HKIS QSD CPD
Contractors Build Rates & Pricing
By: Jesse Wong
How special of the construction industry?
Contractor as an insurance company
Contractor will be left behind when
everyone walks off
Build up rates / costs
Labour -How much double handling?
-What type of subcontractors?
Material -How much wastage?
Plant -What type? How many?
Overhead -preliminaries (tangible) &
Profit or at cost?
Sum of insurance / Bond
Contract period-fluctuation / LD
Payment period / honouring time
Site management staff
Plant and equipment
Reputation of the client
Reputation of the consultants
Location of the site
Technology required i.e. QPME for demolition works
Government requirement i.e. contamination
Limit of retention / min. payment
Furniture & Equipment
Factors to consider when pricing
Fully understand the project requirement:-
• Site constraints
• Working time
• Site access
• Statutory requirement
• Standard of safety requirement
• Utility Services
• Details provided
• Judgment from Contractor
Current and future market
Labour / material / currency / interest etc
Global commodities price
Long / short term relationship consideration
Knowledge are important
Programme of works
Schedule of materials submission
Schedule of drawings submission
Design and structural calculation
Type of contract
Predict construction risks
Think of your own home decoration
PC & PQ
Schedule of Provision
Indirect factors affect pricing
Learn from experience
Talk to others
Keep good relationship with supplier
Keep good relationship with bankers
Keep good relationship with subcontractors
Build up loyalty of your staffs / colleagues
Be a considerate contractor
Long time to settle final A/C
Sharing / available of resources
Financial / technical capability
Warranty / Guarantee
Foreseeable tender opportunities
Background of clients / customers
The way / time of settlement of final A/C
Reference to professional prediction
According RLB’s latest quarterly report, tender
prices in Hong Kong have stabilized after the
rapid fall between the 3rdQ of 2008
continue to rise in the 4thQ of 2009
Looking forward, the rising trend of tender
prices throughout 2010
With infrastructure projects moving, the return of
inflation and the increased activities in the
property market, tender prices in Hong Kong are
expected to rise more significantly in the second
half of the year
Tender price index vs construction costs
When is the peak?
How to price a tender when the trend is
Are the contractors making huge profit when
the trend is down turning?
As a PQS, how to estimate the costs?
How to advise the client a saver way?
How the contractors hedge the risks?