What is the difference between individual labour rates and unit cost pricing for labour?
Background
When estimating labour costs, users can price labour in two ways, Individual Labour Rate or Unit Cost Pricing. Understanding the difference between these two methods is essential for accurate and flexible job costing.
Answer
What is an Individual Labour Rate?
Individual Labour Rate pricing calculates labour based on the number of labour hours required and the hourly labour rate. It provides greater detail and flexibility for estimating labour-intensive or variable tasks. Best for jobs with variable complexity or where tracking labour hours is important.
To calculate labour using this method, you'll use the following:
- Labour Rate - The cost per labour hour.
- Unit Labour (Hours) - Estimated hours needed per unit of work.
- Difficulty Factor - Multiplier applied to labour hours to account for complexity or site team size.
- Total Labour (Hours) - Unit Labour × Quantity × Difficulty.
- Total Labour Cost - Total Labour (Hours) × Labour Rate.
What is Unit Cost Pricing for Labour?
Unit Cost Pricing assigns a flat labour cost per unit of measure. This method simplifies labour cost estimation without tracking hours or difficulty. Ideal for repeatable, standardised tasks where labour requirements are predictable.
This method relies on the following inputs:
- Labour Cost (per unit) - Fixed cost of labour per unit of measurement.
- Total Labour Cost - Quantity × Labour Cost (per unit).
Individual Labour Rate vs. Unit Cost Breakdown
| Feature | Individual Labour Rate Pricing | Unit Cost Pricing |
|---|---|---|
|
Labour Calculation Method |
Based on labour hours and difficulty |
Based on cost per unit |
|
Tracks Hours and Complexity? |
Yes |
No |
|
Level of Detail |
High |
Moderate |
|
Ideal Application |
Custom or complex work |
Repetitive or standardised work |
Other Considerations
- Your default labour method is configured at the tool level (Bid Board or Estimating tool). You can still override it per estimate.
- Both methods feed into downstream tools such as budgets, change orders, and proposals with corresponding labour calculation logic.
- The unit cost view provides richer detail and transparency into individual components.
How Do I Configure This in Procore?
- To configure at the company level, follow steps to Configure Default Estimating Settings.
- To configure at the project level, follow steps to Configure Settings for an Estimate in the Estimating Tab.