Cost of employing someone?

[bluesj]

Hi all does any one have any knowledge of what it costs to employ someone, thinking along the lines how much does it cost an employer over what the employee gets? No bosses around to ask.

Without going in to the details we are tendering for a contract and part of it is to put in a price to be payed the in the event that we are held over on a job and not able to go back to work for up 72 hours, as we don't think this is very likely (hasn't happened yet) we don't want to put in a to high price as it would count against us in the contract as a whole. 

[eddoakley]

Not quite sure what you mean but if you are asking what a day rate is charged at compared to what is paid to the actual person doing the work then that varies depending on a whole lot of things.

I would suggest that you should at the very least be charging double what the person doing the job is paid, probably more like triple but some more info would help.

I hope I've understood the question.

 

Edd

[bluesj]

Thanks for the reply, I was more after what it costs my boss if he pays me £15 a hour how much does that hour cost him. As all the bosses have gone of on holiday and left us to it we were hopping to get the tender in place so they can look it over  and give the ok.

We are trying to cut the costs of parts of the contract that aren't likely to happen so the whole contract price looks better. sort of cut a few quide off something that isn't going to happen and put a pound on some thing we will do every day. 

[prem1234]

As eddoakley has said it's a bit of a hard one to be specific due to the proposed pay structure, bonus, company vehicle, overtime, pension contribution etc but if it's a normal flat rate working (no weekend out of hours etc) I'd go for a minimum of 2 times the base hourly rate as a starter and go up from there.

[team tractor]

We base it on double.

if I pay £80 a day it costs me £160 

6 weeks holiday 

pensions

NI

tax 

 

i know not on subject but I normally ask lads how much I can charge them at and it always shocks them . 

 

[bluesj]

2 minutes ago, team tractor said:

We base it on double.

if I pay £80 a day it costs me £160 

6 weeks holiday 

pensions

NI

tax 

 

i know not on subject but I normally ask lads how much I can charge them at and it always shocks them . 

 

Shocked me too, I was expecting it to be another 10 or 15 % may 25% at a push not 100% more!!!

[eddoakley]

 

Bit of a tricky one if you are trying to make the rates look different for things that are "not likely to happen".

Things like that will be spotted by anyone worth their salt.

Keep the rates the same, it might seem clever taking a bit off one part so that it can be added to another but in my experience it's not worth the hassle.

As before I would say that charge out cost is at least double what the employee earns but there are just too many factors to be able to be specific.

What trade/industry? Where in the world? What's the contract value? What's the previous with the client? How badly do you want the work? Is it exactly what you normally do? In the same areas? How do you have the opportunity to tender? Do you have materials or other upfront costs? If so what is your margin and terms to pay for that?  And many many more factors.

There's a reason that it's normally one person (group) that do the tenders. It's not simple.

 

Edd

Edited December 4, 2018 by eddoakley

[bluesj]

3 minutes ago, eddoakley said:

 

Bit of a tricky one if you are trying to make the rates look different for things that are "not likely to happen".

Things like that will be spotted by anyone worth their salt.

Keep the rates the same, it might seem clever taking a bit off one part so that it can be added to another but in my experience it's not worth the hassle.

As before I would say that charge out cost is at least double what the employee earns but there are just too many factors to be able to be specific.

What trade/industry? Where in the world? What's the contract value? What's the previous with the client? How badly do you want the work? Is it exactly what you normally do? In the same areas? How contour have the opportunity to tender??? And many many more factors.

There's a reason that it's normally one person (group) that do the tenders. It's not simple.

 

Edd

The problem with different rates for different parts of the contract are not a problem as such, as they have asked for rates for different parts of the contract. Like rates for traveling rates for working away from the yard and rates for working at the yard and rates for waiting time, one job would have 2 of these and most would have 3. so a different rate for sitting around watching telly is not a problem.

You're right about this tendering lark not being simple! think that's why the boss said see what you can do with that and I'll see you in January ☹️

It was a lot easier just sub contracting to someone else, it just boiled down to someone asking can you do this job for that much, just say yes and the order was placed. 

