Creating Rates that Actually Reflect Reality

Rates: The Engine Room of Accurate Estimating

If quantities are the map, rates are the terrain. A beautiful takeoff with weak rates will still produce an unreliable estimate. In Australia, rates must reflect local labour markets, supply chain reality, and the builder’s delivery model (self-perform vs subcontract).

1. A Rate Is a Build-Up, Not a Guess

Every rate should be explainable as:

• Labour: (hours per unit) × (cost per hour including on-costs)
• Materials: supply + waste + freight + handling
• Plant: hire + operator + consumables + mob/demob
• Subcontract margin / builder margin: depending on procurement model

2. Labour Productivity: The Variable That Makes or Breaks Jobs

Productivity is affected by:

• Access: tight sites, multi-storey carry distances, limited laydown.
• Repetition: repeated units increase productivity; bespoke details reduce it.
• Coordination: trades stacking on each other causes delays and rework.
• Quality level: “architectural finish” is not a standard productivity assumption.

Practical approach: maintain a productivity library (units per day) for common tasks and update it from job actuals.

3. On-Costs and True Labour Costing

Base hourly rates are not the true cost. A realistic labour cost includes allowances, leave, super, insurances, payroll tax (jurisdiction dependent), supervision, and downtime allowances.

4. Material Pricing: The Quote Trap

• Quote inclusions: confirm delivery, unloading, packaging return, and lead times.
• Specification alignment: ensure the quoted product matches the spec (grade, coating, BAL requirements, acoustic ratings).
• Wastage: apply trade-specific waste factors, not generic values.

5. Overheads, Prelims, and Margin

Separate your preliminaries (site establishment, supervision, temporary services, safety, amenities) from trade rates. Otherwise, you can’t see where profit is really coming from.

6. How to Validate Rates

• Back-check against historical actuals: final cost vs budget, by cost code.
• Benchmark critical trades: concrete, framing, windows, services, joinery.
• Run sensitivities: +10% labour cost, -10% productivity, +8 weeks lead time.

Expert tip: A good rate database is a competitive advantage. Guard it, maintain it, and treat it like IP.