Professional Documents
Culture Documents
BT 358 ConstructionEstimating and Price Analysis
BT 358 ConstructionEstimating and Price Analysis
Kumasi Ghana
Kwame Ofori-Kuragu
Course Author
KWAME OFORI-KURAGU is a lecturer at the Department of Building Technology at
the Kwame Nkrumah University of Science and Technology, Kumasi. He holds a
Bachelor of Science in Building Technology from the Kwame Nkrumah University of
Science and Technology and a Master of Science in Construction Project Management
from Loughborough University in the United Kingdom. He is member of the Chartered
Institute of Building (CIOB), UK member of the American Association for the
Advancement of Cost Engineering (AACE), member of the General Teaching Council
(GTC) of Great Britain and the Design and Technology Association (DATA), Great
Britain.
His main teaching and research interests are in the areas of Improving Productivity in
Construction, Construction Cost Reduction Strategies, Innovation in Construction and
Project Management Excellence.
Table of Content
Session 2-1
1-2.3
1-2.4
Session 2-2
PC Sums, Provisional Sums and Overheads......................................53
2-2.1
PC Sums
Nominated suppliers..........................................................53
2-2.2
Provisional sums............................................................................................56
Session 3-2
3-2.1
Final review...................................................................................................75
Session 3-3
3-3.1
Tender submission..........................................................................................78
3-3.2
2-4.4
Session 2-4 Estimating for Roofing, Walling, Woodwork, Finishes, Painting and
Decoration108
2-4.1
Estimating for Roofing...................................................................... 108
2-4.2
2-4.3
2-4.4
2-4.5
Session 3-4
Preparing Estimates for Plumbing and Electrical installations, Glazing
and Preliminaries.129
3-4.1
Estimating for Plumbing Installation..............................................................129
3-4.2
Risk Management.........................................................................................154
References........................................................................................................................159
List of tables
Page
1.
Table 2.1
46
2.
Table 2.2
47
3.
Table 2.3
49
4.
Table 2.4
51
5.
Table 2.5
51
6.
Table 2.6
51
7.
Table 2.7
52
8.
Table 3.1
83
9.
Table 4.1
96
Reinforcement Requirements
99
101
104
106
108
109
109
116
117
19. Table 4.11
117
125
126
127
Output data per gang-day for supply, preparation and fixing fittings and
appliances
129
24. Table 4.16
Showing output per gang-day for pipework inclusive of pipes, fittings and
supports in domestic buildings
130
25. Table 4.17
131
134
140
145
152
152
List of Figures
Page
1. Fig 4.1
96
2. Fig 4.2
100
3. Fig 4.3
115
4. Fig 5.1
146
5. Fig 5.2
147
6.
Fig 6.1
152
7.
Fig 6.2
156
8.
Fig 6.3
157
Course Content
This course broadly covers:
1. The Estimating and Bidding process
2. All-in rates determination and materials adjustments
3. Unit rate computation for construction items
4. Price analysis
5. Price and contract strategies
Course Objective
Target
Date for
Objective
Date
Objectiv
e
Achieve
d
Comment
To enable you to assess your progress whilst you study this course, each session is
followed by an activity. The activity consists of assessment questions which seek to
consolidate your learning by helping you assess your learning against the learning
outcomes. These questions should be done within a reasonable time. It is recommended
that you spend about fifteen minutes on the activities. The course material should serve as
a useful guide to help you answer correctly any of the assessment activities. Should you
find it necessary, please feel free to refer to relevant sessions.
Finally, the units have been arranged to make it easy to read and may be studied in any
order depending on your specific needs and preferences. In the same way, whilst it will
provide some consistency if the sessions are studied in the order in which they appear in
the book, the presentation of the course material lends itself to any approach that suits
your needs and style. We wish you all the very best as you study this course.
Do enjoy reading.
REQUIRED READINGS
Harris F and McCaffer R. MODERN CONSTRUCTION MANAGEMENT 4TH
EDITION Professional Book Chapter 9
Hackett M, Robinson I & Statham G, (2007) AQUA GROUP GUIDE TO
PROCUREMENT, TENDERING & CONTRACT ADMINISTRATION Chapters 3,4,815
Amoah Mensah, K., (1995), MANUAL FOR ESTIMATING
Ashworth, A. & Hogg, K., (2007) WILLIS PRACTICE AND PROCEDURE FOR THE
QUANTITY SURVEYOR, Blackwell Publishing, Oxford
10
COURSE STRUCTURE
Unit 1
Session 1
Session 2
Unit 2
Session 1
Session 2
Unit 3
Session 1
Session 2
Session 3
Unit 4
Building up Estimates
Session 1
Session 2
Session 3
Unit 5
Session 1
Preliminary Items
Session 2
Pricing Strategy
Unit 6
Price Analysis
Session 1
Price Manipulations
Session 2
11
UNIT 1
Unit Objectives
By the end of this unit, you should be able to:
i.
ii.
Explain what happens at each stage of the estimating and tendering process;
iii.
12
ii.
The factors considered by the contractor when making the decision to bid; and
iii.
1-1.1
The process of estimating and tendering for a project usually follows a set of systematic
stages. The following distinct stages can be identified:
i. Development of tender list and invitation to tender;
ii. The contractors decision to tender;
iii. Project appreciation;
iv. Enquiries and quotations;
v. Planning and temporary works;
vi.
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14
Commercial factors;
Knowledge of Client;
Once the contractor has decided to put in a bid for the project, the next thing is to put
together a team for the estimating process. Let us now consider the estimating team
generally and the main parties which usually make up the team.
other members of the contractors organisation may contribute depending on the scale
and complexity of the project in relation to the companys workload. On a major project,
some or all of these functions within the contractors organisation may work on the
preparation of a tender. Not all of these will however work on a full time basis depending
on the specific needs and the requirements relating to a particular project.
In general, some of the members who make up the contractors estimating team are:
estimator, planner, buying officer, engineer, plant manager, quantity surveyor, insurance
officer and operations manger. Lets look at the respective roles that each team member
plays and/ or their departments play in the overall estimating process.
The Estimator: The estimator is the team leader and is responsible for pricing the works
which form part of the project.
The Planner: The planner has responsibility for the pre-tender planning process. This
includes the programme of works, method statement and resource scheduling. The
planner must work closely with the estimator so that the estimate produced relates
directly to the pre-tender plan.
The Buying Officer: The buying officer is generally responsible for sending out
enquiries for all bought-in items. These include enquiries relating to materials, subcontractors, temporary works and consumables. This department is responsible for
presenting the estimator with a table of comparisons and their recommendations for
inclusion in the estimate.
Engineer: The engineer is responsible for design, quality control and /or quality
assurance proposals. He is also responsible for making recommendations relating to
temporary works.
16
Plant Management Officer: The plant management officer is responsible for advising
the estimator on the selection, availability, utilisation and cost of specialist plant and
transport required for the project.
Quantity Surveyor: The quantity surveyor on the estimating team is responsible for
examining contract documents to identify any areas of commercial risk or opportunity.
Insurance Officer This is the insurance expert on the estimating team who offers
specialist advice regarding bonds and insurance to the estimating team.
Operations Management Representative: Represents the operations department in the
contractors organisation and serves on the estimating team; must be given the
opportunity to examine and approve the proposed contract strategy.
That the documents and information are adequate for assessing costs; and
Drawings;
Schedules;
Technical reports;
Bills of quantity.
All forms must show the date of original issue as well as the date(s) and nature of any
amendments. The drawings issued in the bills of quantities or the drawing issue forms
will be issued with the tender documents.
Self assessment questions
i.
You are part of a client consulting group tasked with selecting a contractor for
a large project. What factors will you consider when deciding which
contractors to invite to bid for the project?
18
ii.
iii.
What actions should be taken by a contractor after a decision has been made
to tender for a project?
19
Session 2-1
Learning Outcomes
By the end of this session, you should be able to:
i.
ii.
Describe the nature of enquiries which contractors may need to make whilst
putting a bid together; and
iii.
Describe the type of planning which the contractor makes at this stage.
Management of estimates
All projects in an estimating department must be entered in a tender register. Many
companies use the register to evaluate tender performance in relation to their competition.
Co-ordination meetings are needed with management and other departments within the
contractors organization to establish key dates, decide on actions necessary and monitor
progress during the production of the cost estimate. The chief estimator will prepare a bar
chart each week to plan the estimators work-load showing both present and possible
future tenders. Copies are sent to heads of other departments for their input.
of tender documents received because they will become the basis of a formal offer and
eventually be checked against the contract documents in the case of a successful tender.
This can best be achieved by stamping each drawing and document to show the date
received and the words Tender Documents on them.
Latest date for dispatch of enquiries for materials, plant and sub-contracted items;
Bills of quantity production for design and build, drawings and specifications
contracts;
Review meetings;
Non-standard payments or retention provisions are included and the effects that
such alterations may cause regarding the contractors liability for payments to
sub-contractors;
A schedule must be prepared for use in obtaining quotations for various materials and
elements to be sub-contracted. In order to prepare this, the estimator must first of all
group together relevant items from the specifications and bills of quantity into respective
trades and if necessary, individual suppliers. It may be necessary to obtain further
information from drawings, for example lengths of timber may need to be specified. The
estimator should consider any additional quotations that will be required to enable him to
have flexibility when pricing. This could include extra over rates for machine offloading
of bricks. Another example is the extra over charge made by ready mix concrete
suppliers. Such information will be of benefit when pricing the bills in detail at a later
stage. The attention of the consultants must be drawn to any problems, particularly when
an estimator is concerned that poor specifications could make his tender less competitive.
The information provided on tender drawings will be a significant factor in the decision
to tender. At this stage, the estimator will systematically analyse the data shown on the
various tender drawings and schedules and build up a picture of the projects needs. This
analysis must highlight the cost significant items in the project and demonstrate areas of
caution or risk. Further information may be needed when the site is visited. This
information must be recorded for review purposes in the Estimators summary. The
estimator should look for various factors at this stage which will influence his approach
to pricing such as:
Tolerances required;
Buildability;
Whether load bearing and non load bearing areas can be identified;
From his appreciation of the drawn information, the specification and measured items in
the bills of quantity, the estimator will begin to understand how the project is to be
constructed and the quantity and quality of resources needed.
Outstanding information
Having examined the tender documents thoroughly, the estimator will highlight any
concerns or queries relating to the project and the proposed method of construction. It is
important that the estimator puts together queries that are raised by other members of the
contractors team who have examined the documents as well. All queries concerning the
tender information should be channeled to the estimator for resolution. It is recommended
that only the estimator should deal with the consultants at this stage to avoid any
problems which may arise from different people communicating different things. Queries
raised will be resolved through meetings and discussions between the estimator and other
members of the contractors team and the consultants on the site visit. The estimator must
ensure that all queries raised with the consultants are made in writing and that the
urgency of the information needed is stressed. Any significant decisions communicated to
one contractor by the consultant, must be communicated to all tendering contractors.
The legal department or the company secretary may need to comment on the
wording of warranties or performance bonds or arrange directors signatures for
parent company guarantees where these are required.
24
Visits to consultants
The estimator may need to visit the clients consultants, particularly when further
information is needed which has not been given to tenderers, such as further drawings
and site investigation reports. In some circumstances, these documents may be
confidential. In practice, visits will normally be made to the architect, but it helps to visit
the consulting engineer, services engineer and quantity surveyor, in order to meet the
personalities who will subsequently be involved in the project. Detailed drawings, reports
of site investigations and any other available information must be inspected and notes and
sketches made of all matters affecting either construction method temporary works or the
25
likely cost of work. A critical assessment must be made of the degree of advancement
and quality of the design. The reason for this is that, generally a well-developed and welldocumented design may be indicative of a smooth running and possibly profitable
project. A design which is obviously ill-conceived and incomplete may cause delays
during construction and as a result, allowance must be made for this in the tender. If the
indications are unfavourable at this stage, the decision to submit a tender may be affected.
Although visits to consultants are invaluable, they have become less common in practice
because contractors are usually given copies of all the drawings and specifications which
are going to become part of the contract documents. The more common situation
therefore is that a visit will be seen as an opportunity to show the tenderers willingness
to contribute to the scheme, to work closely with the design team and to express an
interest in further work.
Enquiry Documents
As previously stated, the contractors success in obtaining a contract depends upon the
quality of the quotations received for materials, plant and items to be sub-contracted. It is
therefore essential to obtain realistically competitive prices at the time of preparing the
estimate. The responsibility for carrying out this important function will vary from
company to company. In some organizations, the estimator prepares the information for
enquiry purposes, selects the organizations to receive enquiries and reconciles the
26
quotations received. In others, some or all of this will be done by the buying department,
who may provide the estimator with a selection of fully reconciled quotations at the end
of the enquiry stage for his final consideration. Whoever has responsibility, standard
procedures should be established, setting out the responsibilities of the person who is to
carry out the enquiry function and any subsequent negotiations that arise.
The professional manner in which enquiries are sent to suppliers and sub-contractors can
have a considerable effect on the response and the quality of quotations submitted. Lists
of items for which quotations are required are established following the detailed
examination of the contract documents. Enquiry abstract forms should be produced which
enable the estimator or buyer to list the materials and trade packages which need
quotations. If only drawings and specifications are provided, it is necessary for the
contractor to produce additional information to assist with the enquiries. Every
opportunity should be taken to clarify the contractors requirements, bearing in mind the
limited time usually available for obtaining quotations. The contractor must ensure that
comprehensive records of the various elements of project information sent to suppliers
and sub-contractors are maintained. These records must list the drawings sent, the
relevant contracts and specification clauses, project preambles and the pages of the bills
of quality. The use of the standardized documentation and procedures assists at this stage
in the methodical preparation of the estimate, and allows an interchange of personnel at
any stage.
When operating in a new area, a contractor needs information concerning the local
suppliers and sub-contractors. In this case, performance should be verified from other
external sources and any remaining information established from the supplier and subcontractor concerned. A questionnaire may be used to establish the resources and abilities
of subcontractors concerning:
Area of operations;
28
Phasing.
