CG18:09

Daywork

1. Introduction

Daywork is a method of valuing construction work according to the time spent carrying out work together with the
value of the plant and materials resources used. It is an alternative to valuing work by measurement.

Whether work will be valued by measurement or daywork will be dictated by the contract. Standard form contracts
normally provided for valuation by measurement and only when work cannot be measured will it be valued by
daywork. That said the parties can agree to value specific items of work by daywork even though it is possible to
measure and value it.

2 Daywork Labour Rates

Daywork rates are normally expressed as an all inclusive hourly rate or as a basic rate plus a percentage addition.

Separate all inclusive hourly rates may be required for different periods, eg. normal time, time and a half or double
time, although it is feasible to have a rate that will cater for work done at any time. Separate rates may be required
for each grade of operative eg. Craft, general operative, driver etc. Each rate must include all potential elements of
cost including overheads, profit and supervision as well as costs associated with employment of operatives.While the
basic cost of employment may not change between contracts, variable employment costs such as travel, subsistence,
protective clothing costs etc may do so. Similarly supervision costs, and even profit and overhead costs, may vary from
contract to contract. Unless all work undertaken by member companies is of the same nature, in the same geographic
location and within the same working hours, it is difficult to calculate daywork rates suitable for use on all contracts.
To be accurate all of the variable cost elements must reflect the costs to be incurred on any particular contract.

An example schedule, as a guide to the calculation of inclusive daywork rates is set out in Appendix 1. The schedule
includes most of the common cost elements that may need to be accommodated in a daywork rate but may not be
exhaustive. Although premium time working cost elements are included in the schedule they are not included in the
worked example as the rate is for ordinary time working only.

Where a basic rate plus percentage addition is used, the basic rate is normally calculated in accordance with a specific
formula. The formula most often used in building contracts is set out in the RICS Definition of Prime Cost of Daywork
carried out under a Building Contract. Various bodies publish revisions to the Prime Cost rates for craft and general
operative each time there is a change in any element of the basic rate. An example schedule as a guide for the
calculation of Prime cost using the June 2008 rates (which have not changed in June 2009) is set out in Appendix 2.

The percentage addition to be added to the RICS Prime Cost is calculated from the difference between the RICS
Prime Cost and the daywork rate required by a member company. Assuming that a member requires an all inclusive
daywork rate for normal time of £26.09 per hour, as set out in the example calculation Appendix 1, the percentage
addition on an assumed RICS prime cost, as Appendix 2, would be:-

i. All inclusive rate 26.09

ii. RICS assumed Prime cost for craft operative 12.92
a. Difference 13.17
iii. Percentage addition = 13.17 x 100 = 101.93%
i. 12.92

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3. Plant and Material Rates

Plant and materials used in connection with daywork are normally valued at cost plus a percentage addition, often
5 – 10%. However, as far as scaffolding equipment is concerned, it is difficult to determine what the cost price is. Unless
the equipment is being sold and invoices can be produced, members are often faced with the problem of determining
what the cost of hire is, that is unless member companies actually issue a standard list of their hire rates.To avoid this
difficulty hire rates for different components should be included in the contract or agreed separately.

The RICS publishes a schedule of plant rates, which includes rates for common scaffolding components, which may be
used to value equipment used on daywork. A +/- percentage to the rates in the definition may be required.

4. Administration

The administration of daywork is normally set out in the contract and requires a strict procedure to be adopted.
Daywork sheets describing the work carried out should show the hours worked for each operative together with
quantities of plant and materials used. Daywork sheets should be submitted to the employer’s representative for
signature in accordance with the contract, normally 7 days. Failure to submit within the required time scale may
invalidate the claim.

Having had a daywork sheet approved, they should then be extended at the agreed rates and included in the
next valuation.

If there is no time scale set out in the contract for the approval of daywork sheets, they should be submitted as soon
as possible to avoid employers disclaiming the work has been carried out.

Time spent on daywork is the actual time worked. It does not include meal breaks, travelling time or unworked hours.

