Labor cost constitutes a substantial portion of the total cost of construction. In this post we provide a guide for putting together an accurate Rate per Man-hour particularly tailored for Construction Works in the Emirate of Dubai. In building up the rate we divide the rate into 6 cost groups. These groups are the Salary, recruitment and Visa Costs, Transportation Cost, Food and Accommodation Costs, Overhead Cost, and Personal Protection Equipment Cost. Items to consider in each group and how to compile the final rate are detailed below.
We define Salary as the Basic salary which the labor will receive directly, excluding any allowances. This amount varies with level of skill and experience. Nationality also plays a role in determining the salary range as it depends on comparable work opportunities back home and competition fueled by demand from other countries. Basic salaries can range from as low as AED 750/month up to AED 2000/month or even more depending on the factors stated above. Overtime hours are marked up from the regular work hours in accordance with the Labor Law and should be taken into account in the calculation.
Recruitment and Visa Cost
Recruitment costs include the costs of sending a company representative for interviews, fees to be paid to manpower agencies, costs of test centers if applicable, and the air tickets to fly the labor into Dubai, among other applicable costs.
Visa Costs will differ and may be amended from time to time but in general will include the following as applicable to the Emirate of Dubai:
- Reserve Quota- AED 350
- Job Offer Letter- AED 60
- Work Permit- AED 2060
- Visa Process in Immigration- AED 440
- Labor Contract- AED 60
- Medical & Em-post- AED 555
- Emirates I.D- AED 275
- Visa Stamping on Passport- AED 560
- Labor Card- AED 50
- Bank Guarantee- AED 3030
In case of attracting labor already present in Dubai an additional fee of AED 1300 will be charged for changing the existing Visa status. We recommend that the listed fees and requirements be confirmed with the local authorities before adopting them in your calculation as they are subject to changes.
Visas are usually valid for 2 years, therefore this cost should be spread over a 24 month duration.
It is common practice in Dubai for the Company to provide transport for labor from the Labor Camp to the work site and back. Costs to be considered are as follows:
- Bus rental or depreciation cost
- Fuel charges
- Service and Maintenance allowance
- Driver Salary and allowances
Food and Accommodation Cost
Food cost can either be an allowance (typically ranging between AED 250/month to AED 350/month) or company provided catering. Company provided catering could either be procured through a specialized Vendor or by employing company cooks. Typical costs for employing company cooks include:
- Salary for Catering staff including allowances
- Kitchen Utensils
- Cooking ranges and consumables
- Food ingredients
Cost for Accommodation include the following:
- Camp Rent- This Depends on the location and condition of the labor camp. As an example a camp room with a capacity to accomidate 6 people in Dubai Investment Park can set you back AED 3900/month. This results in a cost per head of AED 650/month. Care should be taken in selecting a camp approved by the authorities as a Labor accommodation.
- Utilities (Water and electricity) – In some cases this cost is included within the room rental rate.
- Camp Staff- Camp Boss, Security, Janitors
- Maintenance allowance
- Accommodation furniture and fittings (Beds, Mattress, Bed sheets, blankets, …)
- Laundry expenses
Overhead costs to be considered include the following:
- Severance Pay at end of service (as per labor law)
- Paid Leave + Air ticket
- Public holidays and rest days
- Sick Leave
- Mandatory Health Insurance (this depends on the insurance plan but on average the basic plan will cost you AED 750/year)
- Allowance for medical expenses including deductible at hospitals and clinics and cost of medicine
Personal Protection Equipment (PPE)
In order to ensure the safety of labor on site, all labor are required to use personal protection equipment. This will differ from trade to trade and includes helmets, safety jackets, coveralls, safety shoes, gloves, googles, ear protection, fall protection harness, amount others. Rates and prices will differ based on quality and intended use. It is preferable that you contact a specialized Vendor to obtain accurate rates, where a list of such vendor can be found on buildingbling.com under General Requirements.
Depending on the PPE requirements and replacement frequency the cost is calculated and factored into the Labor rate.
Compiling the Rate
After having aggregated the total costs per month for the Salary, Recruitment and Visa, Transportation, Food and Accommodation, Overhead, and PPE the total monthly cost is divided by the number of work days per month and again divided by 8 Work hours per day to arrive at the Man-Hour Rate. Care should be given for work days above 8 hours per day and work during rest days (Fridays) and public holidays as an overtime factor should be applied in accordance with the Labor law. This should be factored into the Rate to arrive at the final composite Man-Hour Rate.