McCadden: How Many Field Employees Does Your Remodeling Business Need?

by Kyle Clapham

I recently offered guidance in this column on determining the true cost of labor for your field employees. Knowing the true cost for each individual employee is empowering in many ways. One extremely valuable way is that it allows you to easily determine whether you have enough, too many or too few field employees on staff for the work you have scheduled.

Also, if your pool of available labor is limited in some way, you can avoid overpromising on schedule. By really knowing and understanding your labor capacity, customers will appreciate your honest and accurate assessment of completion dates, and subs will come to learn that your projects will really be ready for them when you said they would be ready.

Total Labor Capacity

If you know the annual cost of labor for each individual field employee, you can simply add up the total annual cost for all field employees. This represents the total dollars of labor your business has available “on the shelf” to schedule for the coming year. You can also do the same for each individual quarter, month or week.

You can get much more detailed by factoring in how part-time workers as well as employee vacation, holiday and other non-productive hours affect what labor will be available on the shelf for any specific period. This level of detail enables you to create much more accurate and realistic schedules.

The truth of the matter is that the pace of work will actually be completed during a given timeframe is relative to the real amount of labor available when you assign tasks to create your individual job schedules. If you do this for all jobs you can create a much more accurate production schedule for all jobs.

Estimated Hours, Estimated Dollars

The accuracy of your schedule is highly dependent on the accuracy of your estimates. Your business must first determine the hourly burdened labor cost it will use for each hour of task time in your estimates. I recommend using one labor rate regardless of how many employees you might have at different labor costs.

To do this, I typically recommend you use your highest-paid field employee’s burdened labor rate, but also assume that person’s productivity per hour when estimating the time to do each task on the estimate. The accuracy of this strategy also assumes the pay rates for all other field employees are relative to their productivity as compared to that of the highest-paid worker.

If broken down by task, your estimate will therefore create a labor budget for each task. To determine how many hours the task will take within your schedule, divide the labor budget by the total cost of the actual person or crew you plan to assign to each task.

For example, if you budget $5,000 for the framing and you assign two carpenters whose total crew cost is $100 per hour, that task should be scheduled for 50 crew hours. This highlights the important differences between estimated hours and estimated cost when it comes to accurate scheduling of multiple staff with varying levels of productivity.

However, if you only have a two-man crew on staff, and you put those same two individuals together on every job, you can estimate and schedule using their specific crew cost and productivity. If you never plan to grow past one two-man crew, things can stay simple. However, if you plan to grow, I suggest you do what I describe above.

Do You Have Enough or Too Much?

What if you must get a project, or even a specific individual project task, done by a certain date? The number of employees you’ll need to assign to that project is determined by dividing the labor budget by the number of crew hours available between start and completion.

For example, if you budget $5,000 for framing and need to complete the work in five eight-hour working days (40 crew hours), you need to assign a crew of employees whose total cost is $125 per hour ($5,000 ÷ 40 hrs.). If the work must be done in four workdays (32 hrs.), you need to assign a crew of employees whose total cost is just under $167 per hr. ($5,000 ÷ 30 hrs).

Complexity Needed for Accuracy

During my career as a remodeling consultant, I’ve heard a lot of pushback from remodelers who claim this strategy is too complicated. These are typically remodelers who estimate in hours and then assume regardless of which employee they put on the task, that employee is expected to complete the task or tasks in the estimated hours.

Unfortunately, this can only be true if every one of your field employees performs at the same productivity level and are all paid at the same hourly rate. I ask, when was the last time that happened? Plus, what message are you giving someone paid $20 per hour if you expect them to do something in the same amount of time as a fellow employee who gets paid $30 per hour.

There is a difference between a business owner and someone who knows how to manage a profitable business. In my experience, those who find this strategy too complicated and reject it are those who think they make money by doing the work. There are many remodelers who can get the work done. The ones who consistently earn a profit when doing the work are the ones who also know how to predict cost, properly price and then sell their work at that price.

Understanding labor costs, how to use them to hire, compensate and schedule workers not only gets the work done, but it also helps make sure you get enough work done to cover overhead and make a good profit. QR

Shawn McCadden is a speaker, business trainer, columnist and award-winning remodeler with more than 35 years of experience. He can be reached at

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