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Appendix 1 Example calculation of Inclusive Daywork Rate showing items for likely
consideration

Craft Operative General Operative

Normal Time Normal Time

Rate Annual Rate Annual

£ £ £ £
Basic time 10.30 18,558.54 7.75 13,963.95
Supplement for supervisory role 0.00 0.00 0.00 0.00
Time and half 15.45 0.00 11.625 0.00
Double time 20.60 0.00 15.50 0.00
Bonus 4.00 7,208.00 3.00 5,406.00
Statutory holidays – 8 pa at 8 hours per day 82.40 659.20 62.00 496.00
Annual holidays – 21 pa at 39 hours per week 401.70 1687.14 302.25 1269.45
Radius (taxed) 0.00 0.00 0.00 0.00
Travel time (when on lodge) 0.00 0.00 0.00 0.00
Sub total 28,112.88 21,135.40

National Insurance % 12.80 2,948.00 12.80 2,055.00

Employers / public liability insurance % 6.00 1,615.68 6.00 1,214.19
Training / Induction costs 260.00 260.00 260.00 260.00
Sick Scheme 250.00 250.00 250.00 250.00
Lodge allowance 29.17 0.00 29.17 0.00
Protective clothing 300.00 300.00 300.00 300.00
Safety equipment 0.00 0.00 0.00 0.00
Radius (non-taxed) 0.00 0.00 0.00 0.00
Sub total 33,486.56 25,214.59

Monthly Fare allowance 0.00 0.00

Annual prime Cost 33,486.56 25,214.59

÷ 1802 hours
Prime Cost per hour 18.58 13.99

Supervision 1.50 1.50

Site Establishment 0.55 0.55
Sub total 20.63 16.04

Overhead % 15.00 3.09 15.00 2.41

Sub total 23.72 18.45

Profit % 10.00 2.37 10.00 1.85

Inclusive Daywork Rate 26.09 20.30

Notes:-
NB the above example demonstrates a method of calculation. Members should ensure that all their own applicable
items and actual costs are used.
1. NI Calculation eg craft rate £28,112.88 (-£110 x 46.2 working weeks = £5,082) x 12.8% = £2,948
2. EL/PL Estimated as between 5 and 6% of wage costs

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 Appendix 2 Example calculation of Prime Cost of Daywork (RICS) under a Building Contract

Craft Operative General Operative

Normal Time Normal Time

Rate £ pw Rate £ pa Rate £ pw Rate £ pa

Guaranteed minimum weekly earnings 401.70 18,558.54 302.25 13,963.95

Standard basic Rate – 46.2 weeks

Employer’s National Insurance Contribution at 12.8% 1,725.00 1,136.89

(above earnings threshold of £110.00 per week see notes 5)

Employer’s contribution to:

CITB annual levy: 52 weeks @ 2.00 104.00 1.51 78.58
Holiday with pay: 226 hours @ 10.30 2,327.80 7.75 1,751.50
Welfare benefit: 52 credits @ 11.00 572.00 11.00 572.00

Annual Labour Cost 23,287.34 17,502.92

Hourly labour rate 23,287.34 = £12.92 17,502.92 = £9.71

1802 hours 1802 hours

Notes:-

1. Standard working hours per annum calculated as: 52 weeks @ 39 hours = 2028, less holiday of 226 hours = 1802.

2. All labour costs incurred by the contractor in his capacity as an employer, other than those contained in the
hourly rate, are to be taken into account within the percentage addition increase to the above labour rates to
ensure there is no shortfall in charging.

3. The above is an example and does not include all likely costs. All basic costs are subject to re-examination
according to the time when and the area where daywork is executed.

4. The calculation of costs should take into account any additional holiday and/or additional holiday pay to that
shown.

5. Refer to government schedules for fully accurate calculation of Employers’ National Insurance Contributions.

6. CITB Annual Levy is approximately 0.5% of payroll for in scope employees.

Whilst every effort has been made to provide reliable and accurate information, we would welcome any corrections to information provided by the Writer which
may not be entirely accurate, therefore and for this reason, the NASC or indeed the Writer, cannot accept responsibility for any misinformation posted.

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NASC July 2009
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