How to Bid Prevailing Wage Jobs: Build the Labor Line Step by Step

To bid prevailing wage jobs, price every covered labor hour from the wage determination in the bid documents. Take hours from the takeoff, match each hour to a classification, and carry that classification's base rate and fringe rate. Then add payroll burden, the cost of weekly certified payroll and your markup.

The worked example uses illustrative dollar figures, so you can follow each step and swap in your own numbers. For the rules behind it, read Davis-Bacon wages explained. Read it as an explanation of how the documents work, not as legal advice. Your contract, the solicitation and state law control, and rules change, so read the current text on the linked Department of Labor (DOL) pages.

How to bid prevailing wage jobs in seven steps

1. Find the wage determination or state wage schedule in the bid documents, and log its number and date.

2. Take hours by task from the takeoff.

3. Match each task to a listed classification, and flag any task with no line.

4. Price each classification at its base rate plus fringe, with payroll burden on the wage and on any fringe paid as cash.

5. Adjust for registered apprentices and for overtime.

6. Add the weekly cost of certified payroll.

7. Add markup once, at the end, and write down what you assumed.

The sections below take each step in turn, using one invented job.

Where the rates sit: the wage determination

Coverage comes from the contract and the law behind its funding. Whether an hour is covered turns on the work performed, because laborers and mechanics are defined by their duties, not their job titles. If a public job attaches no determination or state schedule, ask the agency that funds or runs the contract before you price.

The rules cited in this post are the federal Davis-Bacon rules. State programs differ on which schedule applies, when scheduled increases reach work already under contract, and on apprentices, overtime and payroll forms. Read your state's current text as well.

Start with the document, not the rate. A wage determination lists a basic hourly rate and a fringe rate for each classification of laborer and mechanic, for one area and one type of construction. Listed rates are minimums, and general determinations are published on SAM.gov. The agency puts the applicable determination in the solicitation and contract, and a subcontractor can request it from the prime, says the DOL FAQ. If you are bidding prevailing wage projects as a subcontractor, get the prime's version in writing and price that one.

Log the determination number, modification number, county, construction type and date on the bid sheet. A bid desk keeps the same log for addenda, as set out in the bid-desk log and addenda routine. Then pull the latest version again before bid day.

On a sealed bid, a revision issued at least 10 calendar days before opening applies, and the guide linked above covers the cases inside that window. After award, the determination in your contract generally sets the minimums for the whole term. The DOL FAQ lists exceptions, such as added substantial work outside the original scope or an additional time period like an exercised option.

The determination fixes two numbers per classification. It cannot fix your hours, your crew mix or how you pay the fringe. The page on how a wage determination changes the labor line lays out the same build from the estimator's side.

Build the labor line by classification, not crew average

Build the labor line from the classifications in the determination, not from your usual crew rates. Keep the takeoff hours in the same table, so a change in quantity moves the labor.

The example is an invented footing and slab package. A worked takeoff example shows the method. Here the takeoff gives 2,400 SF of form contact area and 4,800 SF of slab. Illustrative production rates turn that into hours. Forms take 0.10 carpenter hours and 0.03 laborer hours per SF, which is 240 and 72 hours. The slab takes 0.02 mason hours and 0.01 laborer hours per SF, which is 96 and 48 hours. That makes 240 carpenter, 96 cement mason and 120 laborer hours, or 456 in all.

All dollar figures in this example are illustrative, chosen only to make the arithmetic easy to follow: they are placeholders for your own wage determination, not market prices, wage rates or quotes, and your numbers will differ.

Table 1 adds placeholder determination lines, with illustrative rates in dollars an hour. Burden is 20% of wages. The IRS lists the employer share of Social Security and Medicare as 6.2% plus 1.45%, or 7.65%. The other 12.35% is a round stand-in for unemployment taxes, workers' compensation and liability insurance. Take it from your own records.

Table 1. Illustrative dollars per hour. Fringe to plan: base x 1.20 + fringe. Fringe as cash: (base + fringe) x 1.20.

For the carpenter, $40.00 x 1.20 + $20.00 = $68.00 with a plan, and ($40.00 + $20.00) x 1.20 = $72.00 with cash. Table 2 multiplies each illustrative loaded rate by its hours.

Table 2. Hours times loaded rate, in illustrative dollars.