Likely delivery programme, i.e. the period during which supplies would be
needed with daily or weekly requirements if these are known;
the basis for recovery of increased cost and the base date when a formulae is used
for calculation of fluctuations;
The contractor must record details of all enquiries sent to suppliers on an enquiry register.
Plant requirements
The contractors plant requirements should be established in the method statement and
the programme. They will establish the basic performance requirements of plant and in
many cases will have identified specific plant items needed for the works. The duration
for which the plant is needed on site will be established from the tender programme. The
estimator must firstly compile a schedule of plant requirements, in which the type,
performance requirements and durations for the plant should be listed.
A note must be made of the schedule of any additional requirements associated with a
particular item of plant which must be provided by the contractor. Power supply for a
tower crane, for example could be a significant extra cost and temporary access roads for
erection purposes may be needed together with foundations. Further details are therefore
necessary for certain non-mechanical plant.
30
Purchase price less expected resale value after allowing for disposal costs;
Cost of finance;
A capital sum based upon the purchase price and expected economic life;
An assessment of the costs of finance (interest for loan taken to acquire plant or if
bought on hire purchase);
Maintenance time and cost and also cost of stocks needed for maintenance
purposes.
Anticipated periods of hire with start date on site and duration required;
Whether fluctuating or firm price required. The basis for recovery of fluctuations
and the base date when formulae are used for the recovery of fluctuations should
be stated;
In addition to the basic hire charge per hour or week, the enquiry must seek to establish:
Cost of delivering and subsequently removal of plant from the site on completion
of hire;
Cost of any operator, over and above the basic hire charge if provided by the
hiring company. ( if however this is provided by the contractor, the estimator must
produce a built-up rate for the operators costs);
Whether the hire rates quoted include those for servicing costs;
Any minimum hire periods applicable to the plant and the extent of any
guaranteed time; and
Cost of standing time and insurance cost for cases when the plant is retained on
site and not working for any reason.
Domestic Sub-contractors
Sub-contractors will require the same details and information about the sub-contract
works as the main contractor requires for his tender. Selection of sub-contractors will take
into account skill, performance, integrity, responsibility and proven competence in health
and safety matters and for work of similar size and character to the project under
consideration as well as the sub-contractors interest in tendering for the particular
project. The principles of selective tendering relating to the main contractor must be
33
name of employer;
particulars of access to the site, available site plant, site industrial relations
policy, storage facilities etc.;
a copy of the relevant extracts from the preliminaries and the bills of quantity;
Subcontract enquiries
Contractors use a standard format for producing subcontract enquiries comprising a letter
addressed to each sub-contractor, a list of accompanying documents and an abstract of
contract conditions adapted for the project. Opportunity must be provided for subcontractors to see all the relevant drawings and project details as well as any assistance
available to ensure that the quotation received is the sub-contractors best price and not
unduly inflated owing to inadequate project information. The contractor may seek
quotations from labour-only sub-contractors for certain elements of the work. The
34
decision to use labour-only sub-contractors will take into account company policy,
availability of labour in the area, any special requirements concerning site labour policy
and market conditions. In this case, all items noted under domestic sub-contractors
apply. The contractor must gain further information concerning the status of the labour
only sub-contractor and verify if:
any additional costs that may arise once the sub-contractor has completed the
works and left the site; and
The contractor must record all enquiries to the sub-contractors on the resource abstract or
a domestic sub-contractors register and then await receipt of the sub-contractors
quotations.
Materials
In relation to materials, any responses from suppliers should be recorded on the resource
abstract sheet or in a materials quotations register. In some practices, rates are entered on
a Materials Comparison Form for use during the pricing stage. Any discrepancies and
divergence from the enquiry must also be recorded on the register for later evaluation,
before selection of the quotation to be used in pricing unit rates. Quotations must be
checked to ensure that:
35
the materials will be available when required in order to meet the requirements of
the construction programme;
the method of delivery complies with the contractors requirements and the
intended method of unloading and handling on site;
the quotation is valid for the entire duration for which it is required;
prices are given for small quantities and other items if required;
Plant
Rates for plant are entered on a Plant Comparison Form for use during the pricing stage.
Any discrepancies and divergence from the enquiry must be identified and also recorded
on the register. It must be borne in mind that where a performance specification was
provide for the plant, quotations must be carefully checked to ensure that the plant
offered meets the requirements defined at the enquiry stage. Quotations must be
scheduled to ensure that:
where applicable, all operator costs are included and the operators will comply
with the intended working hours of the site;
The quotation conforms to the terms and conditions of the enquiry and does not
represent an alternative offer; and
Principal quantities
The first part of the planning stage is to extract the principal quantities from the bill of
quantity for the main elements of work. This is done by an experienced estimator or
planning engineer who should be aware of the operations likely to form important and
critical items in a programme. The amount of formwork, for example, has more
significance to the programme than the volume of concrete to be placed. This is because
concrete can be placed quickly when required using large gangs or using a concrete
pump, whereas formwork outputs are limited by the number of skilled carpenters
employed on the site and the need to re-use materials wherever possible.
Principal quantities are usually provided in bills of quantity for civil engineering work
but rarely for building. It is not too difficult to abstract quantities from any bills of
quantity providing ancillary items and labour items are ignored. Computers on their own
are unable to assist in this appraisal because estimating software are unable to
differentiate between significant and insignificant items. In order to overcome this hurdle,
contractors may add an activity or operation code item entered in estimate file.
Method statements
Method statements are written descriptions of how operations will be carried out and
managed during a project. Method statements should not only deal with the use of labour
37
and plant in terms of types, gang sizes and expected outputs, but also include the way in
which the project will be organized.
It is essential that an early meeting is held between the estimator and those responsible
for the programming and construction of the project to discuss the method of
construction. In a smaller organisation, all of these roles may be undertaken solely by the
estimator.
In preparing the method statement, a contractor will gain a competitive advantage by
finding innovative and the most cost effective systems for temporary works and materials
handling. This appraisal of the scope of works and method could involve changes to the
design which may be offered as alternative tenders.
The primary purposes of the method statement are as follows:
i. To establish the principles on which the estimate is based; and
ii. To acquaint construction personnel with the resource limits which have been
considered in preparing the estimate and to describe the method of working
envisaged at the tender stage.
The normal practice is that Clients or their consultants will request method statements
from contractors at tender stage. This provides the client with confidence in the
contractors ability to overcome construction difficulties and above all to deliver the
project on time. Other reasons for seeing a contractors method statement include:
satisfying statutory safety requirements, bringing out interface problems which might
exist with other contractors on site, and to demonstrate compliance with clients overall
objectives such as ensuring production is not interrupted in a factory.
In successful tenders, the method statement will outline the sequence and methods of
construction upon which the estimate is based. It should indicate how it is proposed to
deal with the major elements of work as well as highlighting areas where new or difficult
methods are necessary or intended. This should be supported with details of cost data,
gang sizes, plant requirement and supervision requirements.
38
A pre-tender health and safety plan drawn up by the planning supervisor will be provided
to all tenderers. This will incorporate an identification of risks arising from the nature of
the work and the design. The design team must attempt to minimize risks to health and
safety during the construction stage and when the building is used and demolished.
Identify work which may be affected by seasonal weather changes such as bulk
excavation, drying the internal fabric of the building and landscaping; and
The tender programme usually develops in two stages. First, a preliminary programme is
drawn up at an early stage of the project once the information has been assimilated. This
must take into account:
The preliminary programme will identify the parameters of the project and the main
resources needed. It will establish key dates for major portions of the work and provide
basic information which can be used when obtaining quotations for materials, plant and
work to be sub-contracted.
The preliminary programme will provide a basis on which construction method and
sequence can be developed. This can be done following the clarification of any queries by
the consultants and the site visit. When such queries and constraints have been resolved,
the tender programme can be produced from the preliminary programme, taking into
account the agreed construction method and sequence. The method statement can also be
finalised.
If design is incomplete at the tender stage, the contractor should incorporate in the tender
programme a series of key dates when design information (or instructions regarding PC
and provisional sums) must be given. It may well be that the contractors estimate is
based on early ordering of materials to obtain price advantage and/or long delivery
periods of materials. It is essential that design information is made available to reflect
these intentions and secure the prices contained in the contractors estimate.
40
To allow opportunities for changes to be made by the site team when the
construction programme is produced
To offer an overall duration which meets the clients general requirements and in
cases where time is critical, offer early completion; either because it is feasible or
to gain competitive advantage. (With non-adversarial forms of contracting such as
partnering, where co-operation is encouraged, and price is not an overriding
criterion, a contractor can look for alternative methods, sequences and resources
in order to offer an optimum solution)
41
which prices are obtained from specialist contractors. The costs for temporary works are
calculated and summarized on the project overheads schedule forms.
Mid-tender review
The estimator should report regularly to management as part of the management of the
tender process. A mid-tender review meeting provides an opportunity for the estimator to
explain his approach and others to give their ideas and expectations for large projects.
Self assessment
i.
ii.
Describe the sort of enquiries which contractors may need to make whilst
putting a bid together
iii.
UNIT 2
Unit objectives
By the end of this unit, you will be able to:
i.
ii.
iii.
ii.
iii.
Describe the main components considered when computing all-in rates for
plant and labour; and
iv.
42
All-in Rates
Computing all-in rates is a very key component of construction estimating. The estimator,
needs to be able to calculate all-in rates for both labour and plant. We start this session by
explaining what all-in rates are for both labour and plant.
An operating rate per hour (or per day, per week etc) for an item of plant; and
The cost per unit of material delivered and unloaded at the site.
The cost of labour and some plant items are established after the visits to the site and
consultants. It is also necessary to complete the tender programme and method statement
before finalising these prices. It will be necessary to await receipt of quotations in respect
of materials, some plant items and sub-contracted work. With computer-aided estimating
systems, the estimator can use pricing with notional rates because they can be adjusted
at any stage in the preparation of an estimate.
Step 2
43
Use standards from the contractors data bank or other sources. These standards are net
unit rates which are set against the items in the bills of quantity. Alternatively, rates
received from sub-contractors may be used.
Step 3
This stage involves the incorporation of rates from specialist trade contractors, including
those offering labour-only services into producing either the whole or part of a rate.
The calculation and addition of project overheads is a separate and subsequent
operation.
Labour;
Plant;
Materials;
Sub-contractors;
Profit.
It is recommended that each element is analysed and estimated separately and that the
total cost of all elements is considered by management. This approach is sometimes
called analytical estimating.
44
Well described/explained;
Detailed; and
State what is included in these costs. For example, in the case of labour have you
used an all-in rate? What category of labour are you using? For materials
costs, who pays for unloading? (i.e. will the supplier do this or will the main
contractor, have to do it?);
45
Gang rates
Some of the calculations required to estimate the cost of a bill item may be found in
many items. For example, its usual for an estimator to decide on the size of gang for
brickwork when starting work on a Brickwork bill. If a gang of two bricklayers and
one labourer is chosen, this gang will probably be used for most brickwork items.
Clearly it makes sense to calculate this rate once and re-use it many times. The
estimating jargon for this preliminary calculation is a gang rate. In the context of
this example, note that estimators (and site QSs, Contracts Managers etc.) think of
outputs in terms of what one person can produce per day (or per hour). The gang rate
for the 2 + 1 brickwork gang would look like this:
2 bricklayers@ GH6.00
GH12.00/hr
1 labourer @ GH4.50
GH 4.50/hr
Total
GH 16.50/hr
Divided by 2
GH
8.25/hr
So for each hour that a bricklayer works, half a labourer hour is allocated (to supply
him with materials, clear up etc). The production rates that construction professionals are
familiar with assume this assistance.
In addition, estimators need to include these associated servicing costs so that the rate
they arrive will allow all costs to be recovered.
Gang rates are usually calculated separately before the main calculations.
46
1-2.2
The all-in-daily rate of any operative may be defined as the total cost to the employer for
employing an operatives services for one operative labour days output. It must be
explained that in this case, the employer is the contractor. The all-in rate for labour is
built up from the following:
1. The basic daily wage of the operator involved.
2. Statutory additions such as employers contribution to the national provident
fund, workmens compensation insurance, rent and leave allowances.
3. Trade union requirements of tools allowances for tradesman using their own tools,
uniform or protective clothes and trade supervision.
4. Social expenses like canteen subsidy, sick pay, death benefits, medical expenses
and transport allowances.
5. Unforeseen expenses such as bad weather days, idleness and overtime
requirements for necessary work required to keep delivery schedules.
365
104
13
Annual leave
18
13
155
210
In computing the typical number of working days in a year, we need to explain here that whilst
the number of weekends in a year is constant, the others have been assumed. The assumptions
ensure a measure of uniformity in computations which use the number of days in a year.
47
Now that we have calculated the number of effective working days in a year, lets go ahead to
compute the all-in rate of some operatives. In the example in table 2.1, we will compute the all-in
daily rate of a labourer, carpenter, painter, mason and steel bender. The all-in daily rate is
obtained by applying a set of Multiplying Factors (MFs) to the consolidated daily wage of the
respective operatives. Assume consolidated basic daily wage of each of the operatives to be 1.00.
Now lets proceed to compute the respective all-in daily rates for each of the operatives.
48
Description
A. Basic daily wage as consolidated to
cover
i.
wage + rent + leave
allowance
ii.
canteen subsidy
iii.
transport
B. MF/month at 27 days pay
C. MF/year (B x 12)
D. MF/working day at 210 days/year = C/210
E. Statutory additions:
MF
0.125
i.
social security
}
ii.
