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Job Shop Quoting Labor Hours Accumulation

Posted by Dave Ferguson on Jan 25, 2010 1:12:02 AM

Labor time is very difficult to measure accurately when determining manufacturing time for a custom item.   If you ask 10 people to estimate how long it will take to cut a piece of wood, pipe, etc you would most likely find 10 different answers.  It even gets more extreme between the answers when there are large quantities involved or a large number of cuts involved.   Another factor which ways heavily on the estimate is the experience of the person doing the estimate.   The person doing the estimate usually bases how they calculate labor hours on how fast they think they could do the job.  The problem is different people perform the same tasks at different speeds and this is very likely that no two people will do it at the same speed.

One of the principles of effective labor estimating is the ability to use past knowledge and standards such as averaging past job performance.  Some think an opinion of a skilled technician is preferred over complex methods but if there are detailed standards available these metrics should produce more accurate results. Estimating labor hours for a job is a chore and can be very tedious.  Estimators are some of the better employees with knowledge of manufacturing process and engineering skills.  We must have accurate estimates of labor hours to support scheduling and promote productivity.

One of the ways to have a quality labor estimate is using labor hour cost performance trending where a job is run through the manufacturing steps, reviewed and continually improved based on the actual costs to perform the work.   The nature of job shop work is complex and estimators can't say with certainty how long a job might take. Maintenance work isn’t assembly line work. Job time depends on the actual condition of the equipment and the actual technician assigned. A estimator doesn’t always know exactly what needs to be done. The estimator doesn’t have perfect vision knowing exactly how many bolts need to be burned off. The estimators doesn’t know the actual condition of the equipment before dis-assembly. In addition, the person assigned to the job may or may not be a top technician. He or she might be the least-skilled technician on the crew. Experience shows that the best estimates are routinely off as much as 100 percent. A job estimated to take five labor hours might take as many as 10 hours or as few as two.

Some job shops instruct estimators to use industrial engineering standards for each tiny portion of a job. For example, estimators figure how long each bolt should take to be removed times the number of bolts and then add how fast a typical person walks times the distance the job is from the shop. They add the job elements together for a total plan estimate. Not only does this type of estimate take a long time, it’s not always very accurate or 100 percent correct.  This method is more appropriate for estimating an assembly line task. The execution of an assembly line task thousands of times in a week (or day) justifies the time spent on the estimate. Specific maintenance tasks are usually unique in their actual conditions.   There is free labor estimating software which assists in estimating these labor costs.

Some estimators take strict averages of hours for previous executions of similar work. Some CMMS programs even average past work automatically. The problem with this approach is two-fold. First, execution of the work is, at best, an average. If technicians took too long on past work, their performance carries into the future estimate. The past performance also can include activities such as time associated with interrupting the work. Second, we want a standard, even if not an engineered one. We want to know how long the job should take a qualified tech to perform, but we don’t want an estimate to include lesser-skilled technician efforts or unusual past problems.

MIE QuoteIt from MIE Solutions offers free quoting software for step by step quoting.  The quoting software is very user friendly and offers customization of operations, materials, formulas and even table lookups.   Please visit our website and take a tour of the free quoting software instead of the old method of quoting in excel.

http://www.mie-solutions.com

Topics: Bill Of Materials, company, Estimating, free quoting software, free templates for quoting, labor estimating, labor estimation

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