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					+Preparations of Detailed Cost Estimates
         It is the task of the estimator to predict the cost of construction for the items of finished works
         presented in the bill of quantities. An accurate cost prediction can only take place when each item has
         been analyzed into its simplest element and the cost methodology estimated on the basis of factual
         information.
Cost Break Down
Direct Cost: is a cost that will be affected on actual expenditure on the activities. The direct cost shall be
             considered of Labor, Equipment and Material.
Labor: Cost of personnel as wages or fixed for the duration of activities.
Material: Cost of material purchase, transportation and hardship for that specific activity.
Equipment: This component can be considered as rentals or owned.
  This will lead as to make different approaches.
Indirect Cost: is a cost consideration of the activity as a support item. (i.e. does not have direct
            involvement). This includes:
                1 Supervision (of contractor)
                2 Financial maters
                3 Survey activities
                4 Clerical Works
                5 Head and Project office contribution
                6 Profit and Risk margin
Multiplying Factor: This is a factor used to multiply the direct cost to change it to unit rate and is derived
            from the following
             MF = Dir. Cost + Indirect Cost
                           Direct Cost
                Unit Rate = MF x Direct Cost
Detail
         Labour:        - Wages
                        1 Benefits
                        2 O.T
                        3 Leave
                            Holiday
                            Mourning
                            Sick
                            Annual
                        4 Tax (income)
                        5 Any other involved cost



                                                                                                               0
       Equipment: 1. Rental
                  2. Owned
                      Owing Cost
                      Operational

       Material:     -      Purchase Price
                    1       Transportation
                    2       Loading and Unloading
                    3       Handling and Storage
       Indirect Cost

                       1. Project
                           Staff
                           Stationary
                           Comp. and Access
                           Office Facility
                           Survey crew and instrument
                           Etc

                       2. Premiums
                           Insurance
                           Bonds
                           Advance
                           Performance
                           etc.

                       3.    Head Office
                             Staff
                             Comp. and Access
                             Station
                             Office and facility
                             etc.
Basic Considerations

Increase in volume: will lead to revise the unit rate for the benefit of the client and time consideration.

Decrease in volume: will lead to revise the unit rate for the benefit of the contractor and time consideration.




                                                                                                                  1
                                                                                              Annex I: Guidelines for Site Supervisors of Building Construction Project

                                                      ANALYSISIS SHEET FOR DIRCT UNIT COST (1:3)

Project :                    __________________________                                                      Labour Hourly Output:               _______________________
Work item:                      Trench Excavation                                                            Equipmnt:                           _______________________
Total Qty. of work
item:                             2525 m3        ______                                                      Resultant:                             10 m3/hr

                   Material Cost (1.01)                                      Labour Cost (1.02)                                        Equipmnt Cost (1.03)
                                                                                              Indexed
                                                   Cost Per   Labour by                        Hourly         Hourly       Type of                           Hourly            Hourly
Type of Material     Unit       Qty       Rate      Unit        Trade      No.       UF         Cost           Cost       Equipment    No.        UF       Rental Rate          Cost
                                                              Gangchief          1        1          10            10     Excav              1         1           450            450
                                                                                                                                 3
                                                              Operator           1        1          15              15   (0.38 m )
                                                              Helper             1        1           6               6




                                                                                              Total (1.02)                                                  Total (1.04)
                        Total (1.02)                                                 31.00                                                        450.00


A = Materials Unit Cost __________________                                B = Manpower Unit Cost             31.00                    C = Equipment Unit Cost                  450.00

                                                                            = Total (1.02) = 31 = 3.10                                 = Total (1.03) = 450 = 45.0
                                                                              Hourly Output 10                                            Hourly Output   10

                                                   Direct Cost of Work Item = A + B + C = 45.00 + 3.10 = 48.10

Remarks _________________________________________________________________________________________________________

UF - UTILIZATION FACTORY
* Inclusive of waste, transport, handling, etc.
** inclusive of benefits, travel subsidies and cost of overtime related to targeted output

                                                                                                                                                                           2
                                                    ANALYSISIS SHEET FOR DIRCT UNIT COST (1:3)

Project :                    __________________________                                                  Labour Hourly Output:           _______________________
Work item:                      Cartaway                                                                 Equipmnt:                       _______________________
Total Qty. of work
item:                             1035.00m3                                                              Resultant:                         14.38 m3/hr

                   Material Cost (1.01)                                    Labour Cost (1.02)                                  Equipmnt Cost (1.03)
                                                                                               Indexed
                                                 Cost Per   Labour by                           Hourly   Hourly    Type of                           Hourly            Hourly
Type of Material     Unit       Qty       Rate    Unit        Trade      No.      UF             Cost     Cost    Equipment    No.        UF       Rental Rate          Cost
                                                                                                                  D/Trk              1         1           200            200
                                                                                                                  (9 m3)
                                                                                                                  Loader             1     0.25            450          112.5



                                                                                                                                                    Total (1.04)
                        Total (1.02)                                            Total (1.02)                                              312.50


A = Materials Unit Cost __________________                              B = Manpower Unit Cost                                C = Equipment Unit Cost 312.5

                                                                          = Total (1.02) = _____________                      = Total (1.03) = 312.50 = 21.73
                                                                            Hourly Output                                         Hourly Output 14.38

                                                 Direct Cost of Work Item = A + B + C = 21.73 Birr/m3

Remarks _________________________________________________________________________________________________________

UF - UTILIZATION FACTORY
* Inclusive of waste, transport, handling, etc.
** inclusive of benefits, travel subsidies and cost of overtime related to targeted output