Workmens comp. 0.025 }0.15
F. Social benefits:
i.
medical expenses
0.200
ii.
death expenses
0.294
iii.
end of service award 0.533
(1.027)
G. Tools allowance
H. Sub total
I. Direct supervision at:
1.25H = 0.21H
6
J. Total (working day is all-in-day labour
Multiplying factor)
K. If daily basic rate (usually recommended
government minimum wage) is
L. All-in-daily rate
M. Current all-in-daily rates
Labourer
1.00
27.00
27.00
1.00
27.00
1.00
Steel
Bender
1.00
27.00
27.00
324.00
324.00
324.00
324.00
324.00
1.543
1.543
1.543
1.543
1.543
0.150
0.150
0.150
0.150
0.150
1.027
1.027
1.300
1.027
1.027
1.027
1.300
1.300
1.300
2.720
4.020
4.020
4.020
4.020
0.567
0.838
0.838
0.838
0.838
3.287
4.858
4.858
4.858
4.858
GH2.20
GH7.23
GH7.20
GH 2.20
GH 10.69
GH 10.70
GH 2.20
GH 10.69
GH 10.70
GH 2.20
GH 10.69
GH 10.70
GH2.20
GH10.69
GH10.70
49
1-2.3
The all-in daily rate for an item is the cost to the employer (the contractor) of employing the
services of the item of plant for one plant days output. This thus represents all the costs
which the employer pays as a result of using the plant for one plant days work.
(1)
A.
B.
C.
D.
E.
F.
G.
H.
I.
J.
K.
L.
Description
Achieved
economic
life years
Average
utilization
days/years
(2)
(3)
Tipper trucks
Dumpers
Bulldozer
Wheel loader
Grader
Boiler
Concrete mixer
Crane(Mobile)
Crane(Static0
Compressor
Water pump
Poker vibrator
5
4
5
4
4
7
4
5
7
5
3
3
50
(4)
Repair and
renewals 5 of
annual
depreciation
(5)
Running and
consumables
% of annual
depreciation
(6)
Overhead
cost % of
annual
depreciation
(7)
150
200
100
150
140
60
150
100
80
80
80
60
25
20
25
30
33
10
15
10
10
20
30
20
25
25
30
25
25
25
25
25
17
25
25
25
10
10
10
10
10
10
10
10
10
10
10
10
1-2.4
In the composition of net unit rates, the activities may be grouped into three distinct stages.
The stages are as follows:
Stage 1
The establishment of all-in rates for the key items that make need to be considered. This
includes:
An operating rate per hour (or per day, per week etc) for an item of plant; and
The cost of labour and some plant items are established after the visits to the site and
consultants. It is also necessary to complete the tender programme and method statement
before finalising these prices. It will be necessary to await receipt of quotations in respect of
materials, some plant items and sub-contracted work. With computer-aided estimating
systems, the estimator can use pricing with notional rates because they can be adjusted at
any stage in the preparation of an estimate.
51
Stage 2
Use standard rates from the contractors data bank or other sources. These standards rates
may be net unit rates which are set against the items in the bills of quantity. Alternatively,
rates received from sub-contractors are used.
Stage 3
Incorporation of rates from specialist trade contractors, including those offering labour-only
services in producing either the whole or part of a rate. (The calculation and addition of
project overheads is a separate and subsequent operation).
Labour;
Plant;
Materials;
Sub-contractors;
Profit
It is recommended that each element is analysed and estimated separately and that the total
cost of each of all elements is considered by management. This approach is sometimes called
analytical estimating.
So far, we have seen how to compute the all-in rates for labour and plant. Let us have a look
at some of the considerations that need to be made when computing the cost of materials
during estimating.
52
Avoidable waste
Unavoidable waste
Pilfering
Carelessness
Poor quality work demolished to be made good
Wrong utilization or preparation
Mistakes in ordering, both in quality and quantity
Improper storage
Ineffective supervision
Cutting waste
Damage in transit
Stock pile or residual waste
Utilization waste
From this stage, we will be looking at a few examples which will help to illustrate how to
estimate for specified construction activity. But before we start, lets look at the tables shown
below. Table 2.4 to table 2.7 present information which will be very useful to us in our
estimating work. We will be referring to them from time to time. Please take sometime now
to look at these tables and try to appreciate the information presented in the tables.
53
Item
A
B
Output
500m. sq / plant day
80cubic metres / plant day
D
E
F
J
K
Table 2.5 Multipliers for different excavation types and depths. Source: Amoah Mensah (1995)
Depth Category
Item
0-1m
0-2m
0-4m
4m
1.000
Basement
0.85
0.75
0.06
0.05
Trenches
0.83
0.70
0.30
0.40
Pits
0.75
0.60
0.40
0.30
Table 2.6 Effect of soil type and bulkage effect on excavation output
Item
Type of soil
Multiplying factor
Bulkage factor
A
B
C
D
E
Gravel
Compact soil (laterite)
Soft rock
Hard rock
Loose soil and sand
1.00
1.00
0.70
0.30
0.60
20.00
22.00
35.00
50.00
33.33
54
Item
Description
Depth
A
B
boards,
Stripping
of timber
50x150x360mm
Methods of Pricing
There are different approaches which estimators use to arrive at the best possible price for
items.
In general, items need not be priced in the order they appear in the bills because a better
understanding of activities can be gained by pricing one trade at a time. This is becoming
increasingly popular, especially with computer estimating systems which readily sort the bill
items into trade order (similar items). Computers also allow resources to be entered either
through a resource build-up screen for each item or with the aid of a spreadsheet type
comparison system where like trade items can be viewed in a single table. If it is known that
quotations for materials will be delayed, the estimator can price labour and plant first, and
return to part-priced items later when quotations are available. On the other hand, typical
materials prices may be used during the pricing stage. Computers allow late adjustments to
be made and all affected items will be changed. All these techniques are derived from manual
pricing methods but with computers are now faster and more accurate.
Self-assessment questions
i.
ii.
Describe the main components considered when computing all-in rates for plant
and labour; and
iii.
SESSION 2-2
Learning Outcomes
By the end of this session, you will be able to:
i. Explain how PC Sums are taken care of during estimating
ii.
iii.
2-2.1
PC Sums
Nominated suppliers
Standard methods of measurement state that the cost of materials from nominated suppliers is
to be identified in the tender documents as prime cost sums. A separate item is also given for
the contractor to add his profit. PC sums may also be written-in to an item description (such
as a rate for the supply of facing bricks) for the estimator to incorporate the cost in his rate
build-up.
The estimator will produce a list of nominated suppliers at an early stage using a schedule of
PC sums and attendances. Where details associated with a nominated supplier are unclear,
the estimator must note any concerns in his report for further consideration at the final review
meeting.
If a PC sum has been included for high value materials or large quantities, the estimator must
check the following:
That the terms of the purchase contract provides for the nominated supplier to allow the
contractor a discount (for payment in full within 30days of the end of the month during
56
which delivery is made). Where it is offered, this discount is normally deducted from the
estimate in order to include net costs in the summaries for the final review meeting. Since
this discount is not available through the terms of all main contracts the estimator must
check the relevant contract conditions and not assume a discount is available.
Additional costs for unpacking, storage, handling, hoisting and the return of re-usable
crates or other packing, since the contractor may be required to return such items to the
supplier. Due allowance must be made for the collection, storage, handling and
subsequent dispatch of such items back to the supplier.
Where bills of quantity are used, the fixing of materials supplied by nominated suppliers is
measures in the appropriate part of the bill.
Nominated sub-contractors
A nomination arises in construction contracts where the selection of a sub-contractor is to be
made by the client or his representative. When this happens, a prime cost sum is inserted in
the tender documents to cover the nominated sub-contractors charge.
There is a right of objection to a particular nominated sub-contractor because it would be
contrary to contract law if a party is forced into a contract unwillingly. Where prime cost
sums are included in bills of quantity, the estimator is seldom given the name of the proposed
sub-contractor and so it is impossible to discuss methods and programming issues.
Attendances
Attendance is defined as, the labour, plant, materials or other facilities provided by the main
contractor for the benefit of the sub-contractor and for which the sub-contractor normally
bears no cost. The main character is under the main contract position for the site
establishment and providing attendance. This provides clear responsibility for the support
service and equipment needed on site and duplicate resources for various resources subcontractors. For every large contract where a construction manager or management
contractor has overall control, trade constructions are asked to provide certain parts of the
temporary works and facilities themselves. The cost associated with attendance are built into
the main contractors tender and consequently become a charge against the client. However,
the associated risks of attendance are borne by the main contractor.
The item for general attendance is the indication of the facilities which are normally available
to sub-contractors where they are provided by the contractor to meet his own requirements.
In assessing any sums to be allowed for general attendance, the estimator must investigate
the facilities which will already be provided for the main contractors use and determine any
cost which may arise by the nominated sub-contractors use of any such facilities. The
facilities given in SMM7 include:
providing space for sub-contractors own office accommodation and for storage of his
plant and materials; and
Other specific attendances which do not fall under the category of general attendance must
be specially measured in the bill of quantity as special attendance. Items to be measured
include:
2-2.2
Provisional sums
Provisional sum is as a sum provided for work or for costs which cannot be entirely
foreseen, defined or detailed at the time the tendering documents are issued. Provisional
sums are included in bills of quantity for items of work which cannot be fully described or
measured in accordance with the rules of the method of measurement of the time of tender.
For work measured under the rules of SMM7, there are three types of provisional sum: These
are as follows:
i.
ii.
iii.
measured work, provisional sums should be discounted before entry in the summary to avoid
duplicating the overheads and profit for this type of work.
Dayworks
Dayworks normally occur where variations cannot be valued by measuring using the rates or
comparable rates, nor by negotiation before an instruction is issued. The Dayworks charges
are usually calculated using the definitions for prime cost and overheads. The prime cost of
Dayworks can be defined in other ways, so care must be taken in reading the definition in the
tender documents. It is important that contractors understand the circumstances under which
varied or additional work will be valued on a Dayworks basis.
The composition of the total Dayworks charge will include the following costs:
Labour;
plant;
incidental costs, overheads and profit (this addition will vary between labour, plant
and materials, and, in order to introduce competition at tender stage, is added to
provisional sums for the prime cost of labour in the bills of quantity by the
contractor).
An alternative method (for labour to be valued on Dayworks basis) is for the contractor to
provide all-in gross hourly rates which are applied to provisional hours. This makes the
calculation of the Dayworks simpler during the course of the project but moves the burden
for anticipating increased costs to the contractor.
Contractors may decide that some of the projects and head office overheads are covered in
the contract price and may be excluded from Dayworks rates. This is mainly true if the
Dayworks to be carried out during the currency of the contract will not result in extension to
the contract but other additional costs to project and head office overheads may still have to
be considered.
61
It is inappropriate to use this payment method for anything except work which is incidental
to contract work. In the event that significant changes are made to the original scope of
works the valuation rules normally allow additional overhead costs to be recovered, usually
when the full effects of changes are known. Decisions concerning allowances for profit and
overheads must be made by each contractor taking into account his own circumstances,
method of working and his assessment of the effects of Dayworks on a particular project. The
contractor must assess each contract on its own merits in producing Dayworks rates and
calculating the percentage addition needed. This will include an assessment of likelihood of
the prime cost being a reasonable pre-estimate of the work which will be valued on a
Dayworks basis.
The contractors Dayworks percentages must take into account the rates required by the subcontractors used in the tender. Enquiries to sub-contractors must include a request for
Dayworks percentages based on the definition incorporated in the main contract. For
mechanical and electrical installation in building contracts, the contractor is given the facility
to state different percentages for specialists in the bills of quality.
As Dayworks are calculated inclusive of an allowance for overheads and profit, they should,
like provisional sums, be added to the final summary after the application of overheads and
profit.
Self-assessment questions
i. Give examples of PC Sums and explain how these are taken care of during estimating
ii. Identify examples of Provisional Sum items. Describe how estimates are obtained for these
items
62
The Code of Estimating Practice defines overheads as the cost of administering a project
and providing general plant, site staff, facilities, site-based services and other items not
included in all-in rates. The contractors opportunity to price for these items is in the
preliminaries section of the bill, the section containing the basic background and contractual
conditions of the contract. The pricing of preliminaries is a key factor of the estimating
process, because it is here that the contractor has the opportunity to cover the cost of
operating the site under specified conditions and in accordance with the contractors plan for
progress of the work, storage and movement of materials.
The standard method for measuring for civil engineering and building gives the general items
which should be described as part of overheads in bills in two main parts: the specific
requirements of the employer and the facilities which must be provided by the contractor to
carry out work. Items listed in the preliminaries/general conditions section of a bill of
quantities are not exhaustive and are provided to produce a framework for convenience of
pricing. The actual supervision, site facilities, plant and temporary work to be employed will
be decided by the contractor unless it is clearly stated that certain systems must be used.
SMM7 defines a Fixed Charge as the cost of work which is to be considered as independent
of duration, and a Time Related Charge as the cost of work which is to be considered as
dependant on duration. Items in bills of quantity for Employers requirements and
Contractors general cost items are given for both categories. The purpose is to improve the
allocation of values in valuation for interim payments and variations. Some bills of quantity
list value-related items for general items such as insurances, bonds and the supply of water to
the site on the bill summary page.
63
Programme
The tender programme is a vital tool for the calculation lf project overheads. The cost of
many items will vary in direct proportion to the contract period and the length of time that
staff, facilities, plant and temporary words will be required on the site. It is normal for costs
to be built up on a fixed-charge and a time-related basis. For example, in setting up a tower
crane, a high fixed charge is met at the start. There follows a recurring cost related to the time
the equipment is on site. There will then be a subsequent fixed cost for removing the
equipment on completion. By estimating such items in these two distinct forms, changes to
the programme can be evaluated quickly, by reference to the time-related costs. The estimator
will be able to use the tender programme for most of his calculation or develop project
overheads programme. A carefully prepared tender programme will provide a contractor with
the opportunity to reduce the contract duration leading to cost savings for staff, temporary
workers and plant. Since the prices for the measured portion of a bill will be similar for all
contractors, it is the innovative planning skill which produces a competitive advantage over
other tenders. If, on the other hand, the client wishes to retain a longer contract period (to
avoid claims for extension of time, for example) the contract can be at risk if he allows
sufficient staff for only part of the time.
