CE4221 Contract Admin 04 Lec 5 PDF

Civil Engineering Cost Estimating

Lecture 3
Detail Cost Estimating - Prices
Asoka Perera
Professor of Civil Engineering
1 © Asoka Perera
3 Detail Cost Estimating - Prices

➢3.1 Introduction
❖Estimating and tendering process within contractor's
organization takes place between two well-defined
points, the decision to tender and the submission of the
bids.
❖Between these two points there is a complex process
that involves and depends on several different
categories of person within the contractor’s
organization as well as essential external contribution
by the consultants staff, material suppliers, plant hire
companies and specialist sub contractors.
2 © Asoka Perera

➢3.1 Introduction
❖The process includes collecting and calculating
cost information, designing and planning
around construction method, selecting
resources and production for output rate,
❖Combining cost and resource usage to
determine cost estimate, calculating site
overheads, making tender decision and
preparing tender documents for submission.
3 © Asoka Perera

➢3.1 Introduction
❖The involved nature of the process and the
reliance on different persons, outside
organizations for data and information demand
that the process is carefully managed.
❖The unit rate that should be prepared by the
estimator for pricing Bill of quantities can be
seen as having made up of three elements.
• Direct cost
• Site overheads
4 • Mark-up (Risk, Profits and Overheads) © Asoka Perera

➢3.1 Introduction
❖Direct cost
• Direct cost are
predominantly the labour,
plant, materials and
subcontractor cost involved
in executing the work.
• The direct cost has to
include allowance for
material handling and
wastage, plant non-working
time etc.
5 © Asoka Perera

➢3.1 Introduction
❖Site overheads
• These are costs, which
can be directly
attributable to a
contract and costs
associated with
administration such as
to site staff, transport
cost, site office cost
and insurances and
bonds.
6 © Asoka Perera

➢3.1 Introduction
❖Mark-up
• The direct cost and site overheads together represent
the cost to the contractor in undertaking the contract.
It is the responsibility of the contractor’s estimating
staff to establish these costs.
• The direct and site overheads are called the cost
estimate for the construction work. The tender total
presented in the tender is the contractor-selling price.
The selling price is arrived by adding the mark-up to
the cost estimation.
7 © Asoka Perera

➢3.1 Introduction
❖Therefore
• Unit rate in BOQ = Cost estimate + Mark-up
Material cost
Direct T
Labour cost Cost Estimate E
cost
Plant cost (Contribution N
S/C cost cost) D
Site overheads E
R
Mark-up
8 © Asoka Perera

➢3.1 Introduction
❖Mark-up
• The mark-up usually contains three elements; an
allowance for company overheads, an allowance for
risks & an allowance for profits.
• The evaluation of the mark-up and the determination
of how the cost and mark-up will be allocated to the
bill items is the part of the process described as
tendering.
9 © Asoka Perera

➢3.2 The Importance of the Estimating
❖A contractor’s tender is based on an estimate of
the cost to the contractor, of constructing the
work. The measure of the successful tender is
one whose value is low enough to win the
contract and high enough to allow the
contractor to finish the job and still show some
profit.
10 © Asoka Perera

➢3.2 The Importance of the Estimating
❖In any tender 70% or even more of the tender
sum is represented by the reminder-estimated
cost. The reminder being the contractor’s mark-
up to cover risks, profit and company
overheads.
❖The proportion of the tender sum made up of
estimation cost make it obvious that major
factor in determining the tender’s success is the
cost estimate.
11 © Asoka Perera

➢3.3 Estimating the Direct Cost
❖The estimator’s task is to determine the cost to
the contractor of executing the contract defined
in the contract document.
❖This cost estimate will be modified by senior
management, in consultation with the estimator
to determine the tender or selling price. The
estimator establishes the direct cost rates for
each item in the bill of quantities.
12 © Asoka Perera

❖The direct cost rate is a rate for the labour, the
plant, materials and sub contractors but
exclusive of site overheads, head office
overheads and profit.
❖Determining direct cost rate involves selecting
the appropriate resources of labour, materials,
plant for the item of work, selecting the output
or usage rates for each resource and combining
this with the cost information collected.
13 © Asoka Perera

❖To achieve this, the estimator should perform
the following tasks.
1. Derivation of work norms (output or usage rates)
2. Quantitative analysis of material requirements
3. Collecting cost information on materials.
4. Wage analysis
5. Plant rate analysis
6. Production analysis
7. Calculation of transport cost
14 © Asoka Perera

➢3.4 Work norms
❖Work norms are set of standards specifying the
no of works to be allocated for a job of work.
The estimator can always refer to publish
standards to extract this information.
❖BSR – Building Schedule of Rates
❖HSR – Highway Schedule of Rates
15 © Asoka Perera

