What is the term for the total of the number of hours worked by each classification of worker multiplied by their respective labor rates?

Labor cost refers to the total expenditure incurred by an organization for the work performed by its employees. It encompasses the total number of hours worked across different classifications of workers, each multiplied by their corresponding labor rates. This metric is crucial for project budgeting and cost control, as it directly impacts the overall budget for labor on a construction project.

Understanding labor costs enables project managers to assess their labor expenditures accurately, allowing for informed financial planning and resource allocation. Moreover, having a clear insight into labor costs helps in evaluating workforce efficiency and identifying areas for cost savings.

The other terms—payroll expense, overhead costs, and operational expenses—do not specifically capture this concept in the same way. Payroll expense typically refers to the total costs related to compensating employees, including wages, benefits, and taxes, but does not break down costs by classification of workers or labor rates. Overhead costs involve expenses related to the operation of a business that are not directly tied to a specific project or production, such as administrative salaries and utilities. Operational expenses cover the broader category of costs necessary for running a business but again do not pinpoint labor costs specifically.