64
temporary works such as scaffolding separately because they are rarely related to the value of
the works.
3-2.1
(7) Mechanical plant - Mechanical plant is included in the project overheads for two
reasons:
Plant which is common to more than one trade can be viewed as common
plant available to all. On a small site, for example, one mortar mixer can
service the bricklayers, drain-layers and plasterers laying screeds. In fact one
mixer may be needed for a large part of contract duration.
To reconcile the plant included in measured rates so that plant resources can
be rationalised. A backacter, for example, would not be used for a few days,
taken off site for a day and then brought back for intermittent periods. By
using the same machine for drainage and earthworks, it may be useful to
employ one machine for an extended period.
67
2.
Evaluating the likely specific requirements of the client through the project brief
and through discussions with him;
3.
Preparing a site layout drawing, accommodation, access, storage and all services
(temporary and permanent). Note any special provisions required (e.g. traffic
management etc.);
4.
Preparing a project overheads programme and showing the requirements for staff,
plant and temporary works;
5.
6.
Breaking down the preliminary costs into fixed and time-related costs; and
Completing the project overhead proformas with prices derived from price books
and other costs sources.
68
UNIT 3
Unit objectives
By the end of this unit, you will be able to:
i. Explain how the final estimate is obtained
ii. Explain the adjudication process
iii. Describe what happens once the tender has been submitted
be carried out in a manner that eliminates clerical errors and also allows the establishment
of various sub-totals relating to elements of the work or trades as necessary.
Price fluctuations
In times of relatively low and predictable inflation, contractors are expected to submit
tender prices which remain fixed for the anticipated duration of the work. The method of
calculation of fluctuations in costs is set out in the appendix to the conditions of contract.
Fluctuations in cost can be full, limited or none at all. It should be borne in mind that
fluctuations in cost may give rise to both increases and decreases in the final cost and
thus careful consideration is needed to reconcile such changes to the contractors cost
estimate.
(i).
Full fluctuations
needs to understand the rules and must ensure that any shortfall or non-recoverable
element is identified and also any potential for over-recovery highlighted. Due
allowances should be made on the firm price adjustment form or resource schedules
for any changes needed. Adjustments using the Formula method are limited to
national increases and do not, therefore, reflect market forces.
(ii).
This is normally limited to specific changes to rates of contribution, levies and taxes
in the employment of labour and in the rates and duties and taxes on the procurement
of materials. The extent of fluctuation of such costs is limited and is effectively those
which arise under and by virtue of an Act of Parliament.
(iii). No fluctuations
This is not an option in most standard forms of contract. This is because in all
contracts, situations will arise, such as taxes or statutory levies which may not be
foreseen at the time of tender. In the case of taxes and statutory levies, it will not be
reasonable to include a contingency sum for a new tax or statutory levy which cannot
be predicted at tender stage. This said however, it needs to be pointed out that it is not
uncommon for all fluctuations clauses to be deleted and a statement added that prices
are to be treated as firm in all circumstances.
Contractors insurances;
Performance bond;
71
Contractors each have their own method of dealing with these items, either as project
overheads or in the final summary. If the project overheads forms are used, an adjustment
may be needed when the final tender price is known.
Late quotations
Any late quotations that are received for the supply of materials, hire of plant or work of
sub-contractors, must be entered on the appropriate summary sheets and comparison made
with previously received quotations. Following the meeting, the estimator must use the
final review adjustments form after consultation with the review manager. Great care is
needed in comparing quotations due to the following reasons:
There may be qualifications which other suppliers or sub-contractors may not have
made;
The items included in the quotation must be the same as those priced by others;
The net amount of late quotations must be compared with the previous lowest tender,
including any adjustments made before or during the review meeting; and
Checking procedures
As a general rule, calculations must be self-checking through the use of well-designed
forms or otherwise, someone else must repeat the calculations in order to eliminate
mistakes. With computer-aided estimating systems, the number of calculation errors tends
to be less but other problems may arise through wrongly entered data and incomplete
pricing of items. Since most items are judged on price, it is important to check that the
tender figure has been calculated correctly and is sufficient to meet specific requirements of
the client. A badly prepared tender could have the following effects:
Under-priced may be difficult to achieve the specification for the price and there
would be a potential loss of profit;
Over-priced the tender will not win the contract in competition; and
72
Badly priced unreliable cost data is provided for construction, and it would be
difficult to achieve the desired financial outcome.
The total unit rates must be reasonable and correct for the unit of measurement. Particular
attention must be given to the major items in each trade and to those items to in which the
materials specified are usually costly. Any inaccuracy for the rate build-up for these items
will be magnified and have very serious consequences. It is equally important to check the
sub-contractor related items to see items of work, plant and materials not included in their
quotation have been correctly assessed and incorporated in the rest of the item and the unit
rates reflect these factors. It is important to ensure that when time for project is prescribed by
the client, it is realistic in relation to estimated labour cost and number of men required to be
physically working on site. The construction programme must be reviewed critically to
ensure that no major problem has been overlooked and that the method statement represents
the best method of completing the project. The estimator may be able to compare the
estimate and final costs of previous projects of a similar nature in order to form an opinion on
the likely profitability of the project. Once checking is completed, a final summary is
prepared by the estimator.
Cash flow
Cash is a major resource in construction and its use must be anticipated and managed.
Production on construction projects must be planned and the effect upon resources and the
return on assets employed determined. Clearly, the return on capital will be influenced by
the speed at which it is earned. A simple cash flow diagram must be regarded as a useful
aid to decision making and estimator should ensure that such a diagram is produced for
consideration at the final review savage. When a contract has been secured, a fully-detailed
forecast of cash flow, budget and cost control will be essential. However, post-contract
action is outside the scope of this Code. The estimators build-ups will have established the
costs of the work and project overheads under the headings of, labour, plant, materials,
domestic sub-contractors, PC sums and provisional sums and Dayworks. In order to
produce a cash flow diagram this financial appraisal must be linked to the tender
programme. Cash resources must be established for each item on the programme. Once this
link between estimate and programme has been established the cash flow position can be
73
calculated. The following headings must be taken into account when assessing the
contractors financial commitments to a project and in making the cash flow forecast:
i. The contractors own trading accounts;
ii. Contract conditions; and
iii. Banking conditions.
These are briefly explained below:
This describes the anticipated cost commitments for own labour, plant, materials, subcontractors and overheads. This is because in most cases, these may have to be prefinanced before the client reimburses on presenting a certificate.
Contract conditions
The conditions of contract affect the contractors Cashflow. Some of the constituents of the
contract conditions which impact on Cashflow are as follows:
Banking conditions
The conditions associated with a contractors banking operations impact on the Cashflow
position. Theses include:
74
the present financial commitment of the company and effect of the current tender on
that commitment;
the addition to be made to the net cost estimate for head office overheads and the
manner in which this addition is to be made.
Cashflow calculations will indicate the financial support needed for the contract and the
financial contribution to be made to company. When a client requests a cashflow forecast at
tender stage, the contractor is asked to submit a schedule of gross valuation at the date of
each interim certificate, based on the tender programme. Such a document would have no
contractual standing but assists the client to prepare a funding schedule. The calculations
needed to produce a cashflow forecast can be complicated and takes time. The contract value
graph is based o
n income from rates contained in the priced bills of quantity. These are produced at the end of
the tender period. Computers can be used to produce the data and charts, either using a
computer-aided estimating system or spreadsheets.
75
2-3
2-3.1
Estimators report
The estimators report should include all pertinent facts which have influenced the
preparation of an estimate for final review by management. The object of this report is to
highlight to management the various matters which have been identified as having some
significance in relation to costs, especially if alterations have been made to normal
production standards or if there are any special or unusual contract conditions or risks. The
way in which information is presented will vary according to company policy and
preference and the guidelines suggested should not be regarded as mandatory. Many of the
resources schedules, project overheads and other summaries are produced by computeraided estimating software, often tailored to a companys procedures. Whichever system is
used, the estimators report to management should include:
any information regarding the client, architect, quantity surveyor, consultants or other
member of the professional team that should be brought to the attention of
management;
an assessment of the state of the design and the possible financial consequences
thereof;
a note of any major assumptions made in the preparation of the cost estimate;
the terms of quotations from own sub-contractors which have been included in the
estimate;
76
the time for which the tender is to remain open for acceptance;
final summary.
Supporting documents
The cost summaries should be supplemented by supporting documents which will provide
the technical background. These may include:
method statements;
tender programme;
tender drawings;
This information will then be considered by management at the final review stage.
77
2-3.2
Final review
The final review of an estimate and its conversion to a tender is the responsibility of
management. This is a separate commercial function based upon the cost estimate and its
supporting reports and documents. The accountability of the estimator is limited to the
proper preparation of the predictable cost of a project. The estimators must not feel a sense
of obligation or responsibility for securing work for the company. This is the responsibility
of management. The estimators role is to lead the process of preparing a good estimate
with a potential to win.
Although the final decisions are made by management, those concerned with estimating,
planning, management and buying must be encouraged to communicate the knowledge
they have acquired throughout the estimating stage to the review panel. Their contribution
at this stage can be by attending the meeting or reporting through the estimator. In larger
companies, the final review stage often consists of two meetings: the fist to review the
estimate through a detailed examination of rates and quotations; the second would be for a
director to receive a short briefing and consider commercial matters before settling on a
mark-up. The need for a formal approach to finalising tenders should be regarded as
fundamental to competent tendering. There should be an agenda for the review meetings.
On large projects, the agenda must be circulated to those required to attend, with an
indication of the time for each agenda item. An evaluation of alternatives, scope to improve
profitability and risks which may be encountered will be considered at each stage of the
estimating process and converted into costs at the final review meeting.
78
Some of the factors considered when deciding on the mark-up to the estimate include:
The desire to win the contract (here the contractor needs to ask if winning the project
will potentially lead to repeat work, or if the contractor has got too much work
already to be able to take on more);
At the end of the review meeting, there may be other decisions to be made before proceeding
to the submission stage, including:
Which documents will be submitted with the tender? Some contractors may wish to
prepare additional information such as a programme, company profile and coloured
brochures, whereas others reserve their efforts, and ideas, until they know that their
tenders are under serious consideration;
If an alternative method (or design) is to be offered, then another price may need to be
settled by the review panel;
Qualifications which vary the requirements of the tender documents are generally not
permitted by clients. On the other hand, and management must decide the form which
a qualified tender will take; and
In order to provide appositive cash flow for the duration of the project, it is important
to decide how rates are apportioned in bill of quantity to be submitted at tender stage.
Since any artificial alteration of price will bring additional risks, it is for management
to agree the strategy.
It is recommended that a record is kept of all tenders submitted. Particular care should be
taken of the final summary form, and all notes and details of the decisions taken at the
review meeting should be fully recorded for future reference.
79
All amendments being made to the respective elements of the tender. (this may mean
substantial re-pricing of the bills of quantity, and a balance inserted in the
preliminaries bill);
Units rates increased by an agreed percentage so that the whole difference is included
in the measured items;
The unit rates left net with any difference included as an adjustment on the final
summary page providing this is considered to be acceptable to the client;
The unit rate remains net and the difference inserted in the preliminaries bill ;
The way in which submitted bills are priced will have a significant effect on income
generated through interim payments and the valuation of variations. Clearly a contractor
would not be able to insert highly inflated prices against early items because a client will
not accept a disproportionable distribution of rates. Contractors also put their position at
risk if under-measured items are under-priced, and over-measured items are over-priced, in
both cases where the work is re-measured a loss will be incurred.
Self-assessment questions
i. Explain what actions are taken to arrive at the final estimate;
ii. Explain the term tender adjudication
iii. Describe what happens during the final review
iv. Explain the term mark-up and how contractors achieve this
80
81
3-3.1
Tender submission
The estimator must ensure that the procedure set out in the tender documents for the
submission of the tender is followed meticulously. The form of tender and any other
declarations must be completed as required and signed by an authorised person from the
contractors organisation. A letter should be attached to the forms to list the documents, and
confirm the amendments received during the tender period. Any other remarks about the
technical content or price may be reviewed as a qualification to a tender and so should be
avoided. The codes of procedure for selective tendering, whether for main contractors or
trade contractors, state that a tenderer who submits a qualified tender should be given
reasonable opportunity to withdraw his qualifications without amendment of his tender
price. Failure to do so will lead to the rejection of the whole tender if it is considered that
such qualifications give the tender an unfair advantage. Alternative proposals involving
design, specification or timing may be invited. In this case those contractors who wish to
offer alternatives must submit a separate tender indicating the effect on price and
programme together with an appraisal of any charges needed to other elements of the
scheme. The tenders should be opened as soon as possible after receipt. Submission of
priced bills of quantity may be required with the tender and it is recommended that the
lowest tenderer should be invited to submit priced bills of quantity within four working
days of the opening of the tenders.
3-3.2
The role of the estimating department does not end at the submission of the tender. They
have an important role to play in responding to further requests by the client team, and in
82
evaluating the tender efficiency. We will now focus on these stages, and how the estimator
can advise senior management on future bidding strategy.
Adjustment of errors
The estimator should be prepared to respond to any request for further information or
notification that the submitted tender contains errors in computation. For errors, two
alternative courses of action are responsible:
The tender will be given details of such errors and afforded opportunity of confirming
or withdrawing the offer. The estimator will need to refer to management when the
extent of the computation errors has been determined for a decision as to whether to
confirm the original tender figure or withdraw the tender. It is legally possible to
withdraw the tender at any time before its acceptance
The second option is that the tenderer is given an opportunity of confirming his offer
or of amending it to correct genuine errors. If the contractor elects to amend his offer
and the revised tender is no longer the lowest, the second lowest tender will be
examined with more detail.