                                                                                                                                                                   3
                                                           ANALYSISIS SHEET FOR DIRCT UNIT COST (1:3)

Project :                      __________________________                                                         Labour Hourly Output:             _______________________
Work item:                        Lean Concrete 5 cm thk                                                          Equipmnt:                         _______________________
Total Qty. of work
item:                                 687 m2                                                                      Resultant:                           25 m3/hr = 50 m2/hr

                   Material Cost (1.01)                                           Labour Cost (1.02)                                      Equipmnt Cost (1.03)
                                                                                                   Indexed
                                                        Cost Per   Labour by                        Hourly        Hourly      Type of                           Hourly            Hourly
Type of Material     Unit         Qty          Rate      Unit        Trade      No.       UF         Cost          Cost      Equipment    No.        UF       Rental Rate          Cost
Cement              Qts                2.4       187      448.8    Foreman            1      0.5          15           7.5   Mixer              1         1          22.5            22.5
                                                                   Plasteror          1        1          15           15
                        3
Sand                M                 0.52       120        62.4   Carpenter          1     0.75          16           12    Vibrat             1      0.5          18.75            9.38
                                                                   Labourers      18           1        3.75          67.5
                        3
Aggregate           M                 1.03       150      154.5                                                              Hand. T        18            1          0.05             0.9
Water               Litter              20       0.3           6

                                         Total (1.02)                                              Total (1.02)                                                Total (1.04)
                             671.17                                                       102.00                                                     32.78
A = Materials Unit Cost               671.17 Birr/m3                           B = Manpower Unit Cost             102.00                 C = Equipment Unit Cost                  32.78

                                                                                 = Total (1.02) = 102          = 40.80                    = Total (1.03) = 32.78 = 13.11
                                                                                   Hourly Output 2.5                                        Hourly Output   2.5

                                                        Direct Cost of Work Item = A + B + C = 671.17 + 40.80 + 13.11 = 725.08

Remarks        725.08 Birr/m3 = 36.25 Birr/m2

UF - UTILIZATION FACTORY
* Inclusive of waste, transport, handling, etc.
** inclusive of benefits, travel subsidies and cost of overtime related to targeted output



                                                                                                                                                                              4
                                                         ANALYSISIS SHEET FOR DIRCT UNIT COST (1:3)

Project :                     __________________________                                                       Labour Hourly Output:             _______________________
Work item:                       Back Fill                                                                     Equipmnt:                         _______________________
Total Qty. of work
item:                               576 m3                                                                     Resultant:                           1 m3/hr

                   Material Cost (1.01)                                        Labour Cost (1.02)                                      Equipmnt Cost (1.03)
                                                                                                Indexed
                                                     Cost Per   Labour by                        Hourly        Hourly      Type of                           Hourly          Hourly
Type of Material     Unit       Qty          Rate     Unit        Trade      No.       UF         Cost          Cost      Equipment    No.        UF       Rental Rate        Cost
                                                                Gang
                                                                Chief              1    0.75           10           7.5   Hand
                        3
Select Material     M                 1         45        45                                                              Tools              2         1           0.5            1
                                                                Labourers          2        1        3.75           7.5



                                          Total (1.02)                                          Total (1.02)                                                Total (1.04)
                            45.00                                                      15.00                                                       1.00


A = Materials Unit Cost             45.00                                   B = Manpower Unit Cost             15.00                  C = Equipment Unit Cost 1.00

                                                                              = Total (1.02) = 15.00           = 15.00                  = Total (1.03) = 1.00 = 1.00
                                                                                Hourly Output 1.00                                        Hourly Output 1.00

                                                     Direct Cost of Work Item = A + B + C = 61.00 Birr/m3

Remarks _________________________________________________________________________________________________________

UF - UTILIZATION FACTORY
* Inclusive of waste, transport, handling, etc.
** inclusive of benefits, travel subsidies and cost of overtime related to targeted output



                                                                                                                                                                         5
                                                          ANALYSISIS SHEET FOR DIRCT UNIT COST (1:3)

Project :                      __________________________                                                         Labour Hourly Output:          _______________________
Work item:                        Mortar - 1:3                                                                    Equipmnt:                      _______________________
Total Qty. of work
item:                                                                                                             Resultant:                          2.5 m3/hr

                   Material Cost (1.01)                                          Labour Cost (1.02)                                      Equipmnt Cost (1.03)
                                                                                                        Indexed
                                                       Cost Per   Labour by                              Hourly   Hourly    Type of                           Hourly          Hourly
Type of Material     Unit         Qty          Rate     Unit        Trade      No.        UF              Cost     Cost    Equipment    No.        UF       Rental Rate        Cost
Cement              Qts               4.41       187    824.67                       as of lean concret
Sand                M3                0.95       120       114                                                                                as of lean concrete
Water               Litter              20       0.3          6




                                        Total (1.02)
                             944.67                                                      Total (1.02)                                                    Total (1.04)
A = Materials Unit Cost               944.67                                  B = Manpower Unit Cost ___________                       C = Equipment Unit Cost ________

                                                                                 = Total (1.02) = _____ = 40.80                         = Total (1.03) = ____ = 13.11
                                                                                   Hourly Output                                          Hourly Output

                                                       Direct Cost of Work Item = A + B + C = 998.58 Birr/m3

Remarks _________________________________________________________________________________________________________

UF - UTILIZATION FACTORY
* Inclusive of waste, transport, handling, etc.
** inclusive of benefits, travel subsidies and cost of overtime related to targeted output




                                                                                                                                                                          6
                                                          ANALYSISIS SHEET FOR DIRCT UNIT COST (1:3)

Project :                     __________________________                                                         Labour Hourly Output:                 _______________________
Work item:                       Masonry Wall                                                                    Equipmnt:                             _______________________
Total Qty. of work
item:                                1450 m3                                                                     Resultant:                               0.6 m3/hr

