Why Construction Staffing Firms Prefer to offer Per Diem over Hotel to Traveling Hands

Get the Best Skilled Workers for Your Construction Projects

Posted by Zach Short 2/14/2017 12:00:00 AM

In light of the holiday season approaching, we felt it fitting to do another post on travelers, and what works best for them in these times of last minute shut down projects, big construction jobs needing a solid final push before the New Year, or contractors looking to relocate top talent to their company. What have our contractors found to be most effective, and why?

At Grus, we take pride in our traveling hands, as they are typically our most skilled workers - continually refining their skills by going to where the construction projects are instead of waiting for work to come to them. Our teams of recruiters have a great relationship with these workers, as they talk to them daily. You could say that these personnel are our on-the-ground intel when it comes to what the market looks like, and what trends they have picked up on moving from place to place.

Let's start with a scenario:

An electrical contractor calls us up and is looking for 10 licensed electricians in Chadron, NE (Ever heard of it? Didn’t think so) The contractor realizes that due to the population of Chadron being a little over 5,000 total (during the college season) along with the fact that he is the only electrical contractor within 100 miles, and knows or has hired all the local electricians in this town…he knows that he will be hard-pressed to find even one good Nebraska licensed electrician local to him. So, he offers the following:

·         $35 - $37/hr

·         Hotel stay provided (two to a room)

·         Per Diem of $25/day

·         50 hrs/week

On paper, this looks like a great job order, and there is a good chance we could fill it. However, let us look at the pros and cons of one piece of this job order in particular: the hotel and per diem. We will analyze from both the contractor’s and worker’s perspectives.

First, for the contractor, we can deduct that as this contractor is local to the hotel where workers will be staying that they may have built a solid rapport and can get a decent group/monthly rate for this hotel. Understandably, they will save some money going this route. The per diem of $25/day is also a good way to mitigate food expenses for the electricians.

On the flip side, contractors now must coordinate with these electricians to get hotels set up, often having to book in advance. While Grus does what we can to ensure we get workers who will represent us well on and off the job, we do get some outliers who can be unpredictable at best, and may cause disruptions at the hotel, or damage the room. These are expenses that the contractor is responsible for, and could lead to increased hotel rates or repair expenses that would easily exceed the cost of higher per diem.

 

So, to summarize, for the contractor the pros are as follows:

·         Avoid a higher per diem by offering housing

·         Save more by housing two to a room

·         $25/day per diem is tax free

Cons to consider would be:

·         Being responsible for coordinating/reimbursing/or booking hotels for workers

·         Being responsible for potential damage or disruption caused by workers

·         Damaging relationships with local customers/community

Now, let’s consider the hotel option from the worker’s perspective. While having the hotel eliminates the electrician’s stress of finding their own place, they may not be too keen to share with a stranger. Conflicting personalities can present issues of their own on the job site, but at least there is room to separate them. What do you think will happen if you take that tension and bottle it up into a small hotel room in the middle of nowhere? There is much higher potential for conflict and the aforementioned damage to rooms/damage to local partnerships.

Again, to summarize the pros:

·         Eliminates the worker’s need to find a place to stay

·         Can work well for travel teams

Cons:

·         Unpredictable personalities in the same room

·         Must rely on someone else to coordinate/reimburse/or book hotel for them (this means if someone drops the ball on the contractor’s end, workers may have to use their own money to cover a room for a night or two)

So, do you want to make things easier for yourself when you need travelers for projects? Offer a monetary per diem.

Take that same scenario, and substitute the hotel and $25/day for a higher monetary per diem of just $80/day, alone. This means that now the contractor is no longer responsible for coordinating the booking and/or reimbursing for hotel stay, and are no longer liable for damages to rooms, nor do they have to intervene in conflicts between workers, or risk damaging relationships with the community. On top of all of that, Per Diem is not taxed. From what our recruiters hear this is the preferred scenario for travelers that work with us.

With that said, could you use some travelers for any upcoming projects? Give us a call, or visit our Request a Quote page and let us show you what we can do!