[team tractor]

21 minutes ago, bluesj said:

Shocked me too, I was expecting it to be another 10 or 15 % may 25% at a push not 100% more!!!

I’ve asked my lads if they’re worth £200 a day ? They’re good lads and say no. I ask could I charge their parents £200? They know it’s not possible.

thats £500 a week £2k a month £24k a year. It takes a lot of earning in our trade. . 

Im lucky my lads are great and understand and will get there but it’s early days and barely out there teens. 

[itchy trigger]

back in the day, when I was subcontracted out, the company charged £48 plus vat hr, I was paid around £16/£17 hr

that was over 10 years ago

Edited December 4, 2018 by itchy trigger
10 years ago

[bluesj]

4 minutes ago, team tractor said:

I’ve asked my lads if they’re worth £200 a day ? They’re good lads and say no. I ask could I charge their parents £200? They know it’s not possible.

thats £500 a week £2k a month £24k a year. It takes a lot of earning in our trade. . 

Im lucky my lads are great and understand and will get there but it’s early days and barely out there teens. 

Until this contract  our time has never been charged as such, the company charges a fixed rate per job makes no difference if it takes 10 minutes or 3 hours, same for mileage 5 miles of 55 makes no difference to the price charged

[eddoakley]

10 minutes ago, team tractor said:

I’ve asked my lads if they’re worth £200 a day ? They’re good lads and say no. I ask could I charge their parents £200? They know it’s not possible.

thats £500 a week £2k a month £24k a year. It takes a lot of earning in our trade. . 

Im lucky my lads are great and understand and will get there but it’s early days and barely out there teens. 

I don't know where some people get their figures from!

I am always looking for tradesmen and some of the rates they ask for are just unbelievable.

If I sub a job to someone and it's just a price then it doesn't hurt so much but for example I had a plumber quote me £3600 labour only for a domestic install recently. I questioned the price and he said "yeah but I will get it done in a week for you". That's crazy, £3600 a week!! I know full well what the overheads are for a one man band like him and he was taking the proverbial.

I've advertised for carpenters, Had one number passed on and the guy came to see me.

"I'm looking to take things a bit easier, don't want to be running around putting on big roofs so the job you are offering sounds great. I will have to bring my own labourer and we are £450 a day- cash"

I nearly fell off my chair laughing.

I've never paid great rates but my guys never have time off. Subbies that have had work 5-7 days a week for 3 years without a break. That's worth a lot more than a better rate in "small building works"

 

Edd

6 minutes ago, itchy trigger said:

back in the day, when I was subcontracted out, the company charged £48 plus vat hr, I was paid around £16/£17 hr

that was over 10 years ago

Sounds about right to me but there are other factors too.

I'm sure I remember an accountant telling me many years ago when I first started that I should be charging 3 times what I was paying.

 

Edd

Edited December 4, 2018 by eddoakley

[millrace]

Day rates should not be counted in your tender....if thats what your describing so dont cut them .....you should be costing the works and then im fairly sure what they are asking for is treated an an item....so not part of works package but  its what you will be payed if something occurs so go with fair rate or else they can just give you work at your cut price day rate as per your tender and then your royally up said creek.....

[team tractor]

33 minutes ago, eddoakley said:

I don't know where some people get their figures from!

I am always looking for tradesmen and some of the rates they ask for are just unbelievable.

If I sub a job to someone and it's just a price then it doesn't hurt so much but for example I had a plumber quote me £3600 labour only for a domestic install recently. I questioned the price and he said "yeah but I will get it done in a week for you". That's crazy, £3600 a week!! I know full well what the overheads are for a one man band like him and he was taking the proverbial.

I've advertised for carpenters, Had one number passed on and the guy came to see me.

"I'm looking to take things a bit easier, don't want to be running around putting on big roofs so the job you are offering sounds great. I will have to bring my own labourer and we are £450 a day- cash"

I nearly fell off my chair laughing.

I've never paid great rates but my guys never have time off. Subbies that have had work 5-7 days a week for 3 years without a break. That's worth a lot more than a better rate in "small building works"

 

Edd

Sounds about right to me but there are other factors too.