                   Material Cost (1.01)                                          Labour Cost (1.02)                                          Equipmnt Cost (1.03)
                                                                                                  Indexed
                                                       Cost Per   Labour by                        Hourly         Hourly        Type of                            Hourly          Hourly
Type of Material     Unit        Qty          Rate      Unit        Trade      No.       UF         Cost           Cost        Equipment     No.        UF       Rental Rate        Cost
Stone               M3                1.5        96        144    Foreman            1     0.5           15              7.5   Hand tools          4         1           0.5            2
                        3
Mortar              M                0.33   998.58      329.53    Masons             2        1          15              30
                                                                  Helper             2        1          10              20




                                        Total (1.02)                                              Total (1.02)                                                    Total (1.04)
                            473.53                                                       57.50                                                           2.00


A = Materials Unit Cost              473.53                                   B = Manpower Unit Cost             57.50                      C = Equipment Unit Cost 2.00

                                                                                = Total (1.02) = 57.50           = 95.83                     = Total (1.03) = 2.00 = 3.33
                                                                                  Hourly Output 0.6                                            Hourly Output 0.6

                                                       Direct Cost of Work Item = A + B + C = 473.53 + 95.83 + 3.33 = 572.69

Remarks      572.69 Birr/M3

UF - UTILIZATION FACTORY
* Inclusive of waste, transport, handling, etc.
** inclusive of benefits, travel subsidies and cost of overtime related to targeted output


                                                                                                                                                                               7
                                                          ANALYSISIS SHEET FOR DIRCT UNIT COST (1:3)

Project :                      __________________________                                                        Labour Hourly Output:       _______________________
Work item:                        Galvanized Steel Pipe  1"                                                     Equipmnt:                   _______________________
Total Qty. of work
item:                                1803 mts                                                                    Resultant:

                   Material Cost (1.01)                                          Labour Cost (1.02)                                    Equipmnt Cost (1.03)
                                                                                                   Indexed
                                                       Cost Per   Labour by                         Hourly       Hourly    Type of                    Hourly            Hourly
Type of Material      Unit       Qty        Rate        Unit        Trade      No.        UF         Cost         Cost    Equipment    No.    UF    Rental Rate          Cost
G.S.P  1"           Mt                 1        75         75
 3 plain bar        Mt                 1       0.85       0.85                      Labour Take 40%




                                        Total (1.02)                                              Total (1.02)
                             75.85                                                        30.34                                                      Total (1.04)


A = Materials Unit Cost 75.85                                                 B = Manpower Unit Cost             30.34                C = Equipment Unit Cost _______

                                                                                = Total (1.02) = ___________                             = Total (1.03) = ____________
                                                                                  Hourly Output                                            Hourly Output

                                                       Direct Cost of Work Item = A + B + C = 75.85 + 30.34 = 106.19

Remarks         106.19 Birr/mt

UF - UTILIZATION FACTORY
* Inclusive of waste, transport, handling, etc.
** inclusive of benefits, travel subsidies and cost of overtime related to targeted output



                                                                                                                                                                    8
                                                       ANALYSISIS SHEET FOR DIRCT UNIT COST (1:3)

Project :                     __________________________                                                   Labour Hourly Output:            _______________________
Work item:                       Wire Mesh                                                                 Equipmnt:                        _______________________
Total Qty. of work
item:                              2525 m3                                                                 Resultant:

                   Material Cost (1.01)                                       Labour Cost (1.02)                                      Equipmnt Cost (1.03)
                                                                                                 Indexed
                                                    Cost Per   Labour by                          Hourly    Hourly        Type of                    Hourly            Hourly
Type of Material     Unit        Qty        Rate     Unit        Trade      No.        UF          Cost      Cost        Equipment    No.    UF    Rental Rate          Cost
Wire mesh           M2                  1      85        85                       Labour Take 10%




                         Total (1.02)                                                  Total (1.02)               8.50                              Total (1.04)


A = Materials Unit Cost 85.00                                              B = Manpower Unit Cost          8.50                      C = Equipment Unit Cost ______

                                                                             = Total (1.02) = __________                               = Total (1.03) = __________
                                                                               Hourly Output                                             Hourly Output

                                                    Direct Cost of Work Item = A + B + C = 93.50

Remarks        93. 50 Birr/M2

UF - UTILIZATION FACTORY
* Inclusive of waste, transport, handling, etc.
** inclusive of benefits, travel subsidies and cost of overtime related to targeted output



                                                                                                                                                                   9
                                                       ANALYSISIS SHEET FOR DIRCT UNIT COST (1:3)

Project :                     __________________________                                                        Labour Hourly Output:       _______________________
Work item:                       Barbed wire                                                                    Equipmnt:                   _______________________
Total Qty. of work
item:                              6870 mt                                                                      Resultant:

                   Material Cost (1.01)                                       Labour Cost (1.02)                                      Equipmnt Cost (1.03)
                                                                                                 Indexed
                                                    Cost Per   Labour by                          Hourly        Hourly    Type of                       Hourly           Hourly
Type of Material     Unit        Qty        Rate     Unit        Trade      No.        UF          Cost          Cost    Equipment    No.    UF       Rental Rate         Cost
Barbed wire         Mt                  1    3.38       3.38                      Take Labour - 10%




                                                                                                 Total (1.02)                                          Total (1.04)
                         Total (1.02)                                                   31.00                                                450.00


A = Materials Unit Cost            3.38                                    B = Manpower Unit Cost               0.34                 C = Equipment Unit Cost ________

