 leadman at ₱950 per day, 4 carpenters at ₱780 each, 3 helpers at ₱610 each, all on straight time and an 8-hour paid day. Over 12 working days it completed 2,640 m² of contact area; 1.5 days went to rain, 0.5 to a crane breakdown, and all 12 were paid.

The conditions matter as much as the wages, because they are what makes the output credible. This gang is craning in large pre-assembled table forms and adjusting them, with the decks stripped later and outside the window, so the 2,640 m² buys erection only. A gang hand-building a conventional prop-and-panel deck and striking it inside the same window will not come near these figures, and published labour constants for that work sit far above them. Match the basis before you borrow the number.

Step 1: gang day cost

₱950 + ₱3,120 = ₱4,070, then ₱4,070 + ₱1,830 = ₱5,900 per gang day. Gang size = 1 + 4 + 3 = 8 people.

Step 2: total labour cost

₱5,900 × 12 days = ₱59,000 + ₱11,800 = ₱70,800, gone from the account whatever the weather did.

Step 3: the two output figures

Days lost = 1.5 + 0.5 = 2.0. Productive days = 12.0 - 2.0 = 10.0. Paid days = 12.0.

Step 4: the two rates, and which one goes in the bid

Cross-check against the money: ₱70,800 ÷ 2,640 m² = ₱26.8182 per m², the same figure, because total paid cost over total quantity is the same division.

The gap is ₱26.8182 - ₱22.3485 = ₱4.47 per m², or 4.4697 ÷ 22.3485 = 20.0 per cent of the productive rate. Not a coincidence: 12 paid days ÷ 10 productive days = 1.20 exactly.

With no separate standby item, ₱26.82 belongs in the bill, because it alone recovers what the payroll paid. The ₱22.35 figure is right only if the preliminaries carry a priced allowance for wet time and plant stoppage over the same gang and expected lost days, and that allowance was not also used to justify a lower output.

Step 5: statutory and on-cost loading

Wages are not the whole cost of employing a worker. Take an illustrative loading of 30 per cent, scoped to employer-side statutory costs on Philippine payroll: employer shares of social insurance, health and housing fund contributions, thirteenth month pay, service incentive leave, and an averaged holiday and rest-day premium. Treat every one of those components as something you confirm against current Philippine labour rules, not as a percentage this article vouches for. Entitlements carry statutory exclusions, contribution tables are revised periodically, and both need verifying for your own payroll and your own gang.

Scoped that way, the 30 per cent buys statutory items only. PPE, small tools and site supervision outside the gang are real costs, but carry them as separate priced lines rather than assuming this loading swallowed them, alongside head office overhead, profit, materials and plant, which it plainly excludes. Thirty per cent is an illustration, not a code requirement; the defensible number is your own annual on-costs divided by your own basic wages.

Loading = ₱26.8182 × 0.30 = ₱8.04545. Loaded rate = ₱26.8182 × 1.30 = ₱34.86 per m² (34.8636 before rounding).

That ₱34.86 is labour only, so it is not a rival to the ₱340 line that started the review: the bill rate also carries formwork material and its amortisation, plant, site overhead and profit. The build-up tests the labour content of that rate, not the whole of it.

Step 6: sensitivity

Say output falls 15 per cent. 220.00 × 0.15 = 33.00, so output = 220.00 - 33.00 = 187.00 m² per gang day.

Now the same 15 per cent adverse move on the other input. ₱5,900 × 0.15 = ₱885, so gang day cost = ₱5,900 + ₱885 = ₱6,785.

Output is the more dangerous input. The rate is proportional to gang cost, so a 15 per cent rise gives exactly 15 per cent; it is inversely proportional to output, so a 15 per cent fall multiplies the rate by 1 ÷ 0.85 = 1.1765, or 17.65 per cent.

Neither figure is the real exposure, because a bad job delivers both moves at once. Take them together: ₱6,785 ÷ 187.00 = ₱36.2834 bare, and ₱36.2834 × 1.30 = ₱47.17 per m², which is 35.3 per cent above ₱34.8636, roughly twice the worst single-variable case above. Test the pair, or the sensitivity flatters what the bid is actually carrying.

Step 7: convert to man-hours

Assume a paid day of 8 hours; use your actual figure if overtime was worked. Man-hours per gang day = 8 people × 8 hours = 64.

Before setting either figure against a published table, check the stated basis of that table: some quote pure working performance, others already include an allowance for normal lost time, and your figure has to match it. Put your 0.291 rather than your 0.242 against a table that excludes lost time and you have measured the weather, not the crew.

What this rate assumes

Every number above rests on inputs a reviewer can fairly challenge. Name them before the reviewer does.

What a usable daily record contains

The unit matters most: a record saying the gang finished one deck is useless unless someone can still say what that deck measured in contact area.

Building a rate library

A rate library is one row per task per job, storing ingredients, not the answer: gang, gang day cost, both outputs, days lost with reasons, and the conditions — floor height, access, deck size, repeat cycles. Keep the wages it was built on, so the next estimator re-costs from today's payroll instead of escalating a stale number. Three finished jobs show a range, and a range with reasons beats one confident figure with no parentage.

If these build-ups live in spreadsheets that get copied and quietly diverge, the library is a data problem before an estimating one. The RHCES Estimator keeps a job's quantities and rates together so the build-up survives past the tender.

Common pitfalls

Questions from the bid review

Our output records are patchy. Should we wait until they are complete?

No. Price this bid with the best figure you have, write down what you assumed, then start recording properly on the next pour. One task measured well beats a year of unusable timesheets, and the first honest data point shows how far the inherited rate had drifted.

The gang mix changes during the job. Which one do I use?

The average gang that actually produced the measured quantity. If the mix changed enough that output changed with it, a week short of carpenters say, treat those days as a separate record rather than averaging them into the good weeks.