➢3.4 Work norms – Example 1
Excavation from BSR
16 © Asoka Perera

➢3.4 Work norms – Example 2 Concrete
from BSR
17 © Asoka Perera

➢3.4 Work norms – Example 3 Brickwork
from BSR
18 © Asoka Perera

➢3.4 Work norms – How do you
establish?
❖To establish work norms, as above it is
necessary to study how exactly work is carried
out. This study is known as work-study.
19 © Asoka Perera

➢3.5 Quantitative Analysis
❖Quantitative Analysis is carried out to
determine the quantitative distribution of the
basic materials (cement sand aggregates etc.) in
a unit of measurement.
❖This is based on theoretical calculation and
useful to check library data such as BSR
❖It is useful to derive prices of new items such as
Rat-trap bone or soil cement block walls
❖Let us look at some examples and compare with
20 BSR too © Asoka Perera

➢3.5 Quantitative Analysis – Example 1
❖1m3 of 1: 2:4 (20mm) concrete
• Required materials: Cement
• Fine aggregates -sand
• Coarse aggregates – metal
• Water
21 © Asoka Perera

• Concrete is proportion either by volume or by weight.
For many years past it has been the normal practice
to proportion the materials on a volume basis. This
practice is still largely followed, but it is now
recognized that proportion by weight and carefully
controlling the water cement ratio produce high
quality concrete which is much more consistence
because better control of fraction quantity is possible.
22 © Asoka Perera

• For this reason mixing by weight has become popular
where large volume of high class concrete are
required such as construction of airport runway,
under water construction in harbor
23 © Asoka Perera

• In specifying concrete ratio of mix by volume the
proportionate refer to dry mixture. Allowance must
therefore be made for bulking in the aggregate due to
moisture. Bulking may be ignored in the case of
coarse aggregates (metal) as their moisture content is
very small. However fine aggregates (sand) bulk
appropriately due to the absorption of water and must
be counted for.
24 © Asoka Perera

❖Cement
• Cement is available in loose form or form of bag.
• Specific gravity = 3.15
• Bulk density - in bag form = 1442 kg/rn3
• in loose form = 1232 kg/rn3
• Solid density = 3.15*1000=3150 kg/rn3
• Weight of a bag of cement =50 kg
25 © Asoka Perera

❖Sand Usually river sand is used
• Specific gravity =2.65
• Bulk density =1600 kg/rn3
• Solid density =2650 kg/rn3
26 © Asoka Perera

❖3. Metal
• Specific gravity =2.8
• Bulk density =1440 kg/rn3
• Solid density =2800 kg/rn3
27 © Asoka Perera

❖4. Water
• Water is required for the chemical reaction of
hydration of cement. Water cement ratio required to
chemical reaction is about 0.23. The amount of water
in excess to this is to make the mix more workable.
The Department of Building’s specified water: cement
ratio is 0.52 (by weight) to be used.
28 © Asoka Perera

❖Example 1
• We calculate the materials requirement for 1m3. The
method of calculation is;
• Step 1: Calculate the yield of concrete per bag of
cement.
• Step 2:Calculate the bag of cement, sand and metal
for 1m3 of concrete.
29 © Asoka Perera

❖The Main Assumption
• The solid volumes will not change due to chemical
reactions
Cement
Sand
Concrete 1:2:4
Metal
Water
30 © Asoka Perera

❖1m3 of 1: 2:4 (20mm) concrete – 1 Bag of cement
Volume of loose state (VL)
Materials Volume of (Vs) m3
m3
Cement 50/1442= 0.03467 50/3150 = 0.0159
Sand 2X0.03467 = 0.0693 0.093X1600/2650 =0.04187
Metal 4X0.03467 = 0.13868 1.3868X1440/2800 = 0.07132
Water 50*0.52 = 0.026 0.0260
TOTAL 0.1551
31 © Asoka Perera

❖1m3 of 1: 2:4 (20mm) concrete – 1m3 of concrete
m3
Cement 1/0.1551 = 6.45 6.45X50/3150 = 0.159
Sand 6.45X0.0693 = 0.4467 0.4467X1600/2650 =0.2678
Metal 6.45X0.13868=0.894486 0.894486X1440/2800 = 0.460
Water 6.45X0.026=0.1677 0.1677
TOTAL 1.0545
32 © Asoka Perera

❖Example 1
• We need to adjust for wastage. This will vary on
material and type concrete application. For example
columns wastage will be more than beams –
difference in volume
• For Materials for cement it may be 5%, Sand may be
around 10% and metal could be 8%
33 © Asoka Perera