                                                                             = Total (1.02) = __________                                = Total (1.03) = ___________
                                                                               Hourly Output                                              Hourly Output

                                                    Direct Cost of Work Item = A + B + C = 3.72
Remarks       3.72 Birr/Mt

UF - UTILIZATION FACTORY
* Inclusive of waste, transport, handling, etc.
** inclusive of benefits, travel subsidies and cost of overtime related to targeted output




                                                                                                                                                                    10
Exercise
A company has been invited to participate on bid that requires a performance of a perimeter
fence work (details are given here under) the project site is 50 km (17 km gravel and the
restudies Asp) from the company’s station. The firm has some contractual works and to be
involved on this project may require him 14% of the total company’s expenditure for the head
office is about Birr 25,000.00 per month. Profit and risk margin is set to be 17% in the area.
Duration of the project is 6 months and survey cost to be 15,000.00 Birr.

Exercise – Fence Work
Bills of Quantity

  Item
   No Description                       Unit              Qty.         Unit Price    Total Price   Remark
    1  Excavation Trench to a depth not
       exceeding 3.00 meters for
       foundation masonry wall.         M3                2525

   2    Cart away and spread surplus
        (uneatable) excavated material to
        municipality approved fill site not
        less than 3 km.                     M3            1035

   3    Cost instill of 5 cm thick lean
        concrete in C-10 quality with a
        minimum cement content of 240
        kg/m3 under masonry foundation
        wall.                           M2                687

   4    Fill around trench masonry wall
        with selected granular material
        from quarry site or place to be
        approved by the Engineer in 20
        cm thick longer.                M3                576

   5    Supply and Construct 40 cm thick
        trachythc or equivalent stone
        masonry foundation wall bedded
        and joined in 1:3 cement mortar. M3               1450

   6    Supply and fix galvanized steel
        pipe of Dia. 1 inch to be inserted
        at least 40 cm in foundation
        masonry wall in 2mts distance
        apart. (price include hooks)       Ml             1803

   7    Supply and fix wire mash of < 16


                                                                                            11
         cm2 opening material quality shall
         be approved by the Engineer        M3                 2300
   8
         Supply and fix barbed wire of
         approved quality to be in 3 lines
         with a spacing of 20 cm on the top
         of GSP                             Ml                 6870


Assumptions
Cost of Cement:        187 Birr/Qt
        Sand:          120 Birr/m3
        Aggregate:     150 Birr/m3
        Mas. Stone: 105 Birr/m3
        Galv. Ste. Pipe 75 Birr/
        Wire mesh       85 Birr/m2
        Barbed wire 3.38 Birr/ml
        R. bar         11.00 Birr/kg
        Paint            85 Birr/gel
        Select Mat.      48 Birr/m3
Transp. Gravel road     0.378 Birr/kg/km
        Asphalt         0.32 Birr/kg/km

Step (1) – Required volume of material
        3    For transportation
        4    for program
        5     Cement                   3195 Qts
        6    Sand                      710 M3
        7    Aggregate                 134 M3
        8    Select M                  620 M3
        9    R. steel                  385 Berge
        10   Wire mesh                 2300 M2
        11   Barbed wire               6900 ml
        12   Stone masonry             1330 M3
        13   Galv. Steel               1720 mt. ( 1” CHS)

(2) Transportation Cost
        14 Toad Type                   Asphalt 33 km
                                       Gravel 17 km

        15 0.032 x 33         =        0.1056 Birr/kg
        16 0.037 x 17                  =      0.0629 Birr/kg
                                       0.1685 Birr/kg
                                       Birr 16.85/Qt


                                                                      12
       17 Loading and unloading 2Birr/Qt

Step (3) Direct Cost
       Labor Index

       1. Monthly salary            1.000
       2. OT. 1.5 hrs/day           0.0086
       3. Leaves
          3.1. Annual               0.04
          3.2. Sick leave           0.009
          3.3. Mourning             0.009
       4. Holiday leave             0.337
       5. Sunday and Saturdays      0.213
       6. Increment                 0.08
                                    1.394
              Labor Index           1.394  1.40

     Some other items to be considered
       1. Desert allowance
       2 Perdition
       3 Displacement allowance
       4 etc

Indexed Salary (including Income Tax)

Description           Salary                 Indexed salary          In. Tax   Total

Skilled               50 Birr/day            70           12.50      82.50     82.5
Unskilled             20 Birr/day            28           5.00       33.00     33.00
Supervisory           60 Birr/day            84           15.00      99.00     99.00
etc

Step (4) Indirect Cost
        4.1. Head office contribution – 14% x 25,000 =Birr 3500.00
                                        3500 x 6 = Birr 21,000.00

        4.2. Project office
             4.2.1. Survey                         Birr 15,000.00
             4.2.2. Office facility                Birr 45,000.00
             4.2.3. Staff (Salary and All)         Birr 86,250.00
             4.2.4. Mobilization and Demob         Birr 48,000.00

        4.3. Premiums of Bonds
             4.3.1. Advance


                                                                                   13
               4.3.2. Performance
               4.3.3. Personnel insurance
         4.5. Profit and Risk margin 17%
Exercise - Fence work

       1. Excavation (Equipment) 2525 m3

Excavator      0.38 m3 capacity
Out put        79 m3/day - 10 m3 /hr
Rental rate    450 Birr/hr

Man power
Operator       15 Birr/hr
Grease boy     6 Birr/hr
Gang chief     10 Birr/hr
       Total   31 Birr/hr

Or – Fuel – usually it is the cost of rentee
Cost 481  10 = 48.10 Birr/m3

* P/s work – out using labor force

2. Car-away – 1035 m3

Equip- Dump truck      9 m3 capacity
       Rental rate     200 Birr/hr
       Loader          450 Birr/hr