Estimators must consult with management to establish whether to amend the tender figure
or to confirm the original offer, once the extent of the computation error has been
determined. In both situations the estimator or the signatory to the original tender must be
prepared to endorse the appropriate tender document to note the acceptance or change to
83
the tender. Such amendments must also be endorsed by employers in the event that a
contract is subsequently awarded. There are many ways to correct errors in a bill of
quantities. The most common is to recalculate the bill and make an adjustment on the final
summary page; either by changing the total for preliminaries or introducing an adjustment
item. Since the latter amount must be adapted to all valuations it is preferable to ask the
contractor to change one or more items in the preliminaries to bring the total to the tender
figure.
the drawings are those which were circulated with the tender documents, if they have
been revised to produce a construction issue, they cannot be used as contract
documents;
the dates, penalties and particulars given in the appendix to the condition of contract
are those stated in the tender document; and
A standard form may be used to confirm that these checks have taken place. In larger
organisations, this form will accompany the documents until they are signed by the
companys directors and retuned to the clients representative.
It is recommended that an internal pre-contract handover meeting be held with all persons
so that details are fully discussed and the distribution of information can take place. The
handover meeting is an opportunity for detailed reporting and a discussion on decisions made
at the time of estimating concerning methods of construction, site layout, organization,
suppliers and sub-contractors. Whilst these decisions should not be binding on those
responsible for construction, it is important that the reasons underlying such decisions and
choices should be explained fully and that decisions made at the time of tender should not be
ignored unless it can be demonstrated that a better method of operation is possible.
Feedback Information
It is recommended that a fully operational cost control system be introduced on all successful
contracts. The collection and collation of data is a function involving the use of statistical
techniques. It is important that during construction, information should be obtained on the
labour and plant cost of major items or stages of work, on the quantities of material used, and
the cost of attendance for sub-contractors. This information is essential for control purposes
and guidance in future estimating. These records should be accurate and give all details
including those of the work, the position on the site of the operation, gang sizes, levels of
incentives and bonuses being paid, plant, access, and weather conditions. This information is
needed so that it may be interpreted correctly for future use. Where a substantial proportion
of work is assigned to sub-contractors, a table should be drawn up showing the estimators
allowances and actual prices agreed with them at the time of placing their contracts. In
particular, the estimator needs to know the accuracy of risk and firm price provisions in the
tender. A brief report should also indicate the performance of all sub-contractors and a
recommendation on whether they should be employed for future projects.
85
The contractor will keep track of submitted tenders, number of tendering contractors, lowest
tenders submitted, their estimated cost of the project, their tender sum and the maximum
profit potential for the winning contractor. From this information, they can calculate the
approximate % profit used by their competitors and adjust theirs in the future to be more
competitive. An example is shown below.
Example 1
Building Procurement Inc. has tendered for 6 projects in June. Table 3.1 below shows the
break down of the tenders of Building Procurement Inc in comparison with competitors.
Table 3.1
Project
No. Tenders
Rank
-2.3
11.0
4.9
-3.1
5.0
-3.8
-7.7
14
15.0
1.0
By establishing the types of projects where the company seems to be grossly over or under
priced, management can adjust their profit margin on these particular projects to enhance
their competitiveness.
Self-assessment questions
i. What actions should be taken by the contractors estimator after the submission of an
estimate?
ii. Should errors be detected in a tender, what action should be taken to address them?
iii. Explain the term tender performance
End-of-unit assessment
i. Outline the steps taken by the contractors estimator in completing the estimate before
bid submission.
ii. Explain the terms tender adjudication and adjudication report.
iii. Compare the action taken with a successful tender with the action taken with an
unsuccessful tender.
87
UNIT 4
BUILDING UP ESTIMATES
Unit Objectives
By the end of this Unit, you will be able to:
Apply the knowledge of estimating principles to prepare complete estimates for excavation,
concretework, steelwork and metalwork
ii.
iii.
iv.
v.
GH 900.00
88
GH 112.50
GH 12.00
Banksman @ GH 8.00
GH
GH1,032.50
8.00
At a GH1,032.50daily cost of using the plant, then for the 12 plant days, the total cost is
GH1,032.50 x 12 = GH12,390.50
Add transport to & from site@ GH 200
GH
200.00
GH 12,590.50
For the entire site (6,000 sq. m) therefore, the unit cost for using the plant is 12,590.50 / 6000
= GH 2.10 / sq.m
No. of man days required for the total 80 cubic metres = 80 / 1.8 = 44.44 days
Approximate 44.44 days to 45 days, if labour costs GH 5.20, then for the 45 days, total cost
of labour is:
45 x GH 5.20 = GH 234.00
If GH 234.00 is the total cost for the 80 cubic metres, then unit cost for this activity is
GH 234.00 / 80 = GH 2.90 / m3
= GH2.99 / m3
Lets assume the excavation will not exceed 2.0m and that the total volume of excavation is
15 cubic metres
Soil identification:
Lets assume the excavation involves hard rock with multiplying factor 0.3
Method identification:
Lets assume manual excavation with a multiplying factor of 0.7
Required resources
Labourers with an output of 3 x 0.3 x 0.7 = 0.63 cubic metres /man day
No. of man days required 15 / 0.63 = 23.809 days
Approximate the number of days to 24 days,
If labour costs GH5.20 per day, then for 24 days, total cost of labour is
24 x GH5.20 = GH124.80
If this is the cost for the entire 15 metre excavation, then
The unit cost for excavating through rock = GH124.80 / 15 cu.m = GH8.32 per metre cube
NOTE
Since we are computing the estimate for an extra over item on trench excavation, not
exceeding 2.00m maximum depth commencing from original ground level, we need to
deduct the unit cost of the original trench excavation from the GH8.32 we just obtained.
From the calculation above, the unit cost of excavation was calculated to be GH2.99
Therefore, the unit cost for extra-over item is = GH8.32- GH2.99
= GH5.33 /cubic metre
Estimating for pit excavation which involves excavating through reinforced concrete
Worked Example
Lets assume the excavation is to a maximum depth not exceeding 2.0m and the total
excavation is 100 cubic metres
91
Solution
Soil identification
Reinforced concrete
Method identification
Assume the use of a compressor
Required resources
Plant compressor, hose and operator/driller at an output of 6m3/plant day
Assume compressor has analysis of daily cost as follows:
Ownership cost
Assume the purchase price for the compressor is GH1200.00 with no resale value
Average life of the compressor 80 plant days x 5 years
Depreciation is expressed mathematically as cost price / average life of plant
Depreciation = GH1200 / 80 x 5 = GH3.00
This means that the depreciation cost per day of the plant is GH3.00
Based on this and using the stated assumptions below, we can compute the total cost per day
If interest is 40% of ownership cost, then interest per day
GH1.20
GH0.30
GH8.00
GH12.50
GH0.75
Operating cost/day
Repairs and renewals at 25% of daily depreciation cost of GH3.00
Running expenses / day
Fuel: assume 5gallons @ GH4.00
GH20.00
GH3.00
GH23.00
92
100 / 6 =
= GH616.25
= GH120.00
GH736.25
If this is the cost for the entire 100 cubic metres, then the unit cost is:
Unit cost = GH736.25 / 100
= GH7.36
Solution
Method:
Machine, transportation, placing and compacting
Materials
Assume the concrete mix requires a nominal volumetric 1m3 of cement.
If we use 1m3 of cement, then for the 1:3:6 concrete mix, we will require 3m3 of sand and
6m3 of aggregate.
Cement
As above, we are assuming a nominal 1m3 of cement.
Cement is approximately 1450 kg / m3
Since 1 m3 of cement is 50kg,
Therefore for the 1450kg contained in 1 m3 contains 1450 / 50 = 29 bags of cement.
Thus, we will need 29 bags of cement for the 1 m3 . If a bag of cement costs GH9.50
(ex-site), then the cost for the 29 bags is 29 x GH9.50
GH275.50
The output for unloading and stacking of cement is 120bags / man day
Thus the 29 bags of cement will require 29/120 man days = 0.24 man days
If daily wage for unloading and stacking cement is GH5.20,
Then unloading and stacking of the cement will cost
= 0.24 x GH5.20
GH 1.26
GH 37.50
GH 137.40
GH 451.66
GH 149.05
GH 600.71
GH 600.71
GH 60.07
0.20m3
Mixing cycle
10 mins
Operating efficiency
75%
=3
36 x 0.20m3
= 7.2m3
No. of working days required for the 7m3of concrete is = 7 / 7.2 = 0.97 days
Approximate the number of days required for the plant, 0.97 days to 1 day
With the all-in daily rate of GH40.00/plant day,
This means the cost of using the tilting 10/7 diesel concrete mixer is:
GH40.00 / plant day x 1 day
= GH40.00
Poker Vibrator:
From tables, the output of the poker vibrator is 10 m3 / plant day
Therefore 7m3 of concrete will require 7 / 10 plant days = 0.7 plant-day
Round 0.7 plant days off to 1 plant day
95
GH 5.20
GH12.00
2 loaders @ GH5.20
GH10.40
3 transporters @ GH5.20
GH15.60
GH43.20
GH 420.49
Plant
GH 64.92
Labour
GH 43.20
GH 528.61
The GH 528.61 obtained above is the total cost for producing 7m3
Therefore the unit cost for concrete mixing is: GH 528.61 / 7m3 = GH 75.52
0.37 tonnes
0.06 tonnes
0.43 tonnes
GH322.50
= GH332.50
Therefore for the 0.43 tonnes, the output will be: 0.43 / 5 = 0.084 man-days
The task will therefore take 1 man day (rounding off 0.084 man-days to the nearest day)
If the rate for 1 man day is GH6.00,
therefore the rate for unloading and stacking is: GH6.00 x 1
= GH6.00
= 1. 85 gang-days
GH34.40
GH372.90
= GH1007.84/tonne
Example 2
In this example, we find the estimates for 10 mm diameter bar reinforcement using in
columns and beams
Lets assume we have got altogether 0.03 tonnes of reinforcement.
0.03 tonnes
0.0045 tonnes
0.0345 tonnes
If a tonne of 10mm bars costs GH750.00, then 0.035 tonnes cost GH26.25
GH10.00
98
GH36.25
Labour
(i) Unloading and stacking 0.035 tonnes at an output of 5 tonnes/man-day requires
0.035 / 5 = 0.007 man-days
Use 1 man days @ GH6.00
(ii)
GH 6.00
Combined output for cutting and bending + fixing in arches and beams is:
(1 / 500 + 1 / 320 = 0.005
Number of gang-days required is 0.03x 103 x 0.005 =0.15
Rounding off to the nearest whole number gives 1 gang day
If the cost of 1 gang-day is GH17.20, then cost of gang
GH17.20
GH59.45
= GH1981.67/ton
Solution
Materials:
Timber content calculations;
Assuming the dimensions of area to be supported to be 10 x 10m;
No. of joists required
10 + 1 = 14.3
0.75
Use 15
Hence no. of props required = 15 x 15 = 225
99
D
C
C
25 x 100 brace
FLOOR
750
750
750
750
Vol. (m3)
(2 x 5)
(7)
Cost in
GH
(6)
Rate/
pieces GH
(5)
3.6mm No. of
(4)
lengthTotal
(3)
(3) Waste
100% of
(2)
(Wawa)
(mm)Length
(1)
(mm)Sizes
Symbol
(8)
(9)
25 x 300
boarding
10
0.3 10.0
=333.33
33.33
366.66
102
0.35
35.70
2.75
50 x 100
15 x 10.00
= 150
15.00
165.00
46
0.18
8.28
0.83
50 x 100
prop
225 x 2.70
= 607.50
60.75
668.25
186
0.18
33.48
3.34
25 x 150
brace
2 x15 x 10.00
= 300.00
30.00
330.00
92
0.18
16.56
1.25
25 x 100
connector
225 x 0.30
= 67.50
6.75
74.25
21
0.12
2.52
0.19
Totals
96.54
100
8.35
27000mm
25 x 100
connector
GH96.54
Assuming 3 uses and nail utilization at 0.2kg/m2 first use and 0.1kg/m2 subsequent uses
Weight of nails required for 3 uses for the 100m2 = (0.2 + 2 x 0.1)kg x 100
= 40.00kg
Add 15% for waste
6.00
46.00kg
GH 9.20
GH105.74
35.25
= 0.50
3.83
4.00
GH39.25
Labour:
Unloading and stacking of 8.35m3 of timber at an output of 400m3/man-day
would require 8.35/4.00 man-days = 2.09 man-days
Use 2man-days at incentive rate of GH 0.34
0.68
1.11
1+1+1
18 15 30
would require 100 x 0.16 gang-days i.e. 16 gang-days at GH 1.38
Total labour cost
22.08
GH23.87
101
39.25
Labour
23.87
Plant
- .
Total
GH 63.12
Unit cost
GH 0.63/m2
Timber:
For 100m2 at an average utilization of 0.09m3/m2 (for one use) would require
100 x 0.09m3= 9m3 including waste, cost of 9m3 of timber at GH 10.00
ii.
90.00
Nails:
Assuming 3 uses and utilization as previous in Item 6:5:1;
Cost of nails required (as previous in Item 6:3:3:1)
102
9.20
GH99.20
33.07
4.00
GH37.07
0.74
1.11
23.46
GH25.31
GH 115.64
3.50
119.14
17.87
GH 137.01
No.
Bar
mm
Shapes
Length
(m)
No.
Required
Total
Length
(m)
Weight
(kg)
Rate
(kg)
Cost
1000
Binding
wire reqd.
kg
13
2.65
400
1060
1071
600
642.6
14
10
0.70
1700
1190
734
700
513.8
15
1805
1156.4
29
Total
103
Figures 4.2 to 4.5 show sections through the timber moulds including details as shown on
A
table 4.3
Figure 4.2a Timber moulds for precast concrete works
Frame d
b
288mm
Frame d
2500mm
288mm
Fig 4.2b
Frame d
2 No.
Fig 4.2d
326mm
Fig 4.2c
2No
150
b
104
288mm
250
Frame
Total length
No. of 3.6m
pcs.
