We recently did a large job over the weekend, Up until this point we have scheduled everything during normal time or stayed a little late to get it done. This job didn't get called in till noon on Friday and took two guys (welder and mechanic) 35 hours fri -mon to finish installing and plumbing in a second gen set in a boat. Their guys rigged it into the boat and ran out of time boat had to leave monday! We have a set quoted to them field service rate, on overtime/afterhours is it normal practice to charge 1.5 times your agreed upon hourly rate or do you just charge 1.5 times on the technicians normal rate. What is standard in the industry? Thanks
Yair . . . Moremph . I can't comment on your local conditions but, over here, the charge out rate remains the same regardless, or it did when I was in the game . . . you would be pissing into the wind to expect any extra for Christmas day. That is one of the problems with penalty rates. We had a slipway and pretty much worked 24/7, paid our workers an over the odds flat rate and calculated our rates from that fixed base. Big discussion over here now on this very subject. Cheers.
Definately time and a half for the first 8 hours, and double time after that.
Yair . . . Dualie . Is that so, a workshop will charge (say) a hundred bucks an hour for labour plus time and a half and double on weekends? Like WoW! Cheers.
I started charging overtime rates for onsite line boring years ago. I was paying my men overtime rates and I soon found some clients would try and take advantage of my kind nature and have me starting jobs at 6 am and I would be knocking off 4 am the next day. A hit in the hip pocket stopped that sort of caper except for the odd job where it was really necessary.
I wish I could get 1.5 the regular rate when I have to run my 53'C on Saturdays.:cool2 And I'll take 2 times after the first 8 hours as well. Come to think of it, I would only schedule to work on the weekends at those rates.:tong
We do a lot of scheduled and emergency repairs in industrial facilities all over the north land. On all our help, "union", the burden(insurance, pension, etc) stays the same on any amount of hours worked, so when working at an overtime rate we charge only the extra rate of what the guys get on the check. We still have the same markup per hour, it covers our extra expenses and keeps the client happy. They get the job done and we make the same profit and free the guys up for the next job. Equipment stays at the same rental rate.
Our hourly rate is for an 8 hr shift. We normally run 8am-4:30 pm but the company has the right to move shift start by 1 hr each way. After the shift is done the first 2 hrs are 1 1/2 time and then after 10hrs (or Sat,Sun,Stat holidays) it is double. O/t rates are $29 above the hourly rate for 1.5 time and $57 for 2X time. When jobs that we quoted go into a weekend we simply bill the customer the premiums. So if a customer asks us to work a Saturday to get a job done and guys work 8hrs we would bill them 8 x $57= $456 per man extra to cover the O/T.
We used to get 1.5 for first 2 hr. beyond 8 hr. then double time. Sat.was first 2 hr.@ 1.5 after that double time. Sunday all double time. Travel time never went higher than 1.5 even if you were on double time you dropped back to 1.5 for traveling. If you didn't get an 8 hr. break between shifts you stayed on OT or DT untill you had an 8 hr. break. Mind you you had to be asked to come in. You were expected to take the 8 hour break. Also if the 8 hr. break ran into your regular shift you got paid from your regular start time provided you only took the 8 hrs. No idea how all this was billed out to the customer. d.d.
Yair . . . interesting stuff . . . bit of cross purpose discussion between what the worker gets and what the shop charges out. Any Aussies on here like to comment as to how it work over here these days. As I said our crews worked pretty much 24/7 at a flat rate and in my experience that has always been so. I have never heard of workshop rates adjusted up for overtime. So what's the go with operators? Does a D6 working for 150 bucks an hour get charged at 175 because the operator is on double time on Sunday? I can't really see any difference in (what to me) is that ridiculous proposal compared to charging extra for a machinist turning a taper on a ten inch shaft in the workshop on Sunday. . . and bloody hell, if you have a crew of fifty or sixty blokes doing refits you'd need an extra hand in the office to keep track of all the rate changes . . . sheesh, it boggles my old mind. (big grin) Beats me, clients these days must see the world through different eyes.
A D6 gets about ~$160 an hour here. Sunday would be anywhere from 210-225/hr to cover the O/T. Believe it or not about 90-95% of the O/T premiums go to the operator. His wage, benefits etc all increase by 1 1/2 or 2 x as well as his wage(most construction unions). And yes if a welder or mechanic is needed on Sunday to repair his machine that fellow would be working on O/T as well.
Yair . . . gotcha lowbed driver . Thanks for quick reply, it sure is a different world out there. (big grin) Cheers.
