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Piecerates

 

 

Construction Piece Rate Factors

Several factors affect piece rate plans, so that different companies with different circumstances will develop different payment plans. This analysis explains the factors and their significance.

After you have read this to get the feel of piecerates and what is involved, print it out and mark it up as it relates to your particular circumstances; to outline for yourself just what you have in mind and to judge how the factors can affect your piecerate scope and actions.

Replying "yes" to A.1 is a wrong answer; but otherwise, although answers may ease or complicate your piece rate implementation, they won't automatically stop the show.

If you are serious about piecerates, I invite you to share your answers with me. I'll suggest what you can expect in the particular circumstances; what benefits a company can typically gather, what costs and what operating issues are likely. There may also be techniques other than piece rates to achieve what you seek, and if so I'll point them out.

There is no charge or obligation for preliminary discussions. E-mail Jack Greene, at

jack@jacksonproductivity.com, or call 843-422-1298; in California 626-375-2468.

 

A. Business Purpose

 1. Are you interested in piece rates to avoid paying the minimum state or Federal wage?
A terrible idea, it won't work, can't work, forget it. .

 2. Are you interested in piece rates to improve labor efficiency, cut project cycle time, focus on cost control throughout your organization? ......
A terrific idea, with great potential for the company and its workers.

 3. What is the primary construction trade that your company engages in?.................
Is the business primarily in the residential or the commercial segment? ...............
General contractor or sub? ...............
Piece rates are practiced in essentially all trades. Same theory, different detail and rates.

 4. Is a labor union involved? ...... JPR is experienced in both unionized and "non-union and planning to stay that way" situations. A credible plan will be fair and transparent, so that it will be acceptable to a union.

 

B. Is your interest in piece rate coverage for

 1. Tradesmen? ...... How many? ......

 2. Superintendents? ...... How many? ......

 3. Support, staff, and administrative? .................. How many? ......


All these options are quite possible, alone or in combination. The structure and rates won't be the same for different groups, you'll measure different results, but any or all can be effective.

 

C. Tools that can be involved in piecerate administration

 1. Does your company have estimators? ...... How many? ......

The following questions relate to the administrative tools in use already. An effective piecework system will not re-invent estimating and bookkeeping, but will relate to, use and augment the present mechanisms. JPR does not sell, or recommend, any of these software packages so we are completely objective.

 2. Does your company use an estimating software package? ...... Which? ...............
Are estimated times for bidding: established from the software package, from estimator's experience, from input from management or superintendents, from actual field results? Mark all that apply.

 3. Does your company use an accounting software package? ...... Which?...............

 4. Does your company use a project management software package? ...... Which? ...............

 5. Do superintendents have access to any of the software results on-line? ...... Which programs? ..................
Is their access mobile; phone, pad, laptop? Mark any that apply.

 6. Is payroll administered in-house or through a contract firm? ............ If contract, does the firm have a capability to calculate piecerate, either with software or manually? ......

 

D. Expectations

 1. Are tradesmen currently expected to perform at a given output rate? ......

 2. Are expectations written down and formal? ......

 3. Do expectations vary within the company, for instance between superintendents? ..................

 4. Are expectations based on: past performance, formal work bids, estimates, estimating software values, local area practice, work study, other? Mark all that apply.

 5. Does the company utilize expected work times sourced from one or more internet web sites, or cell / smart phone applications? ...... Which? ..................

 6. Do you use expected work times to set crew size,...... or to balance the work of crews? ......
(You really should; bigger crews are not necessarily better.)

 

E. Reporting
One masonry client believed that reliable, targeted, reporting was as important to his profitability as piecerates. He was right. JPR assures that reporting is set up to support piecerates.

 1. Is labor reporting from the field in place already? ...... Time worked? ...... Other ............ ?

 2. Are reported actual hours tied to particular construction projects? ......Are reported actual hours tied to particular construction projects? ......

 3. Are hours tied to particular output: blocks laid, or slabs poured, or roofing squares, or junction boxes wired, or pipe run, or HVAC element installed? Explain ..................





 4. Is there formal reporting of delay; ...... man hours lost ......, or cause ......?

 5. Is project completion percentage reported? ...... Is it compared to expected, or to bid completion over time? ...... Are project completion dates formally compared to plan,...... individually ......, in total ......?

 6. Are expected or bid hours compared to actual hours?...... Through the financial system? ...... Otherwise? ............



 7. Do your construction sites have real-time cameras in place? ............

 

F. Local area pricing

 1. Does your company sub-contract work out? ......

 2. Are there prices in your community for the main elements of construction work that your company is engaged in, such as block laid, cubic yard poured, square feet of roofing or stucco or dry wall, number of fixtures, linear feet of pipe? This pricing will generally be the amount that subcontractors ask for their services. Explain





If so, it is very useful to relate employee piece rates to local pricing. Understanding the relationships between local pricing, estimates and labor piece rates offers a superior mechanism to control labor cost and expectations.

 

 

After you have read this

After you have read this to get the feel of piecerates and what is involved, print it out and mark it up as it relates to your particular circumstances; to outline for yourself just what you have in mind and to judge how the factors can affect your piecerate scope and actions.

If you are serious about piecerates, I invite you to share your answers with me, I'll suggest what you can expect in the particular circumstances; what benefits your company can expect, what costs and what operating issues are likely. There may also be techniques other than piece rates to achieve what you seek, and if so I'll point them out.

I invite you to E-mail Jack Greene, at

jack@jacksonproductivity.com, or call 843-422-1298; in California 626-375-2468.