Rate/piece
(m) GH
Cost(m) in
GH
3
2.60 = 2.60
4
0.24
5
2.86
6
1
6
0.6
8=6x7
0.6
9
0.033
b+f
38 x 250
2 x 2.55
= 5.30
0.53
5.53
0.6
1.2
0.063
50 x 50
2 x 1.10
= 2.20
0.22
2.24
0.1
0.1
0.0061
50 x 50
2 x 5.6
= 11.2
1.12
12.32
0.1
0.4
0.031
50 x 50
2 x 0.33
= 0.66
0.07
0.73
2.30
0.1351
Length
(mm)
2
38 x 326
Size (mm)
Symbol
Waste % of
(m)
5)Vol. m2 (2 x
Total
Timber Cost/mould
GH2.30
Nails:
Assuming 10 uses and nail utilization to be 0.02kg/m2
for first use and 0.1kg/m2 subsequent uses, weight of nails
required for 10 uses will be (0.2 + 9 + 0.1) = 1.10kg
But internal area/mould = (0.65 x 2.6 x 0.15)m2 = 1.77m2
Weight of nails for 10 uses of mould = 1.1 x 1.77kg = 1.947kg
Cost of 1.947kg of nails at GH 0.20 =
0.39
GH2.69
Cost/use
0.27
GH27.00
105
= 0.09
6.79 units
= GH 7.00
Concrete 1:2:4 (18mm aggregates) volume required = 100 x 0.15 x 0.25 x 2.50 = 9.375m3
Cost of 9.375m3 at GH 6.18 (as in item 6:3:1)
= GH 57.94
137.01
27.00
Mould oil
7.00
Concrete
57.94
GH 228.95
Labour:
i.
ii.
GH0.11
4.0
Mould oil application to 177m2 at an output of 30m2/man-day
would require 177 man-days = 5.9 man-days
30
iii.
GH1.92
= 0.17
16 14 28
gang-days/m2 would require 177 x 0.17 gang-days = 30.08
Use 30 gang-days at GH 0.34
GH 40.80
Sub-Total
GH 42.83
6.65
GH 17.33
GH66.81
106
228.95
Labour
66.81
Plant
Total
GH 295.76
14.79
310.55
Unit Cost
GH 3.11
107
1-4.3
General
Two major considerations which should be made when measuring steelwork are:
i.
ii.
Component element
Beams
Columns
Roof trusses
Fabrication
Plant in gang-days
Labour gang-days
equivalent
3
4.5
6.0
Erection
Labour and plant
0.33 of total input for
fabrication
63
Bolting only
10 gang-days
0.05 tonnes
0.08 tonnes
0.10 tonnes
For components and tees cut from universal beam 102 x 127mm x 13kg/m
ITEM
2.1.4
7.00mm long in 10 No.
0.91 tonnes
2.1.5
8.00mm ditto
1.04 tonnes
2.1.6
Fittings
0.02 tonnes
108
Estimating procedure
The estimating procedure for steelwork is as follows:
For items 2.1.1 2.1.3
Material s required
Add 10% for waste
0.230 tonnes
0.023
0.253
Buy 0.26 tonnes at GH 400.00 ex-fabricators yard
Labour and Plant:
Fabrication of 0.23 tonnes at 69 gang-days/ton require
15.87 gang-days; use 16 gang-days @ GH 30.00
Total cost for provision and fabrication of 0.23 tonnes
Unit cost
GH 104.00
GH 480.00
GH 584.00
GH 2,539.13/ton
1.97 tonnes
0.20
2.17
Buy 2.2 tonnes @ GH400.00
Labour and Plant:
Fabrication of 1.97 tonnes @ 69 gang-days per ton
require 1.92 x 92 gang-days = 136.62
Use 137 gang-days @ GH 30.00
Total Cost for Material, labour and Plant for 2.17 tonnes
Unit Cost
109
GH 880.00
GH4,110.00
GH4,990.00
GH 2,299.54/ton
2-4.4
When estimating for metalwork, the main parts covered are as follows:
i.
ii.
iii.
Collection from stores, fixing carriers and associated hardwood water stoppers for
12 blades with 150m wide chips
8 blades with 150m wide chip
4 blades with 150m wide chip
14 pairs
16 pairs
24pairs
10 m2
10 m2
50 m2
Unloading and fixing with wrought hardwood battens to sheet wire-mesh insect
proofing
30m2
Material:
Assume aluminum louvre blade carrier with clips for 8 blades of 150mm wide blades and
double lever control cost GH 10.00/pair ex-site, then,
Cost of 80 pairs @ GH 10.00
GH 800.00
Add 10% for losses, damage and storage,
GH 80.00
Add 2.5% for fixing screws
GH 20.00
Total Material Cost
GH 900.00
Labour:
Unloading and fixing of 80 pairs at an output of
from table 4.5, 16 pairs/gang-day would require 80/16 = 5 gang-days
Cost of 5 gang-days @ GH 30.00
GH 150.00
Total Cost (material + labour) for 80 pairs
GH1,050.00
Therefore Unit Cost
GH13.13/pair
Self-assessment questions
110
i.
Explain the main cost components which are considered when preparing
estimates for excavation and concrete work
ii.
Why, do you think, can we not develop just a single unit rate for excavation?
iii.
What are the main cost centres which should be considered when preparing
estimates for formwork and reinforcement respectively?
111
Session 2-4 Estimating for Roofing, Walling, Woodwork, Finishes, Painting and
Decoration,
Learning Outcomes
By the end of this session, you should be able to:
i.
Identify the key components which are considered when estimating for roofing,
walling and woodwork;
ii.
Estimate unit rates for a typical wall or any activity relating to wall construction;
iii.
Estimate unit rate for a typical roof and woodwork or sections thereof.
2-4.1
The most common roof form in West Africa is usually of corrugated sheet covering on
hardwood structure. Where felt-sheet covering is used, it has been mainly for water-proofing
purposes. Slate or Tile roofing is very rare and found, if any, on projects designed by
consultant who normally may be non-residents in the West Africa zone. Such woks have been
executed by specialist sub-contractors who normally present their own quotations to the
appointing body. Accordingly, corrugated and bituminous felt sheet roof covering and their
associated operations are considered. Tables 4.6 to 4.8 give outputs for these materials.
Roofing sheet
covering type
Galvanized/aluminum
Cement
Asbestos
Operation
Unloading and fixing
Flashing
Fixing ridge cup
Cutting ridges or hips
Straight cutting
<50
70m2
25m
55m
45m
40m
>50
50m2
55m
40m
35m
Vertical
45m2
-
50m2
40m
30m
35m
45m2
35m
30m
30m
40m2
-
Table 4.7
112
Type
Galvanized
"
"
Aluminum
Width (mm)
Length (mm)
760
760
760
1800
2400
3000
760
760
760
1200
Asbestos:
1060
1060
Ordinary
Super 6 and 7
2400
1800
1060
1060
1060
1060
1060
2400
3000
1800
2400
3000
Operation
i. Nailing on board
ii. Spreading pitch or
bitumen
iii. Unloading and fixing
felt to bitumen
iv. Spreading chippings
10mm thick
Output/gang
-day (m2)
100
100
140
100
Operation
v. Laying in gutters of
100mm girth
Output
gang-day
60m2
90m
0.15kg/m2
vi. Cutting
vii. Bitumen utilization
Solution
Materials:
corrugated galvanized iron sheets: assume the use of a standard
size of 760 x 2400mm in accordance with purlin spacing. Allowing for
the required laps, covering capacity per sheet will be 0.61 x 2.2m2 = 1.34m2
No. of sheets required
= 50
1.34
= 37.31
= 3.73
41.03
GH 820.00
= 50
550
GH 25.00
GH 845.00
Labour:
Unloading and fixed of 50m2 at an output
of 70m2/gang-day would require 50 = 0.71 gang-days
70
But use 1 gang-days at GH 36.00
GH 36.00
GH 881.00
Unit cost
GH 17.62/m2
114
= 2.55m2
= 200
2.55
= 78.43
= 11.76
Total
90.19
2700.00
25.00
GH 2725.00
Labour:
Unloading and fixing of 200m2 of asbestos sheet at an output
of 50m2/gang-day would required 200 = 4gang-day
50
Cost of 4 gang-days at GH 36.00
144.00
GH 2869.00
Unit Cost
GH 14.35/m2
Solution
Materials:
Use 2-unit corrugated asbestos ridge cup of length 1187mm per piece and 200mm end lap
Net covering capacity/piece = (1.187 0.200)m
No. of sets required
0.987m
45
0.987
40.53
4.05
Sub-Total
44.53
GH 450.00
= 200
20
220
GH132.00
GH 582.00
Labour:
Unloading and fixing + straight cutting of
10m asbestos ridge cup at an output of
1 +
40
= 0.042m/gang-days
2 x 30
GH 36.00
GH 618.00
Unit Cost
GH 15.45/m2
116
200.00
30.00
GH 230.00
= 10.00
1.50
11.50
= 11.50
3.60
= 3.19
24.00
GH 254.00
Labour:
Unloading and fixing of flashing
20m long at an output of 20m/gang-day
Would require
117
GH 36.00
Sub-total
i.
GH 290.00
Fixing of 50 No. of
50 x 50 x 50mm hardwood grounds
in blockwork at an output of 50/gang-day would require
50 =
GH 36.00
50
Total Cost (material + labour)
GH 326.00
Unit cost
GH 16.30/m
50
25.33
1.97
0.30
Sub-Total
2.27
118
GH 12.50
Fig 4.3 Bituminous felt roof covering materials and operations (enlarged)
10mm chippings
Hardcore rafter
Measured
separately
Roof boarding
2 layers of double layer
bituminous felt
Binder Bitumen:
With utilization of 0.15kg/m2 layer, requirement for
50m2 will be 0.15 x 50kg = 7.5kg/layer including waste
Requirement for 3 layers will be 3 x 7.5 = 22.5kg @ GH 4.00
90.00
= 0.5m3
= 0.25
Sub-Total
= 0.75m3
GH 10.00
Labour:
No. of gang-days required/m2 for:
i.
ii.
iii.
119
= 0.054 gang-days
108.00
GH 220.50
Unit cost
GH 4.41/m2
2-4.2
Wall construction may be either sandcrete load bearing or sandcrete non-load bearing walls
and partitions. Blockwork in walls consists of 100mm, 125mm, 150mm or 225mm thick
sandcrete blocks using 1:4 cement mortar mix as binding joints. Sandcrete blocks are made
using cement and sand in the ratio of 1:8.
In Ghana, brickwork is rather uncommon. Until recently, bricks were mostly used as facing
bricks mainly for decorative purposes. In the recent past, a few projects have been
undertaken entirely using bricks or using mostly bricks in walls. In some developed countries
such as the United Kingdom and the USA, the predominant walling material is bricks. We
will now look at examples of how estimates for wall construction using both blocks and
bricks. To start with, lets have a look at these tables 4.9 to 4.11 below which provide useful
data which will be used when we compute estimates for blockwork and brickwork. Data
from these tables are used in the examples that follow.
Table 4.9
Hollow
Hollow
Hollow
Hollow
120
Solid
Solid
Solid
Solid
Table 4.10 Weights and volumes of cement and sand in specified nominal mixes of mortar
Nominal
Mix
1:1
1:2
1:3
1:4
Cement
Sand
Weight in tonnes
Weight in tonnes
0.97
0.66
0.50
0.40
0.67
0.46
0.35
0.28
1.07
1.46
1.67
1.79
0.67
0.91
1.04
1.12
Operation
Output
We will use data from these tables variously as we prepare estimates for walls using blocks
or bricks. Lets have a look at the example below.
121
Lets consider a 225mm thick hollow sandcrete blockwall filled with plain concrete using
cement and sand mortar (1:4) in foundations. The plain concrete filling is measured
separately. Lets assume the total area of blockwork is 100 m2
Solution
Lets start by estimating for the materials used for the wall construction.
The main materials used are cement and sand.
i.
GH 261.00
GH 6.00
GH 200
GH 467.00
GH 154.11
GH 621.11
GH 124.22
122
GH 6.00
Cost of mortar
GH 130.22
98.77 blocks
= 1086.42 blocks
GH 1,303.70
123
GH239.20
GH1,542.90
GH352.00
GH1,894.90
Blockwork Example 2
Preparing estimates for solid sandcrete blockwall
In this example, we consider a 125mm thick sandcrete blockwall in cement and sand mortar
(1:4) in walls and partitions. Lets take the total wall area to be 50 m2
Solution
Materials
(i)
Blocks
For the 125mm thick walls, we use 125x225x450mm nominal size blocks
Area of 1 block in metres is: 0.225x0.45 = 0.101 m2
For the 50 m2 of blockwalls, number of blocks required is 50 / 0.101
= 495.05 blocks
Add 10% waste
49.51blocks
544.56 blocks
124
GH545.00
Mortar used
Assume the volume of mortar used to be V m3
V = (nominal area of block actual area of block) x no. of blocks x wall thickness,
= (0.225x 0.45 0.212 x 0.4375) x 495.05 x 0.125
= 0.008 x 61.88
= 0.495 m3
From Example 1, the cost of mortar per m3 is GH 130.22,
Thus for 0.495 m3 of mortar, the cost is 0.495 m3 x GH 130.22 = GH64.47
Total material cost for the blockwall
GH609.47
Labour
We are considering 50 m2 of blockwall at an output of 12 m2 gang man day,
The output for 50 m2 of blockwall is thus: 50/12 = 4.16 gang days
Approximate 4.16 gang days to the nearest whole number, i.e. 5 days
If the charge per gang day is assumed to be GH 32.00,
Then total cost of labour is GH 32.00 x 5
GH 160.00
GH 769.47
GH 15.39
125
59.17 bricks
650.89 bricks
Mortar used
Assume the volume of mortar used to be V m3
V = (nominal area of brick actual area of brick) x no. of bricks x wall thickness,
= (0.075x0.225 0.069 x 0.219) x 591.72 x 0.113
= 0.001764 x 66.86
= 0.1179 m3
From previous examples, we found the cost of mortar to be GH 130.22,
Thus the cost of mortar for 0.1179 m3 is GH 130.22 x 0.1179 m3
Total cost of material
GH15.35
GH536.15
Labour
From tables, the output for 0.6 Brick thick walls is 6 m2
Thus 10 m2 will require 10 / 6 = 1.67 gang days
Approximate this to 2 days. If labour costs GH 32 per gang day,
Then for the two days, cost of labour is GH 32 x 2
Total cost of material and labour
GH 64.00
GH 600.15
GH 60.02
126
2-4.3
In preparing estimates for woodwork, the main input resources which should be
considered are material and labour. In the following example, we will prepare an
estimate for sawn timber 50 x 50mm surface brushed with. Creosote preservative in
pitched roof carcassing. Lets take the total area of woodwork as 726m.