Out put -115 m3/day – 14.38 m3/hr

Cost- 650  14.38 = 45.20 Birr/ m3

3. Lean Concrete – 687 m2 = 34.35 m3

Man power
     1 Forman -      UF 0.50    -   15 Birr/hr - 7.50 Birr/hr
     1 plasterer -   UF 1.00    -   15 Birr/hr - 15.00 Birr/hr
     1 Carp.     -   UF 0.75    -   16 Birr/hr - 12.00 Birr/hr
     18 Labou. -     UF 1.00    -   3.75 Birr/hr – 67.50 Birr/hr
                                        Total 102.00 Birr/hr
       Material
       Cement          2.40 x 187.00 = 448.80
       Sand            0.52 x 120.00 = 62.40
       Aggregate       1.03 x 150.00 = 154.50
                                       665.70




                                                                   14
  Equipment
       Mixer            R.R    22.50 Birr/hr
       Hand tools              0.50 Birr/hr
       Vibrator         R.R 18.75 Birr/hr
                               41.75 Birr/hr
         Out put        2.5 m3/hr
         Man power      40.80 Birr m3
         Equipment      16.70 Birr/ m3
         Material       662.70 Birr m3
         Cost           723.20 Birr m3

         Considering 5 cm thick
                 Cost = 36.16 Birr/m2
4. Back fill – Labor – (576 m3)
         Material
         Select material       45 Birr/ m3 (Assumed)

         Labor
         1 Gange chief UF - 1.00 - 10 Birr/hr - 10.00 Birr/hr
         2 Laborers    UF - 1.00 - 3.75 Birr/hr - 7.50 Birr/hr
                                                  17.50 Birr/hr
         Out put 1 m3/hr
         Cost - 17.50 +_ 45 = 62.50 Birr/ m3

 5. Masonry – (mortar 1:3) – 1450 m3
       Mortar 1:3
       Cement 4.41 x 187.00 Birr/Qt = 824.67 Birr/ m3
       Sand 0.95 x 120.00 Birr/ m3 = 114.00 Birr/ m3
       Labor - 40.80 Birr/ m3
         Cost = 979.47 Birr/ m3 (only for mortar preparation)
        Material
        Trachytic stone - 1.5 m3/m3 x 96.00 Birr/m3 = 144.00 Birr/m3
        Mortar           - 0.33 x 979.47 = 323.23 Birr/m3
        Labor
             1 Foreman - UF - 0.5 x 15 = 7.50 Birr/hr
             2 Masons - UF - 1.00 x 15 = 30.00 Birr/hr
             2 Helpers - UF - 1.00 x 10 = 20.00 Birr/hr
                                              57.50 Birr/hr
        Out put 4.8m3/day = 0.6m3/hr
        Cost- 57.50 + 323.23 + 144.00 + 563.06 Birr/m3
                 0.6
 6. Galvanized steel pipe  1” - 1803 mts
    Material
  G.S.P. - 75.00 Birr/mt
   3 plain bar - 0.20 Birr/20 cm


                                                                       15
                      - 0.65 Birr/mt
                        75.65

      Labor cost (Fabt install) 45% = 34.04
      Cost - 109.69 Birr/mt
7. Wire mesh - 2300 m2
Material    - 85 Birr/m2
Labor      - 10% (assume) = 8.50 Birr/m2
Cost        - 93.50 Birr/m2


8. Barbed wire – 6870 ml
Material – 3.38 Birr/ml
Labor – 10% = 0.34 Birr/net
Cost    – 3.72 Birr/ml
Direct Cost
1.01           2,525 x 48.10 =          121,452.50
1.02           1,035 x 45.20 =          46,782.00

1.03           687 x 36.16      =       24,841.92

1.04           576 x 62.50      =       36,000.00

1.05           1,450 x 563.06 =         816,437.00

1.06           1,803 x 109.69 =         197,771.07

1.07           2,300 x 93.50 =          215,050.00

1.08           6,870 x 3.72     =       25,556.20

             D.C. Total         =       1,483,890.30
Indirect Cost
(Step 4)
       4.1 – 21,000.00
       4.2 – 194,250.00
       4.3 –
               Advance – 11,871.12 Birr/year
               Perf    -      5,935.56 Birr/year

               Personnel - 6,000.00 Birr/year


                                                       16
                              23, 806.68 Birr/year
       4.4 – 252,261.35

       Total I.C. = 491, 318.03
       MF = 1,483,890.30 + 491,318.03
                      1,483,890.30

             = 1.33

Unit Rate
1.01 48.10 x 1.33 =       63.97        64.00

1.02   45.20 x 1.33 =     60.11        60.00

1.03   36.16 x 1.33 =     48.09        48.10
1.04   62.50 x 1.33 =     83.12        83.10
1.05   563.06 x 1.33 =    748.87       748.85
1.06   109.69 x 1.33 =    145.89       145.90
1.07   93.50 x 1.33 =     4.95         124.35
1.08   3.72 x 1.33    =   4.95         4.95




                                                     17
                                               TENDER PRICE
                                                 INCLUDES

        PRICED
     PRELIMINARIES


                                                        ALL-IN LABOR RATE
        BUILT UP                 LABOR                       PER HOUR
       UNIT RATES                                         LABOR OUTPUT
                                                            CONSTANT

                                                          MATERIAL COST
                               MATERIAL                INCLUDING DELIVERY
                                                            CHARGES

