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How to use the right cost data for your area?

Is the labour rate of a welder the same in Sweden as it is in Brazil? Probably not, you would say. But how much does it differ? And what does that difference depend on? 

 

Is the labour rate the only thing you should take into account when choosing the right cost data or are there more factors to take into account? You would like to know what drives the differences in cost data when you’re working on a project estimation in a different region. Find out by reading this blog. 

Labour rate used in cost data

The largest chunk of difference in the amount payable for the labour on one single weld, one meter of pipe or one cubic meter of concrete depends on the labour rate applicable for a certain country or region. 

 

The labour rate itself depends on multiple things, of which what employees get paid per hour is an obvious metric. Applicable taxes and levies on labour are also an important factor, which can differ a lot between countries. 

 

Usually, it is defined in a contract what is also included in an hourly rate. This can be transport, small materials (e.g. screws, bolts) and welding equipment. The cost of transport and goods is also different around the world and has impacts on the quality of cost data.

 

Employee productivity used in cost data

The productivity of an employee per working hour differs per employee. However, on average, the productivity of a certain type of employee (e.g. electricians, welders) can be defined on a region or country level. 

 

Productivity often leads to discussions: it is easy to fall into the trap of calling people who are not as productive as you are used to lazy. Generally, this cannot be said. Various factors influence the productivity of employees. The most important is usually climate. 

 

Someone who pours concrete in a climate with an average temperature of 30 °C (86 °F) cannot be expected to do this as fast as someone who does the same thing in a climate with an average temperature of 15 °C (59 °F). 

 

Currency exchange rates and inflation

The economic situation in the country where your project is developed does not only influence the labour rate itself, but also the currency exchange rate and the inflation. Decisions made at government level might drive the currency and inflation up or down. In countries depending on one or two types of industry, the currency exchange rate can fluctuate heavily. 

 

When developing a project in a country with a different currency, you should take the exchange rate and the differences in inflation into account. 

 

CESK Data as cost database

When developing a project estimation involving different countries, you should have a cost database that can support the differences existing between those countries. Cost Engineering Standard Knowledgebase, CESK Data, supports the differences between various regions across the world.

 

CESK Data can be bought as an off-the-shelf solution, but can also be tailored to your specific needs. Therefore, when using such a solution, the different applicable rates are within reach. 

 

 

Something to add to this blog or do you have a question in general? Mail us at contact@costengineering.eu