The input resources required are as follows:
Material:
i.
Timber
ii.
Nails
iii.
Creosote
iv.
Brush
Labour:
i.
Creosote application
ii.
Material
i. Timber [dimensions 50 x 050]
The number of 4.2m pieces required = 726 / 4.2
Add 15% for waste
= 172.86
= 25.93
198.79
GH
497.50
ii. Nails
Net timber content
= 5.45 x 12 =65.34kg
GH68.25
iii. Creosote
If the area brushed / piece of 4.2m
127
GH
= 337.31 / 120
= 2.81
= 3.81
GH497.00
Nails
GH 68.25
Creosote
GH 32.50
Brushes
GH
8.00
GH606.25
GH
224.00
With the calculated area of 337.31 m2 and creosote application @ 30m2/ man day,
Man days required
GH
286.40
GH 606.25
Labour
GH286.40
Total cost
GH892.65
2-4.4
We start this by looking at the average covering capacities of paint on different types
of surfaces for both oil and emulsion paint as shown in table 4.12.
Table 4.12 Average covering capacities in m2/gallon/coat (4.5L of paint)
Surface type
Rendered walls or asbestos
Concrete fair face
Hardboard
Woodwork
Metalwork
Emulsion
New
Old
40
45
45
50
40
45
-
129
Oil
New
35
40
35
35
45
Old
40
45
40
45
50
Table 4.13 Achieved labour output data on works including preparation in m2/ gang-day
Surface Type
Emulsion Paint
Oil Paint
60
40
35
35
-
45
35
40
30
30
30
Rendered wall
Rendered soffit
Screeded floor
Hardboard soffit
Flat asbestos sheet soffit
General wood surfaces
Stopping and other putty work on painting
Hardwood surfaces including glass paper work
40
Solution
Materials:
Emulsion paint:
At a utilization of 40m2/gallon/coat,
quantity required for 3 coats of 100m2 3 x 100/ 40 = 7.50 gallons
Add 15% for waste
1.13
8.63 gallons
Buy 9 gallons @ GH 10.00 ex-site
Brushes:
With life coverage of 300m2/brush
No. of brushes required 3 x 100/ 300 = 1.00
For losses, add 1
1.00
2.00
Buy 2 of 150mm width brushes @ GH 0.90
GH 90.00
GH 1.80
GH 91.80
Labour:
Preparation and painting 3 coats of 100m2 at an output of
From table 4.13, 60m2/gang-day/coat would require 100 x 3/ 60 = 5 gang-days
Cost of 5 gang-days GH 35.00
GH 175.00
Total Cost
GH266.80
Unit Cost
GH 2.67/m2
130
2-4.5
Allowances have to be made for 60% addition to materials content, in respect of wall
rendering, floor screeds and ceiling finishes. Lets take a look at table 4.14.
Table 4.14 Achieved labour outputs for finishes
1m3/man-day
30m2/gang-day
20m2/ " "
15m " "
10m2 " "
30m2 " "
25m2 " "
4m2
12m2
6 m2
10m2
20m2
24m2
18m2
40m2/bag of cement/gang-day
40m2/bag of cement/gang-day
10m2/4.5L unit
131
Solution
We will use data from table 4.14 to solve this.
Material:
For the (1:4) mortar, lets adopt the rate of GH 130.22 as mixed (from blockwork
example 1)
Since the thickness of the mortar from the question is 12.5mm, then the volume of
mortar (1:4) required is 0.0125 x 100
= 1.25m3
Allow 60% for irregularity of surface, compression
on trowelling and utilization waste
0.75 m3
Total volume required
2.00m3
Cost of 2m3 @ GH 130.22
GH 260.44
Labour:
100m2 wall rendering at an output of 30m2/gang-day would require
100/30 = 3.33 gang-days
Use 3 gang-days @ bonus rate of GH 32.00
Total Cost Summary:
Materials
GH 260.44
Labour
GH 96.00
Total Cost
GH 356.44
Unit cost
GH 96.00
GH 3.56/m2
Self-assessment questions
1. Identify the key components which are considered when estimating for:
a.
Roofing;
b. Walling;
c. Woodwork;
d. Wall, floor and ceiling finishes respectively; and
e. Painting and decoration.
132
Session 3-4
Preparing Estimates for Plumbing and
Electrical installations, Glazing and Preliminaries
Learning Outcomes
By the end of this session, you will be able compute estimates for:
i. Plumbing installations
ii. Electrical installations
iii. Glazing items
3-4.1
133
12 No.
15 "
20 "
4"
4"
4"
4"
6"
1"
6"
4"
30m2
10m/man-day
Table 4.16 Showing output per gang-day for pipework inclusive of pipes, fittings and supports in
domestic buildings
Diameter (mm)
130
100
50
38
25
15
13
Type of Pipe
Asbestos
P.V.C
6m
4m
12m
15m
15m
20m
20m
15m
15m
Galvanized
Copper
15m
15m
10m
14m
12m
Solution
Materials:
P.V.C pipes 100mm are sold in 3.0m lengths locally
No. of lengths required will be 10/3 = 3.33
Add 15% for waste
0.50
3.83
Approximate to 4 lengths,
Buy 4 lengths @ GH 10.50
42.00
Jointing compound for 10m @ a utilization of0.025kg/m would require:
10 x 0.025kg = 0.250
Add 10% for waste
0.025
0.275kg
But this is sold in 0.25kg minimum containers.
Therefore, buying 2 containers @ GH 6.60
13.20
Total Material cost
55.20
Labour:
Trench excavation and backfilling of 10m @ an output of
10m/man-day would require 10/10 = 1 man-day
Use 1 man-day @ GH 6.50
Pipework in trenches for 10m @ an output of
15m/gang-day would require 10/15 = 0.67 gang-day
Lets use 1 gang-day @ GH 30.00
Total Labour Cost
36.50
134
GH
GH
GH
GH 6.50
GH30.00
GH
GH 9.17/m
15
12
Office
18
Builders work
45
38
Rate (GH)
Cost (GH)
60.00
60.00
consumer unit
B
C
D
A
B
C
D
E
F
H
J
K
2
2
2
30.00
35.00
40.00
60.00
70.00
80.00
20m
2.00
40.00
40m
3.00
120.00
200m
2.50
500.00
20m
2.50
50.00
3 Nos
2.00
6.00
15 Nos
2.50
37.50
300m
1.00
300.00
20m
1.00
20.00
100m
2.00
200.00
40m
2.00
80.00
L
M
N
P
Q
R
S
T
A
B
C
D
E
yellow/green as earth
continuity cable
6.0mm2 PVC cable (Cu) for
cooker control unit
4.0mm2 PVC cable coloured
green/yellow as earth wire
SWITCHES AND SWITCH
SOCKETS
Supply, erect and connect
the following:
13A 240V SP 1 gang switch
socket
15A 240V SP switch socket
45A DP cooker control unit
5A SP 1way 1 gang switch
5A SP 2 way 2 gang switch
5A SP 1 way 2 gang switch
Meter Board
LIGHTING FITTINGS
Supply erect and connect
the following :1x 40W 1.2m fluorescent
fitting C/W tube
1x 40W batten lamp holder
EARTHING
Supply, erect and connect
the following:1.2m long 13mm copper
earth rod
6.0mm2 bare copper as
earth lead bounded to the
DB at one end and to the
earth rod at other end
buried 2m below ground
MATERIAL COST
Add 10% for transport
Add 5% for storage
TOTAL MATERIALS COST
10m
2.00
20.00
10m
2.00
20.00
2 Nos
1.50
3.00
11 No
Nil
3 Nos
2 Nos
2 Nos
1 No
1.50
2.00
2.00
2.50
20.00
16.50
2 Nos
10.00
20.00
10 Nos
10.00
100.00
2 No.
15.00
30.00
20m
2.00
40.00
6.00
4.00
5.00
20.00
1,908.00
286.20
2,194.20
Labour:
20nr of switches and switched outlets at an output of 2/gang-day would require
20/2 =10 gang-days
Use 10 gang-days @ GH 25.00
GH
250.00
137
On the other hand, using an output of 12m2 of floor area/gang-day for 100m2 would
require 120/12 = 10 gang-days
Hence using 10 gang-days
Total Cost Summary
Materials
GH 2,194.20
Labour
GH 250.00
Plant
Total Cost (Labour and materials)
GH 2,444.20
Hence installed total cost as a factor of material input cost is 2,444.20
2,194.00 = 1.114
Rates of each of the items of materials must be multiplied by the factor 1.114 to
obtain the unit rate in each case.
For builders work in connection to this, gang-days required will be 100/45 = 2.22
gang-days
But use 3 gang-days @ GH 25.00
GH
75.00
2.7 x 1.67m
2.7 x 3.33m
2.7 x 3.33m
150 No./gang-day
120 No./gang-day
90 No./gang-day
Area range
(m2)
Up to 0.1
1.1 0.5
0.5 1.0
1.0+
Timber
3.50
3.00
2.50
2.00
4.5
4.0
3.5
2.5
Plastic
5.5
5.0
4.5
3.5
Putty utilization @ 0.70kg/m2 all-in. For cuttings only use 2.00 times output.
138
Solution
Materials:
150 x 750 x 5mm glass louvers:
Net number required
Add 10% for waste and damage
Total no. required
Cost of 1100 @ GH 0.80
800.00
1000
100
1100
GH
Labour:
Louvre glass fixing for 1000 @ an output of
150 no./gang-day would require 1000/150 = 6.67 gang-days
Add 10% for minor cuttings
0.67
7.34
Use 8 gang-days @ GH 35.00
Total Cost (material + labour)
1,080.00
Unit Cost
GH 280.00
GH
GH1.08
Self-Assessment Questions
List the key constituents which make up estimates for:
i. Plumbing installations
ii. Electrical installations
iii. Glazing
(Clue: this refers to the key headings which are covered in preparing estimates for
these worksections)
139
Unit 5
Unit Objectives
By the end of this unit, you will be able to:
i. Explain what the term preliminaries refer to and how these can be estimated
ii. Identify the relevant preliminary items for a project
iii. Prepare a complete estimate for Preliminaries for a project
Introduction
In general, the preliminaries section of a bill of quantities for a specified project relate
to expenses incurred during construction which will not easily fit into any of the other
trade sections when building up unit rates. They relate to works required for the entire
project but nor necessarily associated with any particular work section or any
particular aspect of a project.
In the Ghanaian construction industry, some of the common items which constitute
preliminaries are as follows:
1. Description of the works and particulars of the work.
2. Visit to the site
3. Access roads to the site.
4. Setting out of the works
5. Competent surveyor and any surveying equipment required.
6. Temporary buildings
7. Programme of works
8. Handing over of the completed works
9. Antique items
10. Photographs showing the progress of works
140
142
In general, preliminary items are considered on the basis whether they are timerelated or otherwise. The main components which make up the total cost of
preliminary items are usually as follows:
i.
ii.
iii.
We will illustrate these with a few worked examples of preliminary items. By their
very nature, preliminary items tend to vary depending on the nature and
characteristics of the project under consideration. We can therefore not present a set of
comprehensive worked examples representing all possible preliminary items. These
worked examples are meant to simply illustrate the principles used when estimating
for preliminary items. We will focus on some of the more commonly occurring
preliminary items.
the general overhead cost. However other expenses relating the site visit are priced as
show in table 5.1 below.
Table 5.1 Pricing of site visit
Fixed Cost X
Variable Cost Y
Fixed Cost Z
GH
GH
GH
200.00
135.00
20.00
355.00
GH 355.00
i.
ii.
GH100.00
Hotel and other incidentals @
iii.
Item 4:
Setting Out
The following items which constitute general supervisory labour: Site Agent, General
Foreman, etc, engaged on this are covered under the project overheads. The remaining cost is
estimated as follows:
Use a profile girth of 2(L + B + 2)m where L and B are dimensions of the least
rectangular enclosure of the building. Hence for a building of 20 x 25m on plan, the
required profile
Material:
i.
= 95pegs
= 10
144
= 105
GH 105.00
= 94.0m
= 9.4
= 103.4m
= 28.7
GH 435.00
c/fwd
iii.
GH 540.00
= 0.3
3.4kg
GH 4.00
GH 544.00
GH 5.79/m
Using a carpentry gang of 2 carpenters and 2 labourers with a daily gang output of
100m at a rate of
Labour cost/m
2(8 + 6)
= GH 28.00
GH28/100
= GH 0.28
= GH 6.07
GH 3.36
GH 0.42
GH 9.85
145
Expenses on the surveyors team and their equipment will be covered under item 5.
Item 5: Competent Surveyor and Equipment
For general building works, such expenses are allowed for in the overheads. But
where specialist surveying services are required, the duration of the surveying teams
involvement must be estimated. This is a time-related item and from the computation
of the all-in-rate for the surveyor and his team members on the projected duration of
the works, the cost can be estimated.
