1 September 1997
benefits and travel and/or subsistence costs are not.
state while the Federal unemployment tax will be
Example 5-1 shows overtime calculation for 40
constant for all projects. Insurance rates can be
hours regular time, plus 8 hours overtime at time
obtained from the state unemployment office,
and one half:
commercial publications, or the Bureau of Labor
d. The social security tax rates and the income
48 hours at straight time
= 48.00 hours
ceilings on which social security taxes must be paid
vary from year to year. Therefore, the cost engineer
8 hours at double time
must verify the rate to be used in the cost estimate.
paid equivalent straight time
= 52.00 hours
Current and future rates can be obtained from the
Social Security Administration.
(52 hrs paid/48 hrs worked
= 1.0833) -1 x 100%
e. The total percentage of the above taxes and
insurance is summed and then applied to the basic
c. Many construction projects utilize multiple
hourly wage rate plus overtime for the various crafts.
shift operations. When estimating direct labor costs
Example 5-2 illustrates the method for deriving the
for multiple shift operations, the cost engineer
total tax and insurance percentage. Since rates are
should estimate the number of hours to be worked
subject to change and in some cases vary by region, the
(include shift differential work loss) and the number
calculations shown are presented as an example only.
of hours to be paid for each shift based upon the
Actual values must be determined by the cost engineer
developed construction schedule. Differential shift
for the specific project.
premiums may need to be added to the hourly rate.
d. A tabulation of overtime percentages for
Workman's compensation and employer's liability
most conditions is shown in table 5-1. The
(varies with state and contractor) ........................ 7.60%
percentage also includes an allowance for the direct
work loss of multiple shift or shift differential, where
State unemployment compensation
(varies with each state) ...................................... 3.20%
5-5. Taxes and Insurance
Federal unemployment compensation ................ 0.80%
. Rates for all taxes and insurance should
Social Security & Medicaid ............................... 7.65%
verified prior to computation for the following and
any additional components.
Total taxes and insurance ................................ 19.25%
b. Workman's compensation and employer's
Note: Foreman and overhead labor rates must also
liability insurance costs applicable for the state in
include these applicable costs. See sample estimate
which the work is performed should be included in
sheets for method of application.
the composite wage rate. Insurance rates may be
obtained from the state if the state law provides a
5-6. Fringe Benefits and
monopoly or from insurance companies providing
this type insurance. The project compensation rate is
based on the classification of the major construction
a. Fringe Benefits. Fringe benefits may include
work and applies to all crafts employed by the
health and welfare, pension, apprentice training,
depending on the craft and the location of the work.
These summed costs are usually expressed as an hourly
c. Unemployment compensation taxes are
cost with the possible exception of vacation which may
composed of both state and Federal taxes.
be easily converted to an hourly cost. The type of
Unemployment compensation tax will vary with each