Transcript Construction Labor: Costs and Unions

Construction Labor:
Costs and Unions
Module 6.1
Halpin Chapter 13, and Others
October 29, 2002
RAT #06-01-1



Take out a piece of paper, put your
name on it, and … …
What is a CPFF Contract and what are
they used for? (take 2-minutes)
Turn in … …
November 3, 2002
Maxwell
2
Purpose


To expose students to some facts about
the relationships between labor and
management and how it will impact
them.
To provide a basis for understanding
how labor costs are determined and
charged against projects.
November 3, 2002
Maxwell
3
Learning Objectives


Students must be able to outline the overall
history and impact of Labor Unions in general
and upon construction in particular.
Students should be able to compute labor
rates and costs from given data and
circumstances.
November 3, 2002
Maxwell
4
Labor is THE Major Resource




Labor
Labor
Labor
Labor
November 3, 2002
Productivity
Costs
Laws
Organizations
Maxwell
5
Labor Legislation


Table 13.1 – Goes from Sherman
Antitrust Act (1890) to Civil Rights Act
(1964)
Formation of AF of L (1886) to the
Consolidation of AFL-CIO (1955)
November 3, 2002
Maxwell
6
A Short History …




1890: Sherman Antitrust Act used to break up
Unions – Pinkertons hired as private armies
by Corporations to bust strikes.
1932: Norris-LaGuardia Act (anti-injunction)
prevented courts from protecting
Corporations from the formation of Unions.
1931: Davis-Bacon Act forced Corporations to
pay “prevailing” wage on Federal Projects.
1938: Fair Labor Standards Act forced
Corporations to pay a minimum wage.
November 3, 2002
Maxwell
8
A Short History …



1935: Wagner Act – National Labor Relations
Act established a list of unfair labor practices
by employers. (Table 13.2)
1947: Taft-Hartley Act curbed union abuses
resulting from WW II labor shortages. (Table
13.3)
Look at the details in Tables 13.2 and 13.3
and contrast the results.
November 3, 2002
Maxwell
10
Texas “Right to Work Law”
November 3, 2002
Maxwell
11
Exercise # 6.1.1




Take out a sheet of paper and write you
name and team.
Individually, If you have been employed
in Texas, what was the job and the
hourly rate?
As a team, generate a single list.
As a class, let’s discuss the effect of the
“right to work” law on you.
November 3, 2002
Maxwell
12
Other Legislation




Protects Individuals from abuses by
Labor and Management
Provides improved oversight over union
elections
Provides increased government over
record keeping and finances
Protects union members from racial and
sexual discrimination
November 3, 2002
Maxwell
13
How is Labor Organized?



Organized by Industry – Congress of
Industrial Organizations (CIO): United
Auto Workers, United Mine Workers
Organized By Craft: American
Federation of Labor: Iron Workers,
Bricklayers, etc.
The AFL-CIO formed in 1955.
November 3, 2002
Maxwell
14
Construction Unions
November 3, 2002
Maxwell
15
Local Unions



Local Union Business Manager – Employee of
the Union. Responsible for ensuring a pool of
skilled workers available, etc. (Ideally!)
Shop Steward – Your employee usually elected
by fellow workers to provide a working interface
between them and the local union and the
company supervisors. (Ideally!)
If you have the right political skills and everyone
(including yourself) is honest and fair, you can
work this arrangement to your advantage.
(Sweetheart Unions)
November 3, 2002
Maxwell
16
Jurisdictional Disputes and/or
Enforcement of Work Rules



This is a big problem as seen by construction
management because it determines WHO
does the work. This in turn may dictate how
the work is done.
Labor sees this as a way to protect the jobs
of members.
Source of many blatant union and company
abuses.


MBTA Example
T.C. Cage BBNP example.
November 3, 2002
Maxwell
17
RAT #06-01-2



Take out a sheet of paper, put your
name on it, and … …
Take 2-minutes to describe the impact
of the Texas “Right to Work” Law.
Pass to the aisle and front in 30
seconds.
November 3, 2002
Maxwell
18
Labor Costs

Labor Costs fall into four general categories.




Direct: those costs that actually go into the product.
Includes the employee’s share of insurance, pension,
taxes, etc.
Fringe Benefits: includes: insurance (employer’s
share of, health, life, disability, unemployment, etc.),
pension (401k, etc.), vacation, holidays, sick leave,
“personal days”, etc.
Taxes: Employer’s share of FICA, unemployment,
worker’s compensation insurance, pension, etc.
Indirect: Includes training, subsistence, travel, etc.,
termination expenses.
November 3, 2002
Maxwell
19
This is an example
of how complex
the math can get
for non-exempt
personnel.
Question: Who is
“exempt” from the
protection of the
“wages and hours”
law?
Why does it matter?
How are these
numbers usually
demagogued?
Exercise # 6.1.2


Depending on the actual percentages
and what they apply to, it may be
cheaper to pay premium time for a
reduced work staff that to hire extra
workers at straight time.
Can you come up with an example?
November 3, 2002
Maxwell
21
Example of How to Use This in
a Consulting Environment.



Labor Cost is the critical factor in
Consulting.
The largest component is “exempt”
personnel.
What follows is and interesting example
of “the arithmetic” of consulting.
November 3, 2002
Maxwell
23
Overhead (a.k.a., Indirect
Cost) Calculation
“Dead Time”
November 3, 2002
Maxwell
24
Revenue Required to Maintain
the Company.
November 3, 2002
Maxwell
25
Contracting and Negotiating
Numbers
November 3, 2002
Maxwell
26
What Happens When You
Don’t Generate Backlog.
November 3, 2002
Maxwell
27
Affect of Overrun on Fee
November 3, 2002
Maxwell
28
PAT #6.1.4





Take out a sheet of paper, write you name and
team.
You are the Project Manager.
Your billing rate to the client is $150/hour.
If the direct salary multiplier (includes:
overhead, fringe benefits, etc.) is 3.00 and you
worked 50 hours last week, what was your gross
(before taxes, etc.) pay?
Turn in your answer after 1-minute of think
time.
November 3, 2002
Maxwell
29
Module Assessment

Please take 1-minute to write down the
“muddiest” topic on a sheet of paper
and pass it to the front.
November 3, 2002
Maxwell
30