Large bids will typically contain a significant labor component. Whether the contract is fixed price or based on level of effort it is important to not only estimate the labor required as accurately as possible, but to also justify this estimate to the client or prospect.  While most lay-people think of a labor estimate as a bunch of resources spread over time in a spreadsheet - or perhaps an MS-Project plan with resource assignments to calculate the estimated work - a complex bid submitted with the basis of each labor estimate is made up from a combination of:

• Level of effort estimates - aka numbers plugged into a spreadsheet like interface
• Estimates from a discrete plan e.g. imported from MS-Project or created in the GANTT (future enhancement)
• Estimates imported from Primavera
• Parametric estimates based on for example "hours per drawing" x "number of drawings" or based on formulae
• Estimates that are similar to, or copied from, a prior estimate
• Estimates based on actual performance history (actual labor recorded in a system such as SAP).

Make-part labor estimates are not included here.

To build up your labor estimate click on the LABOR tab of your estimate, having first made sure labor estimating is checked in the WORK tab:

1. The proposal and BOE-WBS description, as well as design to cost target and current estimated cost, are displayed at the top
2. Select the basis for your estimate (at least for the majority of it) from the list. Each option is explained above
3. Depending on what option you select you must select or input the proposal and proposal WBS (copy from a previous estimate) or input the reference SAP project and WBS (copy from actual performance history - as shown in the image above). Also note:
   • Estimates based on level or effort or copied from a discrete plan use a spreadsheet like input as explained below
   • Click here to learn more about importing estimates from Primavera
   • Parametric estimates are based on formula which are added to each individual resource, because each resource can be based on a unique formula. Click here to learn more about parametric estimates
4. Once you have selected the source to copy from, optionally enter a complexity factor, and click on the COPY button to copy in your estimate
   • Specify in the popup the complexity factor, whether to copy in hours as well as a list of resources, and whether to add to or replace your existing labor resources in the current estimate
5. Describe your assumptions in the text box provided. This is the justification for your estimate
6. If you performed a discrete or level of effort calculation describe the calculation here or click the link to upload a spreadsheet calculation
7. The total hours and labor cost in the current estimate is displayed here. This is different to the total cost at the top which includes other estimating methods such as material, travel and ODC (other direct costs)
8. You can collapse the header information to see the list of resources more easily without scrolling down.

Next you see a table or list of resources with resource type or pool, dates, duration and efforts or work-hours, rate per hour and of course cost. This is your labor estimate; all the options outlined above simply populate this list for you to review and refine.

1. Click the + button to add a new resource, or the - button to delete an existing resource from your estimate
2. Select the resource. Estimates cannot be created without a resource type or pool. Resources are loaded during the implementation and are typically imported from SAP activity type / work center combinations
3. The rate per hour for the selected resource, as well as its department and SAP work-center, are populated automatically. The rate per hour normally comes from SAP's activity type rate for the resource's cost center in SAP, but you can edit rates manually
   • The rate per hour is read based on the labor START DATE, which in turn defaults from the assigned task, WBS or proposal
   • Rates cannot be edited within the estimate, only in the resource master
4. The effort (work-time) or quantity can either be input manually or derived automatically
   • Duration is calculated from number of working days (based on your company's work-time calendar) and effort is calculated from duration x full-time equivalent resources (FTE). You can show the columns for dates, duration and FTE as needed
   • When you copy a previous plan or copy an estimate from actual performance history with a complexity factor higher than 1, the original effort is copied to reference effort and the new effort or quantity is calculated as the reference effort x complexity
5. The total cost for this resource is calculated simply as effort x rate/hour
   • Currently rate changes mid-way through the task are not considered so if the task or WBS spans several years it is recommended to break up your task into annual blocks with one task per year. This means each row has only one rate per hour
   • You cannot enter the same resource and task combination twice, that is why it is recommended to create tasks for each year in the WORK tab
6. The estimating basis is copied from the top to the table column here but can be changed manually. Depending on what you select (e.g. copy from plan or copy from actuals) you may have to specify the reference proposal or project, and WBS
7. If you are doing a parametric estimate select the most appropriate formula and enter any BOE-level parameters into the popup
8. Select or enter the distribution curve, how you want the total labor effort to be spread between start and end dates for this resource
9. Click the speech bubble to enter remarks or assumptions specific to this one resource in this estimate
10. You can upload or download your resources from/to Excel or change the view/columns.

This is the same LABOR list with different columns visible. The bubble numbers refer to the same list above.