CHAPTER 1

Elements of Estimating

1.1 . INTRODUCTION _
Estimating is an rut by which we cnn get nn approximation of the material '. investment involved, and
the time to be taken for the completion of Electrification project we are planning to do.
By estimating the material cost and the tim_c required f ~r compl~tion of _th~ project we ~an get help
·I· in making right and firm decision while making a contract with any f1_rm but m 1t~elf th~ r~port prepared
0 11 estimating and costing does not establish any te nder or contract. The Job of an estimator 1s mtercoQJlec ted
with different aspects of estimating a programme in such a way that it cann ot be demarcated separately very
easily. Nonnally, it can be enlisted under followi ng four headings :
1. Estlmating the quantity of material and the cost involved
2. Analysis of cost or selling price.
3. Maintaining-proper accounts.
4, Provision of ·selling aids.
/'\

1.2. PURPOSE OF ESTThfATING AND COSTING

I It is necessary to know the necessary material and the cost to be incurred on it before starting a new
programme. Hence it is very necessary to make a complete project report for the said programme because
I
T
this project acts as a guide in the successful implementation of our programme. The project report includes
I 'a complete knowledge about the work to be done such as the drawing of the work, complete details of the
necessary material with its costing and the sequence of operation to be performed.
1·
Es~mating is also necessary because it gives us certainty about the amount of money req~ired, availability
of matenal etc. In the absence of pre-project and the work started without estimating and costing, the work
cannot be completed un-interruptedly because, it becomes difficult to continue the work due to instantaneous
shortage of money or unavailability of material.
. F?r purchasin_g the material according to estimating and costing, market suwey is necessary. The
estimating and costrng have following aims : ·
1,. To ensure that the. list of material is completed before starting the job so that there are very sleek
chances" of shortage of any necessary material after starting•the work. • .•.
2. To ensure "that the money is not misused in t~e projects un.d er impletnen~ation.
3. The time is saved i.e., the work is completed well in time as planned.
The following probl~ms can come in the way of the work started wi~hout estimating and costing :
_1. It becomes_very d1ffi~ult to pu~chase necessary material in the absence of the list of material due
to which the work 1s not contmued unmterruptedly. 1
•

h h2. The money is misused by purchasing smaller, or excess quantities of material from market an~
t e s ortage of money can cause the stoppage of work in midway. . ·
3. Due to above-mentioned hurdles the work can tak ·
the other proiect which is related to th ' . . . . e more lime for completion and it can affect
J e ex1stmg proJect 111 hand.
. . Hence, for completion of project work within 'time Ii · · · · • •
ll 1s necessary to do esllmating and
1
. . ffilt unmterruptedly and without 1;msuse of money,
cos mg pnor to starting an k h . ..._ .
electrification of any building esti u· d . . Y. wor on t e project. For instance, for - .
' ma ng an costmg ts necessary Th . ·11 k .
of electrification including desig · Of . . . · e estimator w1 ma e complete plannmg
and costing report After nurchas m~gO
w~n;g, location of po~nts-and finally prepare a complete estimating
· -r e matena according to the estimating--an9 costing report, the work sho11ld
. 1.1
 DESIGN ESTIMATING AND COSTI NG
1.2 ELECTRICAL
EL
be . en inecr (from chief electrical inspector)
completed under the supervision of some qualified or pcmut-holdcr g '
is
supervisor or contractor.
th1
13 1 • • ·
· · QUALITIE S OF A GOOD ESTIMATOR b well-quahfied, efficient a nd expenenced an
I · work and an idea of its
d 10
A successful nnd economical estimate can be mnde on Y Y
persons. They should hnve n complete knowledge of the material to be use exact in
coSt, Hence, n good estimator should have following qualities : . . . up
d actical expenence about est1mat1on.
1· Th e estimator should have thorqugh knowledge nn pr . . lis
. , lO ti 1nc for inspectrng the on going project
2 · An estimator should go to the work pince from time
on his estimate. pri
. . . · ting power. He should have thorough
3· An estimator should have n good irnngmatJon and expenmcn
and uptodnte knowledge about the prevailing designs.
• • & fu xtension or diversions while estimating
4 · A good estimator should always keep provJSton ,or ture e . .
a project. ·
· f · · f material and for that he should keep s.
5 . An estimator should keep uptodate knowledge 9 pnces o
Ne
on changing the price lists maintaine·d in his office. ·
l.
1.4. ESSENTIA L ELEMENT S OF ESTIMATING AND COSTING
th
Before any electrical project is initiated, the knowledge of material req_u ~ed for at ?roject _and the 2.
estimate and cost involved is essential while preparing, design details and the ~st of rnate~ial reqmred for
that project. The estimator should also know the fol1owfog aspects which are essenual elements of · 3.
estimating : 4.
I . Specificatio n of material.
2. Latest market cost of material.
3. Price list and net prices. , .,
4. Calculation of material and labour cost.
5. Knowledge of purchase system.
6. Labqur cost. · 5,
1.4.1. Specificati on of material. Uie specification and cost of all nec~ssary material should be known
at the time of preparing a report on estimation and-pricing of the project. It will be very difficult to purchase
the material from market without the knowledge of ,specifications. For example, it will be very difficult to
choose a specific 'holder; out of different holders .t9 be installed in an electric~ installation, because, there 6.
are many holders such as pendent holders, batte~ .hplders or screw type holders available in the market.
If we have to choose holder for mercury vapour 'tamp or for a lamp having w~ttage more than 200 watts, 7.
then screw type holder will be best ·suited. But in the absence of detailed ·specifications, the shopkeeper
feels difficulty in providing the correct material.
1.4.2. Latest market cost of material and market survey. The market cost of material is that cost
of the material at which it can be purchase~ o! brough~ to the store at a~y µme.
After estimating and costing of installation of the project, it become~ ~ecessary t~ purchase the material.'
Market survey has to be conducted for estimating the cost of enliste~ material sp thl;lt the shop.~eeper could 8.
cj,
not deceive us ·by .overchargi ng the co~t of ~aterial. Market surveying .a!'}d ptirchasing of material is a very
delicate job and one should be fully ex~rt ~n this f1eld. 10.

