Default Trade Labor Rates on Xactimate Removal Items

CLAIMS, CONSTRUCTION AND CONSULTING C3 Group Inc. 8400 East Crescent Parkway, Suite 630 Englewood, Colorado 80111 P: (303) 501-3002 F: (720) 398-3198 www.C3Adjusters.com

Re: Removal and Trade Labor Associations

Default Trade Labor Rates

The purpose of this letter is to provide clarification in regard to trade labor rates that are built-in to most, if not all removal items within Xactimate. Removal items commonly default to Demolition Labor (DMO). For trades utilizing the same crews for removal and replacement, or trades requiring specialty tradesmen – and not general laborers – this labor rate should be corrected to the proper trade.

For instance, the below image shows the line item ‘Tear off, haul and dispose of wood shakes/shingles’ (RFGSRMV). The labor trade rate defaults to Demolition Labor, or ‘DMO’.

Figure 1A. Showing DMO labor rate selected for the removal of line item ‘RFGWSRMV’.

Recognizing that roofing trades may warrant this labor trade rate changed to the actual trade – in this case, Roofing (RFG) – a user may adjust this by using the drop down, then by selecting ‘RFG’ (Roofing).

Figure 1B. Showing RFG labor rate selected for the removal of line item ‘RFGWSRMV’.

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As a second example, the line item ‘Packaged air conditioning unit – 2 ton 13 SEER’ (HVCPAC2) has been listed below. The labor trade rate also defaults to Demolition Labor (DMO).

Figure 2A. Showing DMO labor rate selected for the removal of line item ‘HVCPAC2.

Recognizing that HVAC trades may warrant this labor trade rate changed to the actual trade – in this case, HVAC (HVC) – a user may adjust this using the drop down, then by selecting ‘HVC’ (HVAC). It is important to consider that when removing a packaged unit, it would be expected that electrical and/or gas disconnections, recovery of refrigerant, etc. would be required. This type of work would require the use of specialty tradesmen – not general laborers.

Figure 2B. Showing HVC labor rate selected for the removal of line item ‘HVCPAC2’.

Global Change Considerations

An estimator should realize that the ‘DMO’ (Demolition) trade labor rate will default across most, if not all removal items on any given trade. As such, corrections made to trade labor rates should be made globally across that specific trade. For flat roofing, for instance, an estimator would consider correcting removal charges for the membrane, insulation, parapet flashing, cant strips, cap flashing, high charges, etc. from ‘DMO’ (Demolition) to ‘RFG-M’ (Membrane Roofing).

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Labor Burdens

Labor burdens are applied on a trade-specific basis. For example, the Workers Compensation rate applied to ‘DMO’ (Demolition) labor and ‘RFG’ (Roofing) labor vary by more than double.

Figure 3. Showing comparison between DMO and RFG Workers Compensation rates.

Job-Personnel Overhead (Sub-Contractor O&P)

Job-Personnel Overhead costs are directly associated with the labor selection that a user inputs. Per Xactware’s published White Paper “Overhead and Profit”, “Job Personnel Overhead expenses are included in the Labor Overhead portion of each unit price in the Xactware price list. The labor Overhead, along with expenses for Labor Burden and Worker Wage (wage paid to the individual) make up the Retail Labor Rate.”

Comparing the Job-Personnel Overhead expenses of ‘DMO’ (Demolition) labor, and ‘RFG’ (Roofing) labor, a user can identify that the overhead costs associated with a Roofing trade exceeds that of a Demolition trade- see Figure 4. These overhead expenses include “vehicle costs, uniforms, mobile phones, depreciation on hand-tools owned by the company, etc. Job-Personnel Overhead also includes the portion of General and Administrative expenses and profit that correlate to employees performing billable tasks, and that are not included in the General Contractor O&P mark-up.” The White Paper continues on, stating that “…these expenses are incurred by either a general contractor using employees, or by a sub-contractor, depending on who is actually performing the work.” It becomes critical for a user to determine the proper labor rate for removal items.

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Figure 4. Showing comparison between RFG and DMO Labor Worker’s Wage, Labor Burden, and Labor Overhead.

When Default Trade Labor Rates Are Adequate

One must also consider scenarios in which the ‘DMO’ (Demolition) trade labor rate may be adequate. For instance, during fire and flood losses, restoration companies regularly utilize demolition labor in lieu of specialty tradesmen. In another example, let’s say there is an abandoned rooftop unit already disconnected, with most its internal components and refrigerant removed previously. ‘DMO’ (Demolition) trade labor rates may suffice in these situations.

Ultimately, it is up to the estimator and the parties involved in a job to determine which items to use in an estimate, how they are applied, and the pricing.