Now price the same 456 hours at a flat crew average, the simple mean of the three plan-basis loaded rates. The rates sum to $171.00, so the flat average is $171.00 / 3 = $57.00 an hour. Applied to 456 hours, it gives $57.00 x 456 = $25,992.00. That is $1,320.00, or 4.8%, under the true $27,312.00, because the job leans on carpenters. Flip the mix to 60 carpenter, 96 mason and 300 laborer hours. The same average still gives $25,992.00, against a true $23,352.00. It overstates the line by $2,640.00, or 11.3%. An overstated line can lose the bid. An understated one wins work and eats the margin.

A blend weighted by the real hours would match the build-up exactly: $27,312.00 / 456 = $59.89 an hour, rounded to the cent. The failure is a standing crew rate carried onto a job with a different mix, and only the classification build-up shows which way it errs.

Fringes: count them the way the determination does

Prevailing wage fringe benefits can be met with plan contributions, with cash, or with a mix, according to the DOL fact sheet on fringe requirements. A plan must be bona fide. For a funded plan, that means irrevocable contributions to an unaffiliated trustee or third party.

The credit has a ceiling. The same fact sheet limits it, with narrow exceptions, to the plan's average hourly cost over all the hours a person works in a year or other representative period, covered or not. If your plan costs less per annualized hour than the determination's fringe, the shortfall has to be met another way, usually cash, and you price it.

This example treats a cash fringe as wages, so every burden item that follows wages applies to it. It treats a plan contribution as a different payment that carries none of them. Your insurer, payroll provider and plan administrator decide that for your job, and a trade in a high workers' compensation class will differ. Under those assumptions, each dollar of fringe moved from plan to cash adds $0.20 of burden. At the illustrative rates, this job carries $7,440.00 of fringe (240 x $20.00 + 96 x $15.00 + 120 x $10.00), and $7,440.00 x 0.20 = $1,488.00. That is the whole gap between $27,312.00 and $28,800.00, or 5.4% at this burden.

Undecided on how to pay it? Carry both lines and choose after you see both totals.

Apprentices, overtime and what moves the labor line

The apprentice rate is open only to a registered apprentice, or one in the first 90 days of certified probationary employment, and the site ratio must stay within the allowed ratio, which is the program's or, for a program registered in a different locality, the project locality's, says the regulation. Anyone unregistered or over the ratio gets the full rate for the work performed. If the program is silent on fringe, the apprentice gets the full fringe amount.

Say your program allows 1 apprentice to 3 journeyworkers, at 70% of the journey base. Real figures belong to the program. The rule counts people on site, so 25% of hours is only a planning proxy. It caps apprentices at 1 / (1 + 3) = 25% of the 240 carpenter hours, or 60 hours.

With the illustrative carpenter base, the apprentice base is $40.00 x 0.70 = $28.00. This program is silent on fringe, so the full fringe of $20.00 applies, and a plan-funded apprentice hour loads to $28.00 x 1.20 + $20.00 = $53.60. The carpenter line becomes 180 x $68.00 + 60 x $53.60 = $15,456.00. That is $864.00 (5.3%) under $16,320.00, and 3.2% off the whole line. Stepping the fringe down with the wage would overstate the saving by $360.00. Assume apprentices only if you have registered ones to put on site.

Overtime comes from federal wage-hour law that runs alongside the determination, and state law may add rules of its own, such as daily overtime or premium days. On contracts that carry the federal overtime clause, hours over 40 in a workweek are paid at not less than one and one-half times the basic rate of pay. The regular rate behind that premium can never fall below the basic hourly rate, and the premium is figured on that rate, not on base plus fringe.

The fringe fact sheet adds that fringe is still due on every hour, overtime included, and that cash paid in lieu of fringe needs no added premium. For a carpenter hour at the illustrative plan rate, the premium is 0.5 x $40.00 x 1.20 = $24.00, so the hour costs $68.00 + $24.00 = $92.00. The shortcut 1.5 x $68.00 = $102.00 overstates it by $10.00, or 10.9%. A steady rate above the basic rate is regular pay, and the premium follows it.

When the work fits no listed classification

A determination lists only what was found prevailing for that place and construction type. If a task on your takeoff has no line, do not slide it into the nearest one and hope. Build a matching worksheet with one row per task before you price. Table 3 shows one.

Table 3. A classification-matching worksheet, shown with invented tasks.