                                                          UNLOADING


                                                            WASTE
                                                          ALLOWANCE

                                                     HIRE CHARGE PER HOUR
                                 PLANT                   PLANT OUTPUTS
                                                        PLANT OPETATOR
                                                             COSTS
                                                       ATENDANT, LABOR
                                                             COSTS
                              NOMINATED
           SUB-
       CONTRACTORS
          WORK
                               DOMESTIC               LABOR ONLY



       OVERHEADS
       AND PROFIT




         MARKET
       ASSESSEMENT




The planning department of the firm does the analysis of the physical resources required
for the project and the deployment of these resources. Pre-tender program will be prepared



                                                                                        18
after consultation with other relevant departments and evaluation of alternate construction
methods and sequences. The program would be presented as a network or bar chart to show
deployment of resources to constructional elements on a time scale. The amount of detail
developed would depend on the complexity of the project and the time available for preparation.
It should show the detailed labor and plant requirements for each operation and the production
outputs anticipated for these resources. A schedule of labor and plant requirements is sometimes
prepared to amplify the program.

The task of the estimator is to evaluate the cost of the resources from the program and to
build up a unit rate for each finished work item. A fundamental principle is that unit rates
should be prepared net. A unit rate prepared on this methodology will take into account methods
of construction and all circumstances which may affect the execution of work on the project. It
will consist of a prediction of the cost of the physical resources and mark-up by management.
These physical resources are: Labor, materials, and plant.

1. Disposition of the Cost Calculation
I. Direct itemized costs
Costs that can be allocated directly to a product
   a. Material costs
        Construction/Building material
        Operating supplies
        Loading, unloading and transportation costs
        Wastages
   b. Labor costs
       The real challenge in pricing construction work is the computation of labor and equipment costs.
       These are the categories of construction expense that are inherently variable and the most difficult
       to estimate accurately because of human variance and external conditions. To do an acceptable
       job of establishing these costs, the estimator must make a complete and thorough job analysis,
       maintain a comprehensive library of costs and production rates from past projects (historical
       data), and obtain advance decisions about how construction operation will be conducted.
      Labor costs include
                  -Standard wages
                  -Extra pay
                  -Supplementary pay
                  -Social Service payments
                  -Supplements
                  -Other payments
   c. Equipment costs: - All costs for commissioning /holding and operation of the equipment
                   - ownership of plant
                   - hire of plant
      All items of mechanical plant should be estimated in terms of all-in rate and a production
      output. In the case of hired plant, the standing costs will be comparable to the hire
      charge.
      The main factors in building up a rate will be:
                   - Standing Costs: includes capital sum based on purchase price and
                      operating cost, maintenance, tax and insurance


                                                                                                        19
                        - Operating Costs: operators cost, fuel, consumable stores

  The diagram below summarizes the components of unit rate build-ups.

                                                      UNIT RATE
                                                      BUILD UPS




           LABOR                                      MATERIAL                                PLANT




ALL IN      OUTPUT          GANG                                                 HIRE   OPERATO       FUEL   ATTENDA
LABOR      CONSTANT         RATE                                                                             NT LABO
 RATE                       BUILD                                                COST   R COST        COST
          PET UNIT OF
                                                                                                               COST
           MEASURE
                             UPS




                                       SUPPLY
                                        COST          UNLOADIN          WASTE                PLANT COST
                                       DELIVER         G COSTS         ALLOWAN
         LABOR COSTS                                                                         PER UNIT OF
                                        ED TO                             CE
          PER UNIT OF                                                                         MEASURE
                                         SITE
           MEASURE


                                                 MATERI
                                                   AL
                                                  COST
                                                 ON SITE


                                                      MATERIAL COST

                                                       PER UNIT OF
                                                        MEASURE




                                                      UNIT RATE COST
                                                       PER UNIT OF
                                                         MEASURE


      d. Costs for sub-constructor:- If the work is to be sub-letted to a nominated sub-contractor,
         the cost shall be determined and separately established as a sub-contractor fee.
                Ex. –Marble cladding
                    -Supply and fix items (aluminum frames)
                    -Furniture etc.
  II. Indirect Costs
         The project overheads are the cost of administering a project and providing the general
         plant, facilities and site based services. They consist of the items that cannot be
         satisfactorily allocated to individual unit rates of finished work. The cost of some of the
         project are time related and will be estimated in terms of the contract period or length of



                                                                                                     20
      time on site and the all-in rate for a unit of time, the information on time being obtained
      from the pre-tender program. Other project overheads are value related and will not be
      able to be evaluated until after the adjudication process by management.
   a. Site over head costs plumb
   Time-independent costs
       Costs for site plant/ site installations
       Cost for site facilities
       Engineering and controlling
       Operation risks
       Special costs
   Time-dependent costs
       Commissioning /holding costs
       Operating costs
       Costs for contractor’s agent
   b. General overhead costs
   c. Risks and profit
        Direct cost + Indirect cost = bid sum
               +Value-added Tax (VAT)
            Bid sum inclusive turnover tax /vat

   Direct cost + Site overhead Cost = Production cost
   Production cost +General overhead cost = Self-costs
   Self- costs + Risk& profit = Bid sum
   Bid sum + Vat = Bid sum inclusive VAT.

Waste Considerations in Material Control
The waste considerations or limit are different for each construction activities. A project manager
shall consider the percentage waste of material when planning of construction performance.

The followings are waster percentage allotted to some major activated materials during
construction. It is copped from building construction out put norms, prepared by MoWUD.

