The all-in labour rate is where estimates quietly inherit someone else’s assumptions. A rate that came from a union plant job in Alberta three years ago is carrying that job’s burdens, that job’s overtime and that job’s camp, whether or not any of it applies. Nobody can see the inheritance, because an all-in rate has no visible parts. It is a number wearing a trade’s name.
On labour-heavy work, that one number can carry a third of the estimate. It deserves better than to be borrowed.
What an all-in rate is hiding
Inside every all-in rate, whether anyone built it deliberately or not, are at least six layers: the base wage, the statutory burdens the law attaches to it, the agreement burdens the collective agreement attaches to it, the premium time implied by the planned work week, small tools and consumables, and some share of supervision. Some rates also smuggle in travel, subsistence or camp costs, and a few carry equipment.
Every one of those layers moves independently. Wages move by jurisdiction and agreement. Statutory burdens move by province. Premium time moves with the planned schedule. Camp and travel exist on one job and not the next. A bundle of six moving parts, frozen three years ago on a different project in a different place, is not a rate. It is a coincidence.
Build it every time
The build-up takes an hour per trade, and it goes in this order.
- Base wage from the applicable collective agreement or market survey, at the pricing date, for the actual jurisdiction. Not the neighbouring province, not last year’s schedule.
- Statutory burdens for that jurisdiction: Employment Insurance (EI), Canada Pension Plan (CPP), Workers’ Compensation Board (WCB) premiums, vacation pay and statutory holiday pay, each at its current rate.
- Agreement burdens from the same document the wage came from: pension, health and welfare, training funds, and the travel and subsistence provisions that apply to this site.
- Premium time computed from the planned work week, not the hoped-for one. A fifty-hour week has overtime arithmetic in it, and the rate has to carry it.
- Small tools and consumables as a stated percentage of labour, visible, not folded silently into the wage.
- Field supervision to the level of general foreman, either in the rate or in the indirects, decided once, written down, and never in both.
A worked example
Build a rate for a pipefitter, and keep every number illustrative. Base wage from the agreement, call it 52 dollars an hour. Statutory burdens, call them twenty percent all told across EI, CPP, WCB, vacation and holiday pay: about 10.40. Agreement burdens from the same pages: pension at 6.50, health at 3.20, training at 60 cents, call it 10.30 together. The planned week is fifty hours, ten of them at time and a half, which spreads an extra ten percent across every hour worked: on the wage-driven layers, call it 6.20. Small tools at three percent: about 2.40. Supervision to general foreman, carried in the rate on this job at eight percent: about 6.50. The loaded rate lands at roughly 88 dollars an hour, and every dollar of it has a source you can put your finger on.
Now move the same trade to a remote job with a camp. The agreement adds a living-out allowance, call it the equivalent of 4.50 an hour. The planned week stretches to sixty hours and the premium arithmetic deepens. Rotational travel adds its share. The same build-up, honestly run, comes out near 118 dollars an hour. Neither number is wrong. They are two different jobs, and the build-up sheets show exactly which assumptions separate them. An estimator carrying “the pipefitter rate” from one of these jobs to the other just moved the estimate by a third of the labour cost, in one invisible decision.
Keep the layers visible
The rate build-up sheet sits in the basis of estimate, one page per trade. When a reviewer asks why the rate is 118 and not 95, the answer is a line item, not a defence. When the collective agreement rolls over mid-project, the new wage drops into the first line and the loaded rate updates itself. When the planned week changes from fifty hours to forty-five, the premium layer reprices in a minute.
That is what the sheet buys: every future conversation about labour cost becomes short, because it happens against a visible structure instead of a remembered number.
Borrowed rates carry borrowed assumptions.
Productivity is separate
The rate is what an hour costs. Productivity is how many hours the work takes. Keeping them apart is the only way to tell, afterwards, which one was wrong.
Blend them, as an “installed unit rate” from an old job does, and the estimate carries a second inheritance: the old job’s crew mix, congestion and weather, welded invisibly to its wages. When the job ends over budget, nobody can say whether the hours were wrong or the price of the hours was wrong, and the company’s cost history gets poisoned for the next estimate. Price the hour on one sheet, estimate the hours on another, and let the multiplication happen in the open. How the hours themselves should be built is its own subject: see Price from a construction plan, not a drawing.
Where this goes wrong
The borrowed rate. The headline error, and the quiet one, because it looks like diligence: a “real rate from a real project”. The realness is the problem. It was real somewhere else.
The mystery blend. A composite crew rate is proper practice when it is built deliberately: a stated mix of foreman, journeymen and apprentices, priced from their individual build-ups. The error is the inherited blend, one average number whose composition nobody can state. Change the mix and the cost changes, but the inherited blend cannot show it, and the crew the bid assumed never survives contact with the union hall.
The hopeful work week. Premium time priced on a forty-hour week while the schedule quietly assumes fifty-five. The overtime arrives anyway, unpriced, every single week, and the trend report calls it a productivity problem when it was a rate problem from day one.
The supervision double-up. The general foreman priced in the rate by one estimator and in the indirects by another, or trusted to be in whichever one it is not in. It is a single sentence in the basis of estimate; write it.
The expired agreement. The collective agreement rolls over eight months into the job and the estimate carried no wage escalation. The increase was published, dated and public at estimating time. This is the most avoidable miss in labour pricing.
One hour per trade
That is the entire cost of doing this properly: an hour per trade, once per estimate, against documents that are public or already in the company’s possession. Against that hour stands a third of the estimate, priced on assumptions you can name instead of assumptions you inherited.
Emerald Group builds labour rates from the applicable agreements and reviews labour pricing on estimates and bids, including working inside a contractor’s own rate structure under confidentiality. If your rates have been travelling from job to job, get in touch.