For example, a months total duration for 3 man team earning 3 x GH10.00 all-in
monthly requires
3 x GH 150.00
= GH 450.00
= GH 20.00
GH 470.00
The site layout shown in the site visit report and the firms policy on such temporary
buildings would help identify the type and space allocation required. With this, cost of
erection and furnishing can be built up from historical records as in the following example for
a large project:
i.
ii.
iii.
iv.
v.
= GH 2400.00
GH 240.00
GH 90.00
GH 560.00
GH 120.00
= GH3,410.00
vi.
Furnishing:
Furniture
GH
500.00
Stationary
GH
500.00
Office Equipment
GH 2000.00
Fridge
GH
500.00
Air Conditioner
GH 2,500.00
Total erection and furnishing
Utilization and maintenance for 12 months
at GH50.00/month
= GH 6,000.00
GH 9,410.00
GH 600.00
146
GH
1,136.67
Total expenses
= GH11,146.67
Item 7-9: Programme of works, Handing over of the completed works and Antique items.
These are normally not priced but deemed to be covered in overheads.
Item 10: Progress Photograph
This may be a lump sum based on, say a set of 5 snaps every 2 months for the contract period
of any 12 months.
= GH 60.00
= GH 200.00
GH 100.00
GH 24.00
GH 20.00
GH 100.00
GH 444.00
GH 60.00
Item 15:
GH 10.00
GH 514.00
Contractors Supervision
This is a good example of time related items. It covers the expenses on general site
staff that have not been allowed for elsewhere in the preliminaries unit. It starts from
147
the preparation of the outline works programme to determine the projected contract
period and then setting out the site organization structure. The latter is extracted from
the projects general staff and the duration of their services during the projected
contract period. The data so collected should then be tabulated as shown in table 5.2,
to calculate the contractors cost.
Table 5.2 Calculation of contractors supervision cost
Designation
Site Agent
General Foreman
General Artisan
Site Records Clerk
Storekeeper
Time-Keeper
Typist
Watchman
Total Cost
Time on
Project
(months)
12
12
10
12
12
12
12
13
No.
1
1
2
1
1
1
1
3
All-in-rate
(months)
GH
18.00
12.00
11.00
8.00
7.00
6.00
6.00
5.00
Total Cost
GH
216.00
144.00
220.00
96.00
84.00
72.00
72.00
195.00
1099.00
Item 16: Resources, labour, material and plant for the works
This item is not priced.
Item 17: Provision of general transport for the works
This is expected to be in the form of, say a Pick-up vehicle and allowance is made as
follows
i.
GH 87.50
GH 15.00
GH 102.50
GH 2767.50
x 12
GH 33,210.00
It should be noted however that the item has no allowance for removal and making
perfect after completion.
Item 18: Small Tools and Equipment Provision
Ideally, a comprehensive list of small tools and equipment envisaged for the project
could be prepared and priced accordingly at rates that allow for expected price
increases. This might include such major items as cranes and dumpers and minor ones
like shovels and pick-axes. However analysis of local historical site cost data
148
indicates that where no heavy equipment like cranes, central batching plant and their
likes are needed, an allowance of 0.8% of cost of works has been found reasonable.
Heavy equipment should be estimated for in terms of the costs of:
i.
ii.
iii.
Item 19:
Scaffolding
In general, ordinary buildings up to 3.0m high do not require any special scaffolding.
From historical data, 0.1% of cost of works appears to be a reasonable figure. Thus,
an allowance of 0.1% should be made for scaffolding for such buildings. Buildings
above the 3.0m high up to about 12m high, require these and timber scaffold of the
horse type shown in Figure 4.1 is normally provided
Solution
Analysis of local site data indicate the following resources input per meter perimeter
of building requiring scaffolding for external surface work at elevations up to 3.5m
high. This is for erection only and subject to 12 repetitive uses.
i.
ii.
Material utilization of 0.12m3 sawn hardwood and 0.25kg of 75mm wire nails
Labour input of 0.20 carpenter gang days
Removal and making good cost is in the region of 1.5 times labour cost for erection.
These estimates increase by 40% for subsequent 1.5m increase in height up to 12m
where specialist attention would be required. In the latter case, tabular scaffolding
would be required and enquiries for quotations for purchasing, erection and removal
would be necessary for first users to facilitate further pricing using historical data as
basis for subsequent uses. This is resorted to because all such tubular scaffolds where
required would have to be imported in the first instance.
575
1000 mm
50
50
3 No. of 50 x 100 x
3600 boarding
149
1150
575
50
3600mm
1150
3 No. of 50 x 100 x
1100 beams
2 No. of 50 x 100 x
3600 posts
2 No. of 50 x 100 x
brace
C 3600mm
Figure 5.1
Item 26:
The two types commonly found at local sites are 50 x 100mm sawn hardwood frame
structure with either 25 x 300mm hardwood vertical boarding of corrugated metal
sheet cladding along the site boundary as shown in Figure 4.2.
Figure 4.2a Site fence with timber frame and corrugated metal sheet cladding.
Figure5. 2a
1500
150
50
1500
150
25 x 150mm boarding
50
150
150
50 x 100
horizontal beam
50
Figure 5.2b
50 x 100
post
Details from analyses local site data on timber shoring of this type show the following
as cost per metre girth of shoring.
i.
Materials:
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iii.
Labour:
Framework at 0.05 carpenter gang day.
Cladding at 0.40
Preservative brushing at 0.01 labourer day
Maintenance cost achieved at local sites per month is of the order of 1.5% of total
iv.
Item 25:
Protection of Works
This is allowed for in the trade units of the bill. If specific requirements are necessary,
this can be priced accordingly on the cost of provision maintenance and removal.
Item 27 and 28: Protection of persons and property / Insurance against injury to persons
on site.
These are usually not priced as part of the preliminaries since they would have been allowed
for in the workmens compensation insurance in building up the all-in-labour rates.
Item 29: Insurance of the work
This is value-related and hence depends on the contract sum with the premium paid in
the order of 0.2% of contract sum. The premium paid is usually re-imbursed in full
without mark-up for overhead expenses which must be allowed for elsewhere. Details
must be cleared from reliable insurance firms concerned.
Item 30: Watching and lighting have been allowed for in computing expenses for items
12-15.
Item 31: Overtime and Completion
Local climate conditions and project resources supply situations are such that the need
for overtime work to keep to works schedule cannot be ignored. Reasonable
allowance for this is in the region of 1.5 days per month operative for a minimum of
10% contract period.
Hence for a 12 month contract with anticipated labour force of 60 operatives, due
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= 100man-days
= GH 810.00
Item 32 and 33: Prevention of nuisance / prevention of fly tipping and spoil dumping.
$These are not normally priced except where very specific precautions are required. An
example is an area where there is a high incidence or potential for their occurrence. In such
cases, detailed estimates can be prepared after thorough examination of the situation.
Item 34: Health, Safety and welfare of workmen
This item is allowed for in computing all-in-labour rates.
Item 39-47
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These cover details of project information and are normally not priced. In the case of
items 41 and 46, specific amounts to be directed by architect and their inclusion in the
sub-total must be noted.
Item 48: Bid Securities and Bonds
The premium charged for bid securities and bonds is usually at the rate of 0.5% of
contract sum. The associated on-cost is also about 0.5%. Thus the total allowance for
bid securities and bonds is usually of 1% of the contract sum.
Self-assessment questions
i. Identify 10 items which comprise preliminaries when preparing an estimate.
ii. Which of the items listed in (1) will incur an expense to the contractor and
which of them will not?
End of Unit Assessment
i.
Explain the terms all-in rate for labour and all-in rate for plant
ii.
In computing the all-in rate for labour and plant respectively, what are
the respective sets of constituents which are considered?
iii.
iv.
Make a list of as many preliminary items as you can. Briefly describe how
the cost for each of these is computed.
153
Unit 6
PRICE ANALYSIS
Unit objectives
By the end of this unit, you will be able:
i.
Explain the different pricing strategies used by contractors when pricing their
estimates
ii. Explain the term bidding strategy
iii. Explain how risks are managed through the contract
SESSION 1-6
Pricing manipulations
Learning outcomes
By the end of this session, you will be able to:
i.
The s-curve suggests that a typical building project does not become self financing
until it is near completion and in addition, requires the contractor to provide
considerable amounts of capital in both working capital and long-term capital. As cost
is associated with the provision of capital, contractors often seek ways of improving
their cash flow at the initial stages of project.
The two common methods which are often used by contractors to improve their
cashflow during the early stages of a project are:
i.
ii.
Front-end loading
It is generally expected that project costs rise as the percentage of bill items covered
increases (fig.6.1). Front-end loading occurs when items of work which the contractor
expects to be executed early in the project have prices which contain
disproportionately large content of overheads and profits and items of work to be
executed in the later stages of the project have their prices reduced accordingly. This
situation is of further benefit to the contractor due to the time value of money. The
clients quantity surveyor should generally be able to detect if front-end loading has
been used by a contractor through rigorous checking. Table 3.3a and fig.3.3b illustrate
the cashflow for a project without front loading and one that uses front loading
respectively.
154
100
80% of the value of work will be 20% of Bill items
20
Fig 6.1
Item
Quantity
Unit
Mark-up
Bill Rate
1000
10
5.5
100
50
10
55
500
50
10
55
200
25
10
27.50
Excavation
Concrete
Block
Proof
Price in
GH
5500
5500
27500
5500
Total Cost
44000
GH40,000
Total mark-up
GH 4,000
Total
GH 44,000
Table 6.2b
Item
Quantity
Price in GH
Excavation
Concrete
Block
Proof
Total
1000
100
500
200
7500
7500
23000
2000
40,000
Unbalancing of Tenders
This normally occurs where the contractor expects variations in the contract. In this
case the contractors will price low those items they expect to be increased. Again
systematic checking by the consultants Quantity Surveyor acts as a restriction upon
such manipulations.
155
Contract Strategies
The development of an appropriate contract strategy requires consideration of:
i.
ii.
iii.
iv.
v.
Adopting the most appropriate contract strategy can help save project costs. Research
suggests up to 5% of project cost savings by using the most appropriate type of
contract.
2-6
Learning outcomes
By the end of this session, you will be able:
i.
Explain the term bidding strategy and identify some useful strategies used in the
bidding process
ii. Explain the main considerations involved in contract strategies
iii. Explain how risks associated with a construction project can be handled using the
appropriate contract strategies
2-6.1
Bidding Strategy
Bidding strategy constitutes a set of arrangements which bidders put in place in order
to enhance their chances of winning more projects which are tendered for. To enhance
the chances of success, a contractor, or specialist trade contractor, will formulate aims
and a framework to win contracts at prices which will produce profitable work. An
evaluation of tendering performance itself is not enough to meet this aim, because
although a contract may be won with a reasonable anticipated profit, it may be found
that the particular type of work seldom achieves or improves margins when the final
results are known. A bidding strategy must recognise the need to decline invitations to
tender for work or procurement arrangements which fail to meet the organizations
objectives. When contractors set tender margins, they consider all the points discussed
in the Final Tender Review meeting. In addition, they may be influenced by tenders
submitted by their competitors and budgets set by clients. It is clear that neither of
these criteria will help achieve optimum margins in a highly competitive market. It is
156
difficult to avoid low margins where competition is strong but, if prices fall below
economic levels, it is time to look for other markets where the company can employ
its strengths more effectively.
2-6.2
Risk Management
Risk management involves identifying what the risks are, taking appropriate efforts to
control them and taking the necessary actions to effectively mitigate the likely effects
of the identified risks. The extent of risk and uncertainty associated with construction
projects are the important things to consider when it comes to estimating, establishing
pricing policies and contract strategies. In dealing with risks, a systematic process
needs to be followed.
Factors to be considered in managing risks include:
1. The extent of risk; and
2. Uncertainties associated with the cost of projects
The risk involved will form the basis of making pricing policies and contract
strategies.
Risks can also be categorized into two: recognized risks and assumed risks.
157
These are the risks that come as a result of political and social pressure e.g. public
disorder, war, labour union related problems, religious or racial factors
Sources of Risk
Some of the common sources of risk in construction are:
1) Technical factors;
2) Environmental factors;
3) Economic factors inflation;
4) Contractual;
5) Productivity of labour and subcontractors etc; and
6) Establishing accuracy.
158
Fig 6.2
Step 1
Risk Identifiction
Step 2
Impact Assessment
Step 3
Risk Assessment
Step 4
Yes
No
No
Yes
Eliminate
Transfer
Insurance
Set a site
Source of
Risk to Sub-
Control
Losses
contractors
Process In
Motion
Do Not Tender
No
Yes
159
Tender
Date:
Quality or
Amount (A)
Expose (S)
Assessment
of Impact
Percent of
Impact (B)
Prob. Of
Risk Occ. (C)
Substructure
High
Medium
Low
Superstructure
1.
2.
3.
2.
3.
4.
High
Medium
Low
High
Medium
Low
High
Medium
Low
High
Medium
Low
High
Medium
Low
High
Medium
Low
High
Medium
Low
160
Expect. Value
(D) of Risk
In some cases, the extent of risk associated with a project will lead to questions as to
whether the estimating process should proceed unto bid submission or not if an
appropriate risk management strategy cannot be found. Fig 6.2 and fig 6.3 shows a
risk assessment worksheet which can be used to assess the extent of risk and the
action required to be undertaken.
Factors to consider in choosing risk transfer policy through contract strategy:
Some suggested factors to consider when choosing an appropriate policy for risk
transfer using contract strategies are as follows:
i.
ii.
iii.
Which party can best control events that may lead to the risk occurring;
Which party can best control risk if it occurs;
Whether or not it is preferable for the client to retain an involvement in the control of
iv.
v.
vi.
risk;
Which party should carry the risk if it cannot be controlled;
Premium to be charged for the risk; and
Whether risk if transferred may lead to the possibility of risk of a different nature
being transferred to client control.
What happens usually within the contractors organisation after the final
estimate has been agreed?
ii.
iii.
iv.
v.
vi.
vii.
List the various stages which make up the estimating and bidding process.
ii.
iii.
iv.
161
162