   1. Reinforcement bar                      5%
   2. Stone (masonry)                        30%
   3. Exposed face stone (one side)          40%
   4. Exposed face both sides                50%
   5. Structural steel                       5%
   6. Plastering works                       10%
   7. Tile (all type)                        2% - 5%
   8. Screed works                           26%
   9. Stone for pavement                     5%
   10. Glass (Glazing)                       10%
   11. Pipes (all type)                      5%
   12. Cement                                5%


                                                                                                21
2. Execution of the Cost Calculation
a) Construction Material Costs
- Cost of all material which will be part of the building.
        What is the required information?
         Quantity of material required to produce a unit amount of itemized work
         Basic price (Prime cost) at the source of material
         Transport, loading and unloading to the site
         Waste/loss (e.g. Breaking, rupture, defective material, wastage etc).
Ex. Calculation of material costs for 1m3 of C-25 grade concrete.
Required information for the calculation of material cost
         Type and quantity of materials for a unit amount of work.
         Basic price including transportation, loading and unloading of materials.
         Loss or wastage amount.
Example
1) Calculation of the material costs of 1m3 concrete C-25 grade given.
        -1Qtl of cement at Mugher - 55 Birr
        -1truck of Sand (13 m3 ) from source to Site 1500 Birr
        -1 truck of gravel (6m3) from source to site 800 Birr
        -1m3 water 1 Birr
        -Transportation cost 0.07 Birr/Qtl/Km
        -Wastage 5%

       Type of material         Unit             Qty         Rate (Birr)    Cost / Unit (Birr)
            Cement              Qt1               3.6            62               223.2
             Sand               M3                0.5         115.38              57.69
            Gravel              M3               0.75         133.33             108.00
             Water              M3                0.3             1                0.30
      SUM                                                                        381.19
      Loss 5%                                                                     19.06
      Total                                                                  400.25 Birr/m3

b) Labor Costs
   All costs, which result from the building /construction works of the employees on site
   include:-
   - Standard wages
   - Extra and supplementary pay for
        Production bonus
        Long continuity of Service (permanent laborer)
        Over time pay
        Merit increase
        Property creating performance
        Less favorable condition /allowances
   -Social Service payments
        Holiday pay if any
        Health insurance


                                                                                                 22
       Unemployment insurance
       Payment during sickness
Required information for the calculation of labor cost
       Number and type of skilled and unskilled manpower for a particular type of work,
          (Crew)
       Performance of crew per hour for a unit amount of work
       Indexed hourly cost of the workman ship.
       Utilization factor of the workmanship. Share of a particular personal per hour for the
          specified work.

Example: Calculation of indexed hourly cost for carpenter
      Standard wage:- 40 birr /day
      Extra pay (for long continuity of service)
                    1Birr /hr for 60 % of the carpenters
      Over time
              50 weekly working hours / 44 weekly working hours/
              6 overtime hours with 25% increment
      Property- Creating performance
              For 80% of the employees 0.25birr /hr
      Supplements: 10% of wage

Solution:
     Standard wage..........................................5 Birr /hr
     Extra pay = 0.6 (1) ...................................0.6 birr/hr
     Over time= 6x0.25 x 5...............................0.15 birr/hr
                     50
     Property creating performance 0.86(0.25) = 0.2 birr/hr
     Supplements= 0.1(5)..............................…..0.5birr/hr
     Total..................................................…….. 6.45 b/hr.

Example2. Calculation of labor cost for a m3 of concrete; production rate 1.25 m3 /hr

    Labor                    No                     UF              Indexed      Hourly cost
                                                                   hourly cost     (Birr)
    Forman                   1                      1/2               7.29         3.645
    Plasterer                2                       1                4.28          8.76
    Carpenter                1                      1/4               6.45          1.61
    Bar bender               1                      1/4               6.45          1.61
    D. Laborer               18                      1                1/13         20.34
    Total                                                                          35.97

  Labour cost = 35/1.25= 28.78/m3




                                                                                               23
c) Equipment cost
  Required information
    Type of equipment for a particular item of work.
    Performance of equipment per hour for a unit amount of work (production rate)
  Two methods of calculation are followed.
     I) With charges accounted for depreciation, interest return and monthly repair costs
     II) With monthly rental charges.
     Example: Calculation of equipment cost for m3 of concrete
   Mixer - Original cost = 50,000 Birr
              Useful life = 3yrs                                   Assume 8 working hours per
              Interest rate=6.5%                                   day and 22 days per month
              Monthly repair cost with supplies: - 700 Birr
   Vibrator- Original cost = 5,000 Birr
              Useful life = 7yrs
     Repair cost monthly = 50 Birr

Hourly equipment cost

i) Mixer
      Depreciation (d)
        50,000 Birr = 7.89 Birr/hr
      3x12(22x8) hr
      Interest of return (i)
      1/3 [50,000 (1+0.0665)3 - 50,000] Birr /year = 3465.83 Birr/year
                 Hourly cost 3465.88/(12x8x22) = 1.641 Birr/hr
      Hourly repair cost = 700/8x22 = 3.98 Birr/hr
      Hourly Mixer cost = 7.89 + 1.641+ 3.98 = 13.511 Birr/hr
 ii) Vibrator
    Depreciation (d)
     5000/(7x12x8x22) = 0.338 Birr/hr
     Interest returns (i)
     1/7 [ (5000 (1+0.065)7 - 5000] = 395.7 Birr/hr
         395.7/(12x8x22) = 0.187 Birr /hr
     Repair cost
     50/ (8x22) = 0.284 Birr /hr
     Hourly virbrator cost = 0.338+0.187+0.284= 0.81 Birr/hr
                                                                         Hourly
       Type of equipment     No        UF    Hourly rental rate           Cost
       Mixer 1                1         1           13.51                13.51
       Virbrator              1         1            0.81                 0.81
                                              Total hourly cost
                                                    (Birr)               14.32
                         3
   Equipment cost for (1m concrete) 14.32/1.25 = 11.46 Birr/ m3
   Example. Equipment cost using monthly rental charges
   Mixer= 5000 Birr Month rental charge
   Vibrator = 500 Birr month rental charge


