Setting your own daywork and plant rates in the pack
How a contractor prices daywork labour and plant in the Construction pack's unpriced starter catalogue, and how those items reach the ledger on an invoice.
By Achekam · · 4 min read · For Construction businesses in South Africa, Nigeria, Kenya
Launching soon. The Industry CRM add-on described in this article is launching soon. This article describes it as it will work at launch.
Some work on a building site cannot be measured. A trench hits rock nobody knew about. Another trade leaves a mess that has to be cleared before you can carry on. The engineer asks for temporary propping overnight. None of it fits a bill-of-quantities rate, so it is charged as daywork: the hours of labour and plant actually spent, at agreed rates.
Daywork disputes almost always come down to the rates. If they were not agreed before the work, the client's quantity surveyor will offer less than you charge. The Construction & contracting pack in Achekam's Industry CRM gives daywork its own catalogue items, deliberately unpriced, so the rates are yours to set and agree. This article explains how to set them sensibly.
What the starter catalogue lists, and why nothing carries a price
Each industry pack sets the words its screens use, its record types, its workflows and a starter catalogue, among other things. The Construction pack's starter catalogue lists:
- contract works;
- preliminaries and generals;
- retention release;
- variations;
- daywork labour;
- daywork plant.
None of them carries a price, and that is by design: no starter catalogue item in any industry pack carries a price, because the business sets its own. A rate that suits a small builder in one town would be wrong for a civil contractor in another country. The catalogue gives you the structure; your rates fill it.
Pricing daywork labour by trade
"Daywork labour" as a single item is too blunt for most contractors. A general worker, a bricklayer, a carpenter and a plant operator cost very different amounts. Price daywork labour by trade, with an hourly rate for each, and note separately any rate for overtime or weekend work if your contract allows it.
A daywork labour rate usually has to recover more than the wage:
- the basic hourly wage for the trade;
- allowances paid on site, such as travel or site allowances;
- the cost of leave, public holidays and statutory contributions on that wage;
- supervision that daywork draws on;
- small tools and protective clothing;
- overhead and profit.
Many contracts set out how daywork is to be valued, sometimes as the contractor's cost plus a percentage. Read that clause first; it may decide how your rates must be built. Daywork is in effect a cost-plus way of pricing, and Investopedia's explanation of cost-plus contracts sets out how such contracts reimburse costs plus an agreed fee or margin, with the pros and cons for each side.
Pricing plant by the hour or the day
Plant needs its own decisions. For each machine you are likely to charge on daywork, settle:
- Unit: per hour for an excavator or a compactor, per day for a mixer or a generator.
- With or without operator: if the operator is included, do not charge the operator again as labour.
- Fuel: included in the rate, or charged at cost.
- Standing time: what you charge when the machine is on site but stopped by the client.
- Minimum charge: whether a call-out has a minimum, especially for hired-in plant.
Write each of those choices into the rate schedule itself, not only into your head. A rate of so much per hour means little to a client's quantity surveyor unless the schedule says whether it includes the operator, fuel and travel to site.
Hired-in plant and your own machines are best priced differently: hire at the supplier's rate plus your margin; your own plant at a rate that covers its running costs and its depreciation. Owning or hiring plant explains how each shows in the books, which is where the cost side of your rate comes from.
Revenue accounts added when the pack is switched on
Switching on an industry pack adds that industry's revenue accounts to the business's chart of accounts, and its unpriced starter items to the catalogue. For the Construction pack the items post to Contract revenue (4370) and Variations and extras (4380).
Two checks before you switch it on:
- Look at your chart for those account codes. If a code is already used for another type of account, the activation is refused, and the message names the account, so you can sort it out with your accountant first.
- Look at which of the two accounts each daywork item posts to, and confirm with your accountant that it matches how daywork should be reported on your jobs.
Invoice lines that name the account they post to
Once your rates are in, daywork goes onto invoices as lines that name the item. With the pack, an invoice line names the revenue account and the product it sells, so revenue is posted per account, and cost of sales, where the item has one, in the same journal.
The source document for each line is the signed daywork sheet. A short checklist for every sheet:
- date, job, and the instruction that ordered the work;
- each worker by name and trade, with start and finish times;
- each machine, with hours or days, and whether it was operated;
- materials used, if the contract allows them on daywork;
- the signature of the client's representative on the day.
Variations priced line by line follow their own approval path, which signed change orders covers, and contract revenue and variations shows how the two revenue accounts read at year end.
Before the next daywork instruction
Draft your trade and plant rate schedule now, send it to the client's quantity surveyor for agreement at the start of each new contract, and enter the agreed rates against the catalogue items. When the next instruction comes, the argument about rates will already be over.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