Materials Volume of (VL) m3 with wastage
m3
Cement 1/0.1551 = 6.45 6.45X1.05 = 6.77
Sand 6.45X0.0693 = 0.4467 0.4487X1.1 =0.50
Metal 6.45X0.13868=0.894486 0.894486X1.08 = 1.0
Water 6.45X0.026=0.1677 0.1677
TOTAL
34 © Asoka Perera

Materials Volume m3 from BSR Volume of (VL) m3 with wastage
Cement 6.36 6.45X1.05 = 6.77
Sand 0.50 0.4487X1.1 =0.50
Metal 1.00 0.894486X1.08 = 1.0
Water 0.42 (with curing) 0.1677
Poker Vibrator 0.94 Hour ?
Mason 0.35 Days ?
?
Unskilled Labour 2.47 Days
35 © Asoka Perera

❖Rubble Masonry 1:5 cement sand mortar
• In rubble masonry structures it can be
considered that 1m3 of rubble stone
willproducelm3 of rubble masonry. In
concrete construction all three materials
are mixed together where as rubble
masonry similar to brick work.
36 © Asoka Perera

❖Quantitative Analysis for Rubble Masonry 1:5
cement sand mortar
❖Materials
• Random Rubble Masonry
• Mortar: cement, sand, water, 1:5 mix
• Since 1m3 of rubble stone is produced
the 1m3 of rubble masonry it is assumed
that the mortar fills the voids.
37 © Asoka Perera

cement sand mortar
❖The Main Assumption
• The solid volumes will not change due to chemical
reactions
Cement
Mortar 1:5
Sand (0.4m3)
Rubble
Rubble
Water (0.6m3)
38 © Asoka Perera

cement sand mortar - Materials
❖Definitions
Vs - (volume of solid)
Vv - (volume of void)
Void Ratio(V.R) = Volume of voids = Vv
Volume of solid Vs
Porosity = Volume of voids = Vv
Total volume V
V.R= Porosity
1-Porasity
39 © Asoka Perera

cement sand mortar
❖Data: - porosity =0.4
• Specific gravity = 3.15
• Water: cement = 0.6
• Mortar, = 1:5 (cement: sand)
40 © Asoka Perera

cement sand mortar
❖Data: Porosity = 0.4
• 1m3 of rubblework needs 1m3 of rubble stone ie. 1m3
of rubblework produces 0.4m3 of voids ie amount of
mortar =0.4m3 for 1m3 Now we can calculate for
requirements of 0.4m3 of mortar
• Mortar: cement, sand, water, 1:5 mix
• Since 1m3 of rubble stone is produced the 1m3 of
rubble masonry it is assumed that the mortar fills the
41 voids. © Asoka Perera

m3
Cement 50/1442= 0.03467 50/3150 = 0.0159
Sand 5X0.03467 = 0.17335 0.17335X1600/2650 =0.10466
Water 50*0.60 = 0.03 0.030
TOTAL 1bag of cement mortar 0.15056m3
42 © Asoka Perera

m3
Cement 0.4/0.15056 = 2.66 2.66X50/3150 = 0.0422
Sand 2.66X0.17335 = 0.4611 0.44611X1600/2650 =0.2784
Water 2.66X0.030=0.0798 0.0798
Rubble 1m3 0.60
TOTAL 1.0004
43 © Asoka Perera

❖Example 1
• We need to adjust for wastage. This will vary on
material and type concrete application. For example
columns wastage will be more than beams –
difference in volume
• For Materials for cement it may be 5%, Sand may be
around 10%
44 © Asoka Perera

Materials Volume of (VL) m3 with wastage
m3
Cement 2.66 2.66X1.05 = 2.793
Sand 0.4611 0.4611X1.1 =0.5072
Ruble 1.00 1.00
Water 0.0798 0.0798
TOTAL
45 © Asoka Perera

Materials Volume m3 from BSR Volume of (VL) m3 with wastage
Cement 1.77 2.793
Sand 0.30 0.507
Rubble 1.30 1.00
Water 0.35 (with curing) 0.0798
Mason 1.41 Days ?
?
Unskilled Labour 2.12 Days
The difference is mainly due to the main assumption

46 © Asoka Perera

➢3.6 The Price – BOQ unit rate
❖Once the quantitative distribution of materials
or resources is known (or from BSR) the
material cost for that item of work can be
calculated using the unit cost of materials or
resources.
❖Cost can be calculated for materials, labour and
equipment (or plant)
47 © Asoka Perera

❖Material Cost- Ex: Material cost of 1 m3 of 1:2:4
(20) concrete.
❖Data:
• 1 bag of cement = Rs. 850.00
• 1 m3 of metal (20mm) = Rs. 3,200.00
• 1 m3of sand = Rs. 4,200.00
• 1 m3 of water = Rs 50.00
48 © Asoka Perera