The mistakes or carelessness show!'} 'in purchasing the material without any market survey will add
to the cost of electrical installation alongwith addition of time in completion of the project. Market survey
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 1.3
ELEMENTS OF ESTI MAT ING
,. mark et surv ey, quotatio ns arc invited for
is an art in whic h, o nly expe rienc ed perso ns succ eed. Afte r the s arc com pare d
I s. 111e costs given in quotnlions of diffe rent shop
the enlisted necessary mnteriaJ from related shop
offer ed by supp liers .
and the material is purc hased al the lowest rotes

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in
1.4.3. Price List. By mark et survey, the eslim a
whic h the shop keep ers give the retai
upda ted acco rding to mark et rote from time to
l and
tor gels the price list of the material from sho
who lesnlc prices acco rding to local market rates
time . Hen ce, nt the time of estim ating and cost
ld be take n into cons idera tion.
pkee pers
. This list is
ing, the price

list avai lable at that time of the mark et shou with the
terms and cond ition s of the s uppl iers a lo ng
The price list avai lable in the mark et inclu des
n belo w in table No. l .
price of mate rial. A samp le _o f price list is show

Table 1.1. Price List

__
Nam eoff inn._ _ _ _ __ App licab le with effec t from date_ _ _ _

Cost Rem arks

s. Name of the item with specification
Unit
No.
30 amperes rating
I. Double pole main switc h, iron clad, 250 V. grade each 85-00
with both fuses \.

with neutral link,

2. Iron clad distribution board, 4 way, 250 volts grade each 55-0 0
30 amperes rating
10, Amperes ~aling per unit 60-00
Miniature circuit breaker, 25o" volts grade, 5,, 6,
I
3.
- 4. One way switches bakelite : 86-00
Tumbler switch 5 ampere pe,r dozen
per dozen 180-00
Tumbler switch 15 ampere
per dozen 92-00
2-way switch 5 ampere
per dozen 85-00
One way flush switch 5 Amps. rating
per dozen 300-00
One way flush switch 15 amps . rating
type each 38-00
Switch ~d socket combined 15 amps rating flush
per dozen 45-00
5. Lamp holders bakelite pendent type
-do - 75-00
Lamp holders brass pendent type
-do - 52-00
Batten lamp holder bakelite
Batten lamp holder brass -do - 80-00
A11gle lamp holder brass - -do - 83-00
1/1.4 0 mm diameter
6. PVC ins.ulated, aluminium conductor wire of size
"

or 1.5 mm 2 single core per 100 mt 300-00

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7. Incandescent lamps' 230/250 volts
15 watt per dozen 72-00
'
25 watt - - do- 78-00 I
' .
40 watt -do - 80-00
-do - 82-00 ,
60 watt
100 watt -do - 96-00
200 wau - do- · 180-00
'
8. Ceiling rose bakelite 2 plate -do - 65-0 0
' I
9.. Ceiling rose bakelite 3 · plate -do - 75-00
I
10. Push button flush type do 72-00 ·
' '

