CEMP-E/CECW-E
EI 01D010
1 September 1997
Army (DA) Form 5420-R or similar local forms, or
CHAPTER 5
MCACES.
LABOR
b. Wage rates are generally well defined. The
5-1. General
Davis-Bacon Act, PL 74-403, requires a contractor
performing construction in the United States for the
a. Direct labor costs are defined as base wages
Government to pay not less than the prevailing rates
plus labor cost additives including payroll taxes,
set by the Department of Labor. A schedule of
fringe benefits, travel, and overtime allowances paid
minimum rates is included in the project specifications
by the contractor for personnel who perform a
and is normally kept on file for each location by each
specific construction task. In addition to the actual
local Office of Counsel. The cost engineer should
workers, there are generally working crew foremen
consult with the District Labor Advisor on any
who receive an hourly wage and are considered part
questions regarding determination coverage, specific
of the direct labor costs.
definitions, or concerns. Where labor is in short supply
for certain crafts in the area, or the work is in a remote
b. Indirect labor costs are wages and labor cost
area, or it is well known that rates higher than the set
additives paid to contractor personnel whose effort
rate scale will be paid, these higher wage rates should
cannot be attributed to a specific construction task.
be used instead of the minimum wage since this would
Personnel such as superintendents, engineers, clerks,
be required of the contractor in order to attract labor to
and site cleanup laborers are usually included as
the job. The wage rate should be adjusted to include
indirect labor costs (overhead).
travel time or night differential where these are a
customary requirement.
5-2. Crews
c. For a long duration project, where future wage
Direct labor cost requirements are broken into tasks
rates are known and used, care must be taken to avoid
of work. Since each task is usually performed by a
duplication by also applying an escalation rate to such
labor crew including equipment, the crew must be
costs.
defined, costed, and a production rate established for
the task. Crews may vary in size and mix of skills.
5-4. Overtime and Shift Differential
The number and size of each crew should be based
on such considerations as having sufficient workers
a. The cost engineer should carefully consider the
to perform a task within the construction schedule
available working time in the construction schedule for
and the limitation of work space. Once the crews
each task accomplishment in a normal time period.
have been developed, the task labor costs can be
The efficiency of both the second and third shifts
determined based on the production rate of the crew
should be adjusted to recognize that production will not
and the labor wage rates.
be as high as the day shift for most types of
construction operations. A three-shift operation should
5-3. Wage Rates
normally be avoided due to a lower labor efficiency and
the requirement to include equipment maintenance.
a. A wage rate must be developed for each labor
craft which will represent the total hourly cost rate to
b. Overtime should be included in the labor cost
the construction contractor. This total rate will
computation when work in excess of regular time is
include the base wage rate plus labor overtime,
required by the construction schedule or is the custom
payroll, taxes and insurance, fringe benefits, and
of labor in the local vicinity. Overtime is normally
travel or subsistence costs as further described in this
calculated as a percentage of the base wage rate. It is
chapter. The composite wage rate for each craft will
usually based on time and one-half, but may be double
be used for development of the estimate. The
time depending on the existing labor agreements. Tax
computation will be prepared on Department of
and insurance costs are applied to overtime, but fringe
5-1
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