                                                                                            24
   Hourly cost
   Mixer 5000/22x8 = 28.41 Birr/hr
   Vibrator = 500/22x8 = 2.84 Birr /hr
   Total =    31.25 Birr/hr
   Equipment cost for 1 m3 of concrete = 31.25/1.25 = 25 Birr/ m3



Example
2) Costs For Formwork
Two methods of calculation to be accounted
   i) With monthly rental charges
        Ex. Steel form works
   ii) With charges according to the number of uses
        Ex. Timber formworks

1m2 formwork for floor slab made of zigba: - 300 birr & number of possible uses 7
       Type of material          Unit               Qty           Rate            Cost per unit
      Zigba                      m2                  1            42.85              42.85
      Batten                      m                  1             2.0                2.00
      Beams                       m                  1            4.16                4.16
      Eucalyptus posts            m                  1             2.5                 2.5
      Mold oil                    1t                0.1             1                  0.1
      Nail                        kg                0.22            8                 1.78
      Sum                                                                            53.37
      Loss 5%                                                                         2.67
      Total                                                                          56.04

   3. Two approaches for cost calculation
   i/ Cost Calculation with predetermined charges

       Direct itemized                                     Indirect itemized
       cost                                                cost
       -Material                                           -site overhead costs
       -Labour                                             -General overhead
       -Equipment                                            cost
       -Subcontractor                                      -risk and profit



                                        Unit prices
                                         (Rate)




                                  Bid Sum

                                                                                                  25
     Procedure for the cost calculation with predetermined charges
The direct itemized cost will be established in accordance with the methods and approach
illustrated in the previous examples. However the indirect itemized cost will be a product of
the corresponding direct itemized cost with some fixed charge to be established by the
individual contractors for the particular project. In our country high-class contractors presume
30-40% of the direct itemized cost as an indirect cost for the particular item of work. One can
readily establish the corresponding unit prices by just summing up the direct and indirect
itemized costs. The summation of the price of the whole item which results from the
multiplication/unit price x quantity/ would give the bid sum to the particular project.

Example: Establish the unit price of 1 m3 concrete considered for in the previous examples.
Given that the surcharge for the indirect cost is 35%.
Material cost= 400.25
Labour cost = 28.78
Equipment cost = 11.04
Direct cost = 440.07
Indirect cost = 0.35 (440.07) = 154.02
Unite price = 440.07 + 154.02= 594.10 Birr/ m3
ii/ Cost calculation through the bid Sum
In this approach, amounts for site overhead costs, general overhead costs, risk and profit are to
be ascertained separately for each project. Here from surcharges on direct itemized costs result
with different amount for each project;
Four steps for this calculation method:
                    - Establishing the production costs
                    - Establishing the bid sum
                    - Establishing the surcharges on direct itemized costs
                    - Establishing the unit prices
Eg. Given the following detail for the construction of 5Om long fence around a site.
1/ List of items quantities and direct itemized costs are as given in the table
 No        Items of work                    Unit Quantity Direct itemized cost
 1         Excavation to a depth of 1m M3           40          6
 2         50 cm thick masonry wall         M3      25          185
                                              3
 3         Concrete for tie beam            M       5           425
 4         Dia 14 deformed bar              Kg      242         5
 5         Dia 8 stirrups                   kg      132         4.5
                                              2
 6         Formwork tie beam                M       20          45
 7         20cm thick HCB wall              M2      90          52
                                Direct cost                     14,374 birr

2) Site overhead costs
     Site facilities (office, store---)------------------------------------2500 birr
     Electricity, water & telephone -----------------------------------800 birr



                                                                                              26
      Salary professionals ------------------------------------------------2000 birr
      Secretarial service ---------------------------------------------------300 birr
 3) General overhead cost -----------------------------------------10 % direct cost
 4) Risk & profit--------------------------------------------------------7% of direct cost
Question: Establish bid sum and unit prices for the itemized works.
Step 1: Establish production cost. (Direct cost + Site overhead cost)
        Direct cost :-       14,374 birr
        Site overhead cost :- 5,600 birr
        Production cost      19,974 birr
Step 2: Establish bid sum [production cost + General overhead cost + risk & profit]
        Production cost ------------------------- ------ 19,974 birr
        General overhead cost = 10%(14,374)=1,437.40 birr
        Risk & profit ---------------7 %(14374)= 1,006.18 birr
                Bid sum without vat             = 22417.58 birr
                       vat 15% =                     3362.64
                Bid sum with vat           =         25780.22 birr
Step 3: Surcharge on direct itemized cost
                Surcharge = Bid sum without vat
                             Direct itemized cost
                           = 22,417.58 = 1.5596 = 1.56
                                14,374
 Step 4: Establishing unit prices
                Unit price = Surcharge x direct itemized cost
        Item of work                  Unit      Qry            Unit price     Amount
                                        3
            1. Excavation             m         40             9.36           374.40
            2. masonry wall           m3        25             288.53         7213.25
            3. Concrete               m3        5              662.83         3314.15
            4. dia 4 bar              kg        242            7.798          1887.116
            5. dia 8 bar              kg        132            7.018          926.376
                                      m2        20             70.18          1403.6
            6. formwork                  2
                                      m         90             81.099         7298.91
            7. HCB wall
                                         Bid sum without vat             22417.8
                                                  Add 15 % vat          3362.67
                                         Bid sum with vat            25780.47 birr




                                                                                             27

				
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