I'm sure I remember an accountant telling me many years ago when I first started that I should be charging 3 times what I was paying.

 

Edd

I’ve had them ask for £25 an hour employed as a joiner . EMPLOYED... 

If you need joinery I pass your way monthly in the summer 👍. 

[bluesj]

3 minutes ago, millrace said:

Day rates should not be counted in your tender....if thats what your describing so dont cut them .....you should be costing the works and then im fairly sure what they are asking for is treated an an item....so not part of works package but  its what you will be payed if something occurs so go with fair rate or else they can just give you work at your cut price day rate as per your tender and then your royally up said creek.....

The bit we are struggling with is not so much a rate for working but more a compensation rate to be payed for up to 72 hour if we are not allowed to return to work or home or to be on standby at a job site.

We could be asked to go to a site and be on standby to do a job, if we then got asked to do the job we get payed the job rate if we don't have to do anything we would get a standby rate, or we could get a job that after its done we are not allowed to leave for up to 72 hours.

Its very complicated and doing my head in! the problem is that if someone else puts in prices the same as us for every thing but their standby rate is £1 an hour less they get the contract and we loose out on a 4 year contract that is worth around 30k a year and growing and for a company with 2 employees that worth having plus if someone else gets it it will put them in contact with some of our customers 

[eddoakley]

11 minutes ago, bluesj said:

The bit we are struggling with is not so much a rate for working but more a compensation rate to be payed for up to 72 hour if we are not allowed to return to work or home or to be on standby at a job site.

We could be asked to go to a site and be on standby to do a job, if we then got asked to do the job we get payed the job rate if we don't have to do anything we would get a standby rate, or we could get a job that after its done we are not allowed to leave for up to 72 hours.

Its very complicated and doing my head in! the problem is that if someone else puts in prices the same as us for every thing but their standby rate is £1 an hour less they get the contract and we loose out on a 4 year contract that is worth around 30k a year and growing and for a company with 2 employees that worth having plus if someone else gets it it will put them in contact with some of our customers 

This info helps me to understand a little better but your standby rate has to be the same as any other rate.

You are still at the job and not able to do other work (elsewhwhere). The cost per man per hour is the same whether he is doing his job or reading the paper.

Do the men get paid more/less for what they do or for how long they are in work?

I wouldn't worry about someone quoting less than you for the standby, I don't see anyone charging less to be on site but not actually working. The hourly rate will be the deciding factor I should think

 

Edd

Edit to say that one exception might be "danger money".

If the job is "dangerous" and as such highly paid then time on site but not actually doing that job might be a different matter?

But surely in this day and age of h&s everywhere then nothing is dangerous.

 

Edd

Edited December 4, 2018 by eddoakley

[bluesj]

2 minutes ago, eddoakley said:

This info helps me to understand a little better but your standby rate has to be the same as any other rate.

You are still at the job and not able to do other work (elsewhwhere). The cost per man per hour is the same whether he is doing his job or reading the paper.

Do the men get paid more/less for what they do or for how long they are in work?

 

Edd

The problem is the way the tender is written there are a few different parts to it, 1 how much to go to site do the job at a unit rate with in an allotted area, it could be 1/2 a mile from the yard or it could be 50 miles away it could take 15 minutes it could take 3 hours, it could be 1 unit or 21units one price fits all we would get payed per unit. Not a problem that's how we work now but then we have to price for mileage out side our area mostly not a problem just the cost of doing a mile plus a bit and an hourly rate for basically not actually doing any thing but being there again cost plus a bit what I wanted to know was what % more does it cost my boss that the amount he pays me and it would seem that for every £100 he pays me it cost him another £100 in  NI, pension, holiday etc.

[grrclark]

So many variables in your question.

If salaried and paying minimum pension, minimum holiday pay and statutory sickness, etc then factor as a minimum about 12% of the employees gross salary before you consider anything else.

That assumes regular working hours in a regular location.

 

[bluesj]

3 minutes ago, grrclark said:

So many variables in your question.