❖Material Cost- Ex: Material cost of 1 m3 of 1:2:4
(20) concrete.
Material BSR Unit Rate Amount
Requirement
Cement 7.1 850.0
6,035.0
Sand 0.5 3,200.0
1,600.0
Metal 1.0 4.200.0
4,200.0
Water 0.185 50.0
9.3
Total Cost
49 11,844.3
© Asoka Perera

➢Labour Cost
❖Any construction activity involves labour. Therefore
cost of labour should be included in the direct cost unit
rate. Requirement of labour for different work item can
be obtain from work norms. Unit cost of labour (cost/day
or cost/hour) should be calculated for each category of
labour by carefully analyzing the remunerations,
working days, sick leaves, holydays, etc. This analysis
is called the wage analysis.
50 © Asoka Perera

➢Labour Cost
❖The labour can be broadly categorized into two
sections;
• 1. Skilled labour; mason carpenter, steel fixer etc.
• 2. Unskilled labour; labours
❖Some time there is another category referred to
as semiskilled labour. (Cleaners, greasers)
51 © Asoka Perera

➢Labour Cost
❖Basic wage: - This is the amount of money a
worker earns without any allowances and can
be calculated as Rs/day
❖Gross wage: - This is the total amount of money
a worker earns including allowances, provident
funds, pensions and other welfare facilities can
be calculated as Rs/day.
52 © Asoka Perera

➢Labour Cost
❖Effective wage: - This is the wage that should
be used for calculation of unit rate. This is the
total amount of money a worker obtains a day of
productive time inclusive of benefits. That is
money, the worker earns distributed over the
effective working day. In fact it is the cost of the
labour considering productive time. It can be
calculated as cost/day or cost per hour.
53 © Asoka Perera

➢Labour Cost
❖In computing the effective wage the estimator
should take into account public holydays,
casual and sick days, attendance at the site,
loss, of production due to bad weather and
strikes.
54 © Asoka Perera

➢Labour Cost
❖Calculation of Effective wage in relation to
gross wage (For year 2001)
• No of days =365
• No of Saturdays and Sundays =104
• No of working days =365-104 =261
• No of public holydays =23
• Casual /Sick leaves etc =42
• No of days loss due to bad weather and strikes =20
55 • Effective working days = 176 © Asoka Perera

➢Labour Cost
❖Calculation of Effective wage in relation to
gross wage (For year 2015)
• Total money earned =gross wage *working days
• =G.W. * 176
• Effective wage G.W. * 176
• Effective working days =G.W. *261/176
• Effective wage = 1.48 G. W.
56 © Asoka Perera

➢Labour Cost
❖Ex: 1m3 of 1:2:4 (20mm) concrete in manual
basis. From work norms labour requirement
• for 2.83m3 of work, per day
• 1 mason days
• 12 labours days
❖From wage analysis unit cost of labour
• Mason Rs 1200 /day
• Labour Rs 1000/day
57 © Asoka Perera

➢Labour Cost
❖Ex: 1m3 of 1:2:4 (20mm) concrete in manual
basis. From work norms labour requirement
• for 1m3 of work
• 0.33 mason days
• 4 labours days
• Mason Rs 1200 /day
• Labour Rs 1000/day
58 © Asoka Perera

➢Labour Cost
❖Effective wage
• Mason – 1200X1.48 = 1776
• Labour – 1000X1.48 = 1480
• Mason 0.33 Days X 1776 = Rs 586.08
• Labour 4days X 1480 = Rs 5920.00
• Labour Cost = Rs. 6506.08
59 © Asoka Perera

➢Plant Cost
❖Plants requirement, from BSR
• Concrete mixer – 0.94hour
• Poker Vibrator – 0.94 hour
❖Plant Cost
• Concrete mixer – 800X0.94 = 752
• Poker Vibrator – 300X0.94 = 282
• Total plant cost = 1034
60 © Asoka Perera

➢The unit rate of 1:2:3 concrete
❖Material Cost = 11,844.30
❖Labour cost = 6,506.08
❖Plant cost = 1,034.00
❖Total cost = 12,878.30
❖Mark-up 25% = 3,219.58
❖Total Unit Rate = 16,097.88
61 © Asoka Perera
THANK YOU
62 © Asoka Perera

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Civil Engineering Cost Estimating

Civil Engineering Cost Estimating

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

TOTAL 1bag of cement mortar 0.15056m3

3 Detail Cost Estimating - Prices

Rubble 1m3 0.60

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

The difference is mainly due to the main assumption

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices

3 Detail Cost Estimating - Prices