How to calculate the real hourly cost of a construction worker
A step-by-step example for moving from gross annual salary to the real productive hourly cost, including contributions, holidays, bonus months and overheads.
In short: How to calculate the real hourly cost of a construction worker
A step-by-step example for moving from gross annual salary to the real productive hourly cost, including contributions, holidays, bonus months and overheads.
- •1. Start from the annual gross salary
- •2. Add contributions and overheads
- •3. Calculate contractual and productive hours
Many construction companies estimate margins using the contractual hourly rate of a worker. The risk is underestimating the real cost, because that figure doesn't include employer contributions, holidays, sick leave and other overheads. In this guide we show how to move from gross salary to productive hourly cost with a concrete numeric example.
1. Start from the annual gross salary
Let's assume a construction worker with a gross annual salary of €28,000. This is the base for all following calculations. The gross salary includes monthly pay and any thirteenth/fourteenth month payments, but not employer social charges. Do not add salary months again when already included in annual pay.
2. Add contributions and overheads
Employer social contributions in the construction sector are typically around 35–40% of gross salary. Add workers' compensation insurance, which is significant in construction. For this example, we use an overall overhead rate of 42%, equal to €11,760. The annual employment cost including overheads becomes €39,760.
3. Calculate contractual and productive hours
A working year has roughly 2,080 contractual hours (52 weeks × 40 hours). But the worker doesn't produce in all those hours: holidays, leave, sickness, public holidays and training reduce the total. Productive hours are typically 75–80% of contractual hours, around 1,600 per year.
4. Get the real hourly cost
Divide the annual employment cost including overheads (€39,760) by productive hours (1,600). The result is about €24.85 per hour. This is the true cost the company bears for every productive hour, well above the simple hourly wage.
5. Use it in estimates and margins
When estimating a job or a site margin, multiply estimated hours by the real hourly cost, not the contractual rate. If you enter €24.85/h in archim, every hour logged on a site report is automatically turned into a project cost.
What to do next
Use this hourly estimate for quotations and labour-cost review alongside the project’s other costs and revenue. This guide uses 42% overheads and 1,600 productive hours; the free calculator starts with different, editable values so you can reproduce the example or use your own data.
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