Hi Scrub. I worked at the manganese mine on Groote Eylandt in 1966 for a few months.and we got a shift differential there. I was on steady afternoons with a mechanic and 2 helpers and we were paid a small amount more than the dayshift guys. Worked in NZ on the Manipouri Power project in 1965 and there we made more money on all the different allowances than our base rate. Some I remember, gumboot allowance, wet pay, dirty money, welding allowance. We got these every day cause it was always wet, dirty and I was employed as a welder. Super who American couldn't understand why someone hired as a welder would get a welding allowance. Neither could I but I didn't say no. I guess different places have different ways of paying. Regards. d.d. Forgot to mention in my last post if we worked on a stat holiday got double time plus the stat pay so we got 3 days pay for the 1 day. d.d.
Scrub puller are you saying there is no overtime pay were you live? Most of the OT rates i got wasnt worth it the taxes ate it all up.
Yair . . . donkey doctor . No worries mate. My posts were more directed at charge out rates for a business. I have always disliked the concept of penalty rates, it adds a dimension of complexity and a potential for shonky dealing that I can do without. Such rates are entrenched in the system though and it is unfortunate that some folks depend on them in order to come up with a decent weekly pay. We worked in a remote area not very far from Groote and, while the area (at the time) was my idea of heaven it was difficult to get good tradesmen to what was seen as "a godforsaken place" so we had to pay them well. To come up with a workable formulae we took the going rate for tradesmen or labour in the region and calculated a hypothetical case where a bloke worked for ten hours a day for the three hundred and sixty five day year. We calculated the time and a half and double time for after hours, weekends and public holiday work (for the whole year) and divided it by 3650 . . . . that was the basic contract rate. In some cases we supplied caravans and accommodation and there were bonuses and incentives for getting boats out on the tide. Sometimes there was only a tide every second day and it cost the fishing company big dollars if we missed it . . . .and when doing pipe work it cost the welder a carton of stubbies for any weld that leaked. (big grin) Old Doug you posted while I was editing. Yes I believe penalty rates are paid in most industries and there is discussion going on right now about changing the system. . . and you are right, you need to make the calculation. If the extra overtime bumps you up a division your hourly rate will decline and you may as well go fishing. Cheers.
Heard this all the time with guys I worked with. Consider though if you are already in the top tax bracket say 30%. Wouldn't you rather take home 70% of time and one half or 70% of double time. For me it worked out to a lot more than 70% of straight time. Just my 1.05 or 1.4 cents worth . Regards d.d.
Posted at my shop and on my invoices: labor rate 80/hour , Saturday 120/hour, Sunday 160/ hour. Weekend rates apply to jobs that are scheduled for or iniciated on the weekend. Anything over 8/ day is time and half. So over 8 on Saturday would be 180/ hour and so on. Also this per man so three men on Sunday is 480/hour. I will adjust this as nessesary , for example what I call tool support . This would be one man on the ground sending up tools and operating the crane, this is not worth two men's worth of labor charges but is worth more than one man worth because it increases the effiency of the man up on the engine because he is not climbing up and down every time he needs another tool or drops one. Competent equipment mechanics are few and far between around here, if there are complaints about the rates I just tell not to call me cause we have plenty of work, to the point that I turn down jobs on a regular basis because there are just not enough hours in day. As some one stated above if you don,t charge extra for the weekend you can count on working all weekend every weekend and the next thing you know your kids are grown.
We have a very elaborate policy and billing it is pain in the a.. Basically the tractor does not make overtime after 40 but the operater does and doubletime on Saturday. So we take the billable rate for the operater and make it time and a half for anything over 40. It is a pain to track and depending on t&m or bid it can be a major headache. The taxes are a huge burden that come along with overtime. Regards, CD
One job i worked i got a raise and that week i was sent to a job out of state so i worked alot of ot. When i got back and saw my check i was going to tell them that i didnt want the raise but it worked out because we didnt get much ot after that.I dont mind working extra hours but i would be better if i could have gotten payed time off. One job they sometimes had us work 3/4 of a shift saturdays. I ended up with a 1/4 days pay.One place i worked 3 20hour days trying to finish up a major rebuild of the factory were i worked. They didnt get my ot on that next check and it took 3 checks to get every thing right. That was great for me because of the way i was taxed. I maid less per hour there than any job i have ever worked but i liked it and would have stay on tell retirement but the place closed.
Basically the practice here is to have the customer pay the labor premium if he wants work done on o/t. Rarely does the contractor pay o/t out of his own pocket unless it is to his advantage to do so.
You know, if you think about it, there should be a nominal adjustment downward in the cost of the tractor, or the tools, as the case may be. The regular hourly rate for that stuff would include, among other things, the cost of the capital for every hour of every day, whether it's working or idle. Recovering some of the cost of otherwise idle hours through overtime work by the personnel that use it should reduce the cost per hour. Not that anyone would ever think to bill it out that way...