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 1.4 ELECTRICAL DESIGN ESTIMATING AND COSTI NG

T erms and conditions of supply :

(a) TI1c above price list is lntest and nil lhc lists issued befor~ this date should stand cancelled.
(b) 10 % discount will be given on bulk p~rchnses. ·
(c) All lhe prices in the list arc ex-godown or·ex-workshop. · . . .
(d) TI1e prices of material can increase or decrease due to change of pnces from time to time hence
this price is only indic ative one.
(e) One perce nt (I %) discount cnn be given on cash payment. .
(J) Packing, delivel:)'.. despatch, freight, insurance charges if necessary, wiil be extra.
(g) The payment is to be made within one week of delivery. _ ·
(h) All taxes suc h as sale tax, ·octroi, local tax as applicable will be charged extra.
· 1.4.3.1. Net_Prices : Net price of an item is that price, in which all _the imposed tax_e s such as sale
tax, central sal~ tax, excise duty and other-local taxes are included. Normally above-mentioned taxes are
not m e ntioned in the price list. ·
If any discount is aj_Yei{ by the factory, $en_shopkeeper ~iJI deduct the qiscount !ill?
th_e n will charge
the tax ti:om the consumer. For example, if. a consumer purchases a 100 wa~t bulb of pnce IO rupees and
fac tof}'. gives a discol:lnt of 10% on this product, then on Rs. 10 - 1 = 9, the.sale tax at the rate of 5% will
result m net price= Rupees 9.00 + ·0.45 = 9.45 rupees.
_ Table 3 shows a sample price list based on net prices. Table 2 explains the above example for giving
discount and finding ,net price of ·the material after imposing sale tax.
Table 1.2.. ..
Name of item Rate per unit ' NJ't price Rs.
. .
15 Ampere switch and 40-00 40.00
socket combined, 3 pin
flush type
Discount 10% -04.00
'
Sale tax 5 % '
' 36.80
! .

Net Price
- ---,-
.
+ 01.80
I Rs. 38.60

Table• 1.3.
Name of firm Net Price List . Applicable with eff~ct from date._ __
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lSr. No. Name of item with full specifications Name of firm and rate of item
. Philips Loochi Gp. -Surya, Basant
1. Fluorescent tube 20 watts co~plete set I 95-00 60-00 90-0Q 75-00
2. Auorescent tube 40 watts complete set
C e iling fan , 3 blade, 1400 mm sweep
I .140-00 110-00 130-00 125-00
3. 1140-00 1015-00 1072-00 970-00
4. Ceiling fan , 3 blade, 1200 mm sweep 985-00 816-00 864-00 802-00
5. D .P.I.C ., Main switch, 15 ampere rating,
2 50 volts grade main switch with both
fuses 75-00 64-00 70-00 73-00
6. Compact fluorescent lamp (CFL)
' 9 watts 240-00 180:00 2 15-00 200-00
11 -watts 250-00 200-00,, 220-00 205-00
15 w.atts 270-00 235;00 245-00 . 235-00
1
 ELEMENTS OF ESTIMATING 1.5

Terms and conditions of supply :