If salaried and paying minimum pension, minimum holiday pay and statutory sickness, etc then factor as a minimum about 12% of the employees gross salary before you consider anything else.

That assumes regular working hours in a regular location.

 

Top man that was what I was looking for.

 

 

[Lloyd90]

The standby rate has to surely be the same as the working rate, because being sat there twiddling your thumbs stops you from going somewhere else to work. 

You’d have to be mad to let them pay you peanuts whilst they mess you about, it gives them no incentive to get their act together! 

 

For me  it’s a bit like my experience of having a lodger, our friends got a lodger to help towards the bills, they found someone they know and they agreed amongst them that he would only pay for the nights that he stayed, as he only stayed there 3 nights a week. I thought this was mad. 

 

We also got a lodger, a friend of a friend who works away for months at a time on oil rigs, I told him the cost and we agreed that even when he is away he still pays, because otherwise I’d prefer to rent to someone else, as even when away I can’t put someone else in his room etc as it has all his stuff. 

 

You have to factor in the opportunity cost. The cost of you missing out on other opportunities whilst sat there doing nothing. 

[bluesj]

Thanks every one for all the pointers. Its safe to say that I will not be applying for any job tendering for work! this one is doing my head in because it just doesn't make sense.

I can't say much about it because I'd be in breech of contract!. But we have got to give them prices mileage unloaded and loaded. a price for lets say knocking down a big wall in red brick, a big wall in black brick, a medium wall and a small wall then prices if we do 5, 10, 15 etc walls and taking them away, then a hourly, half day and day rate for sorting bricks, All straight forwardish. 

but they also want an hourly, half day and daily rate for knocking down walls this has to include all expenses, travel, tools, tolls etc and also accommodation but this is being a bit of a problem, we worked out worst case we would have to charge £450 to £1450 (can't actually pin someone down to a cost for part of it)a day and if the job only took an hour of on sit time it would work out to around £1300 an hour just to cover costs best case  it would around £150 a day or £25 an hour to cover cost. How the hell do you work out what to charge when there could be a difference of over 5000% in the cost! 

 

[grrclark]

What the process sounds like to me is that the business who have issued the tender are making the exercise as difficult as possible for tenderers to complete because they already have a partner in mind they want to work with.

By having everything broken down as it is they are laying so many bear traps to allow then to exclude folk, but whilst still running a tender process that technically gives everyone a fair crack.

Is it a public sector deal?

You would expect them to ask for a blended price to keep it simple, otherwise it will be a crazy contract to manage from their side.

[bluesj]

Yes its a government department!

We got a letter from them this morning regarding other work we do for them saying that we will now be charged for the compulsory inspection they carry out. Will be interesting to see what their mileage and hourly rates are!  

Edited December 5, 2018 by bluesj

[Lloyd90]

14 minutes ago, bluesj said:

Yes its a government department!

We got a letter from them this morning regarding other work we do for them saying that we will now be charged for the compulsory inspection they carry out. Will be interesting to see what their mileage and hourly rates are!  

You do work for them, but they’re going to charge you to come and have a look at it?! 

Plenty of people I know flatnout refuse to work for council or government contracts as they’re an absolute nightmare, and as no one actually owns anything they don’t really care how much they mess you about. 

[grrclark]

9 minutes ago, bluesj said:

Yes its a government department!

We got a letter from them this morning regarding other work we do for them saying that we will now be charged for the compulsory inspection they carry out. Will be interesting to see what their mileage and hourly rates are!  

I’m not surprised at all it is a government contract, for whatever reason they place a far greater emphasis on the process of running the tender than the actual qualitative assessment of the bidder and offer.

Be content that there will be someone sat in an office whose sole function will be to micro manage how many black or red bricks are taken down and how much time was spent between sleeping, eating, working, eating, etc and will add absolutely no value to the process and wont save any public money as in order to make sure that you are getting paid properly you will have to employ someone just to manage the billing process, and put the costs up to cover that.

They will dispute at least 50% of the claims as they have to be seen to be doing their job and that will slow everything down and of course that puts the price up too.

Government bids are a menace.