When a general determination applies but lacks a classification, the contractor asks for a conformance through the contracting officer. DOL approves it only if listed classifications do not do the work, the industry uses the classification in the area, and the proposed rate relates reasonably to the listed rates. Conformance cannot be used to split or avoid a listed classification, so a task that a listed line performs stays at that line. The approved rate is owed from the first day anyone works in that classification. If the only classification the job needs is missing, the agency can instead ask DOL for a project determination before bid opening, so raise it early.

That timing is your exposure. DOL aims to answer a conformance request within 30 days, and silence is not approval. Say 80 hours of the flagged task carry an illustrative placeholder of $60.00 for base plus fringe, and the conformed rate returns at $65.00. The exposure is ($65.00 - $60.00) x 80 = $400.00 before burden. Keep the placeholder on the bid sheet until you hold the written rate, and write your reasoning down on bid day.

When the determination and the bid package disagree

Treat each mismatch as a question to the agency, in writing, before the question deadline. Then price what the documents say and record what you priced. The forms are where a mismatch shows first, so check the owner's form and the bid package contents against the determination.

• No determination attached, or the wrong county or type. Ask which one applies. The agency is the source.

• A newer modification than the attached one. Ask which version governs. On a sealed bid, apply the 10-day rule above.

• More than one determination or schedule. Building, residential, highway and heavy determinations carry different rates for the same trade, and one contract can use more than one. The contracting officer must advise which schedule applies to the various construction items. Price each portion on its own and never average them.

• Federal and state schedules both in play. Do not assume which one controls. Ask, and carry the higher line for each classification as a pricing safeguard, not as a statement of law, until the answer is in writing.

• A subcontractor quote built on another version. Ask each sub which determination and modification the number assumes, and level the quotes on the same one.

• The bid date moves, or award slips. Pull the determination again and reprice any classification whose modification changed. On a sealed bid, if award comes more than 90 days after opening, check the 90-day rule: a revised general determination issued before award can apply unless the agency obtains an extension.

On a unit-price public bid, the labor line also has to be spread across the owner's pay items. Pricing against an owner's pay items explains that spread.

The misclassification trap and clean time coding

Misclassification is the quiet loss on a covered job. Check these before bid and again at kickoff:

• Classify by the work performed, not by the title on the payroll or the worker's skill level.

• A worker who does two kinds of work can be paid each rate, but only if the time records show the hours in each.

• A working foreperson who spends more than 20 percent of a workweek on laborer or mechanic duties is covered for that time, unless the person qualifies as an exempt executive, administrative or professional employee.

• Cost codes on the time cards match the classifications in your estimate, so the hours you priced are the hours payroll records.

The cost is plain. Suppose 40 hours of carpenter work are coded as laborer. With the illustrative rates above, the difference is ($40.00 + $20.00) - ($30.00 + $10.00) = $20.00 an hour, or $800.00 over 40 hours before burden.

Certified payroll, burden and markup go on top of wage and fringe

A covered contractor or subcontractor submits certified payroll weekly, with a signed Statement of Compliance. Form WH-347 is one optional format, and the weekly payroll itself is required. The prime contractor submits the subcontractors' payrolls, and payroll records are kept for at least 3 years after all work on the prime contract is complete. Takeoff Services LLC does not prepare, file, review or certify certified payroll. That stays with your payroll team or payroll service.

Price the hours it takes as its own line. Say the job runs 14 weeks. You spend 3.0 hours a week on your own payroll and 1.0 hour a week reviewing each of 2 subcontractors. That is 14 x (3.0 + 2 x 1.0) = 70 hours, and 70 x $30.00 = $2,100.00 at an illustrative office rate. Use your own rate and the hours from your last covered job instead. Table 4 rolls it all up in illustrative dollars.

Table 4. The roll-up, fringe to plan, in illustrative dollars.

Burden goes into the rate once, and markup goes on once, at the end. Marking up the rate and then the total counts it twice. A 10% markup on cost is a 9.1% margin on price. The pre-bid post works through that conversion in its markup and burden steps. On the cash version, the same roll-up lands at $33,990.00, which is $1,636.80 more.

Other work has a rulebook of its own. Insurance restoration prices to a carrier's price list, and the insurance supplement line sheet shows how those lines are documented.

If you bid covered work in one county every month, the build above is yours to run. If the work spans several crafts, the fringe is still undecided, or the bid date leaves no clear days to read the determination, hand it off.

Frequently asked questions