Understanding Labor Efficiency in Xactimate

In the construction and restoration industry, labor remains the largest variable for most tasks. To address this, estimating software like Xactimate has begun utilizing labor efficiency modifiers to account for "economies of scale"—the idea that the time and cost required to complete a task change based on the job's size, complexity, and environment.

The Three Tiers of Efficiency

Currently, there are three primary Labor Efficiency Modifiers available for use within Xactimate:

• Restoration/Remodel/Service: This is the default setting and is typical of most restoration, remodel, or service jobs where work is performed on finished structures. The site may be occupied, requiring coordinated deliveries and work schedules.
• Large Restoration/Remodel: This modifier typically applies to work on larger restoration/remodel jobs that are easily accessible to workers and separated from adjacent finished areas. The site is typically unoccupied, allowing work and material deliveries to be scheduled with minimal obstacles.
• Total Rebuild or Similar: This modifier is typical for very large restoration or remodel projects, like a total rebuild, where the site offers open access for labor and material staging. Finished areas in the same structure do not inhibit ongoing work. The site is typically unoccupied, allowing the contractor to schedule material deliveries and work freely.

Impact on Estimating

Actionable recognizes the constraints caused by the Labor Efficiency Modifier within Xactimate. The Large Restoration / Remodel Labor Efficiency reduces the overall estimate grand total by approximately 5%, while the Total Rebuild Labor Efficiency reduces it by about 20%.

Informed Decision Making

Because every job is unique, choosing the correct modifier is vital for accurate pricing. Factors such as work volume, proximity to occupants, and material delivery access all influence whether applying a Labor Efficiency Modifier other than Restoration/Remodel/Service is warranted.

We developed rules for use within Xactimate to help estimators make informed decisions. By objectively evaluating these factors, estimators can ensure the Labor Efficiency Modifier accurately reflects the project's real-world conditions.