Yair . . . digger242j Exactly . . . but in the real world the extra utilisation is seen as a bonus, provided (as pointed out by others) it doesn't cost the owner money due to the variation in the labour rate to run the equipment. I have never been able to understand the concept of penalty rates and, as I mentioned in a previous post we structured our pay and charge out rates at a constant higher level at the top end of the range. Since those days I have been in the hospitality industry and small scale farming. In in both those endeavours we were unable to work around entrenched adherence to a ridiculous system that required us to pay barely competent staff seventeen bucks an hour to make hamburgers on week days and thirty four bucks on Sundays when we did most business . . . I do see though there is a growing acceptance of a slight weekend surcharge at some of the beach side eateries. Cheers.
We are only allowed 70 hours per week. All 70 machine labor hours are the same unless it is on Sunday. Sunday is double for the mechanic and I'm sure there is an upcharge but not at full double service rates. Now I get ot at over 8 but it is figured at over 40. Sunday and holidays are double. Saturday is all ot regardless of 40.
Why would one reduce it? The regular hourly rate should be set to cover capital expense, depreciation, operating expense, labor, profit and overhead. For every hour the tractor works, regardless of the day of the week, it's still burning the same amount of fuel, requiring the same amount of maintenance and still wearing itself out at the same rate. There would be a small % of that equation related to depreciation which would reverse downward for higher utilization but a very small fraction. For instance if you have a 10 year old tractor with 4K hours, depreciation is not that big of an issue as it's getting close to bottoming out in value. However it requires more maintenance due to it's age and usage. The maintenance portion of the internal hourly rate is going to be a higher portion than a newer tractor, less on capital, as it should be paid for but it's just swapping capital expense for maintenance. The argument could be made that a new tractor needs to be utilized as much as possible as the depreciation chunk of the equation is much higher. However, for every hour it's working it's still barreling towards the parts house.
That must be why I see cat trucks anywhere I go on Saturdays.
Oh, I'm not saying anybody would. I just said that because I wondered whether anybody would realize it. If you're getting more billable hours out of an asset due to overtime work, there is an advantage to that, all other things being equal, right? Idle iron doesn't make any money at all.
It still costs the same to run the equipment per hour, regardless. For example let's say you have a dozer that has a useful life of 10K hours before major repairs/over haul and you figure 2,000 hours a year usage, that's 5 years of production more or less. Now in the first year of production you run the tractor 2500 hours, beating your utilization by an additional 500 hours which is great if it was all billable/budgeted hours. Those extra 500 hours the first year did earn extra income but you still have the same operating costs (higher if your operator is on overtime) and the tractor is getting there faster to it's rebuild or disposal time. One wouldn't discount the hourly rate for the last 500 hours of utilization in that year because you only figured using 2000. The tractor doesn't know it's on over time, it just keeps doing it's thing - wearing itself out. There shouldn't be a downward adjustment in the hourly rate for over utilization as the asset has a tangible lifespan that is directly related to the hours of usage.
Yep. And it still costs the same to own the equipment for a year, whether it works zero hours, or 2080 hours (40hrs X 52 Weeks), or 4160 hours. And your overhead is still the same. All other things being equal, which of those three quantities of hours would you choose to be able to bill for? Why?
Of course the most hours you can bill makes you more money but it also accelerates it's wear and there is no reason to discount it's hourly rate for over utilization.
Maybe on the basis of 'date of purchase' to 'date of retirement', but not on an hour by hour basis, which is what we're talking about. I think it's fair to say that machinery that makes it into the museum while still in pristine condition didn't make a good return on investment. Ok, I re-read my earlier post, and I'll take some of the blame for your not understanding what I meant. I wasn't suggesting that anyone "should" actually offer a discount on any potion of the rate, even though that's the word I used. But in a perfectly equitable universe, where the customer got charged for the exact difference in cost between regular-time work and over-time work, there would be a downward adjustment made. "Overtime" use of an asset, be it a tractor, a shop, or a service truck, does provide an enhanced return on the capital investment and overhead. Fair enough?
Who the hell want's to spend that much time in the office when there's dirt to move?:tong
Wow. You used a milestone like your 5000th post to reply to me ? I'm so honored. I don't know what to say....
Damit! I didn't see it! It's like wanting to see the hour meter go from 999 to 1000, never remember at the time to watch it :tong It's rather fitting that my 5K post milestone is used in one of our debates.
That reminds me of the time I took picture of my Ford turning over 100,000 miles while doing 100 mph. It just worked out to hit the milestone on a remote road in conditions well suited for it. Back on topic, I often offer my customers overtime work at straight time rates in order to increase utilization and cash flow. Many of the customers will chose not to work on overtime if the rate increases by even a little bit, but will gladly work all the hours I can if the rate stays the same. Even though the tractor is wearing out at the same rate, the costs of ownership, including insurance, finance charges, and other carrying costs get spread over more hours and it usually makes up for the overtime premium paid to the operators. In addition to that, the use of the added cash flow earlier in the machines life is a nice bonus.