(a) All the above prices nrc net prices and include exisc duty, central sale tax .
.(b) Local taxes if nny to be born by purchaser.
(c) All the materials arc ex-shop.
(d) 10% ctiscount will be given on cash payment for bulk purchases.
1.4.3.2. Electrical Schedule. Electrical schedule is that list or plan of the building by which we come
to know the number of points provided in each room of the building under estimation. We need to know
the ceiH ng outlet, bracket outlet, single pole three way and 4-way rotary switch, wall plugs and any other
special plug etc. in any room of a building under estimation. ·
1.4.3.3. Catalogue. For an upto date estimating and costing, an estimator, should always have quotation
and a bunch of price lists provided by whole-sale dealers and manufacturers of specific material. The quotations
and price list'alongwith specifications of material are called as catalogu~. We can get the complete details
of all the pr~ducts of a manufacturing from the catalogue. An intelligent and experienced estimator can do
the job by using the Cl:!talogue for prices and other relavent information. The estimator can further save time
if the information regarding the net price of each item after deducting commission and adding the local taxes
excise taxes etc. is available in the catalogue. This information in the form of a catalogue should be available
with evety estimator.
1.4.3.4. Recording of Estimates. Recording of estimates is an important task for the estimator. Tilis
l
recording of estimate is called 'project report' which should be bound a~d preserved in the form of a booklet
by the estimator instead of filing the project report in the form of loose pages. Tilis reduces undue labour
for the estimator. The project report in the form of book can be preserved for as long as the work is completed
and can serve for future references even after the completion of the project. It will be better if the project
report is prepared-on loose sheets and thereafter these loose sheets are bound in the form of a1 book. It will
be convenient to revise and make necessary amendments in the bound -r~port. •

1.4.3.S. Preparation of List of Material. Preparing estimation of the total material req1:1ired for a
proj ect ,and the total cost involved in the project is an important task of the estimator. The material required
for the completion of the project report with complete specifications of each item q1,1antity and rate of each
item with total cost for the item is recoraed in the fo~ of a material list. See a material table specimen
_ given be,low. At the _end of the material and cost table, the data of submission ·of the report and name of
estimator are recorded. The list of items and cost ·thus prepared is a part of project report and it should .be
filed and bound along with other pages of the report. This report in the form of material and cost table is
the ultimate result of any project report.

· Table 1.4. List of material

Sr. No. Name of item with ·full .R_equired -Quantity Rate Total ·Remar~
Specificationii cost Rs.
Quantity Unit Rs. Per
1. Double pole, iron clad, main I

switch, 30 Amp. rating;-250 V

I
grade 1 ' I. No. 150/-· - -each 150.00 As main
' ' control
- -switch
r I
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 1.6
ELECT RIC AL DESIG N ESTIM ATING AND COSTI
NG

m t .1·4 ·4• Dctcnn inntion of Mntcrlnl nnd Lnbour Cost.

The best arrangement of determination of required
. a enal is to prepa re n detailed mnterinl nnd cost list
ns mentio'ncd in Table No. 4 above . The total cost
invol ved on the project is completed in two steps :
(a ) Q uantity of m aterial nnd cost determination.
(b) Deten ninin g of labour chnrges.
.
. . (a) Whil e detcm ,ining the quantity of material for
any building, it is essential to pr: pare ~he plan of
build ing, marking electrical points , switch board and
main board (Energy meter a nd mam switc h board)
o n .the plan throu gh appro ved electrical symbols. The contro
l route starting from main. switch board to each
s wttch board and then from switc h board to electrical points
is marked on the plan. This plan becomes basis
o f the estim ate. A wirin g diagram is also separately
prepared showing connections to each point.
(,) The mater ial on main board is then calculated such
as selection of main switch, board for the main
sw itch, wire required for wiring the main board, apart
from selection of distributio n board .
(ii) The condu it or batten required is calculated
on the basi_s of installation plan.
(iii) The wire for wirin g the building is then calculated
sub-circuit-wise, this too on the basis of installation
plan.
(iv) Lastl y, the total length of earth wire required is
calculated.
(v) The neces sity of calculations for finding out quant
ity of other material such as switches, socket
out-le ts, switc h boards, lamp holders etc. does not arise.
Such materials can be found out directly
from installation plan. ·
The wirin g mater ial for any building can be calculated as
given in chapter 17 of this book. The material
thus calculated is recorded on the material table.
1.4.4 .1. Deter mina tion of Labo ur Cost~ To arrive at
a final conclusion for determ inatio n of labour
charg es for wirin g a partic ular building is very diffic
ult. It is because of the facts that labou r charges are
diffe rent at the differ ent places. For iristance,'in cities
, a trained electrician may charge R s. 150/- a day but
in rural areas an equal ly trained electrician may be availa
ble ~t Rs. 80/- a day. It is therefore nec.e ssary to
arriv e at a com~ on concl usion on the aspec t of labou
r charges. The labou r charges are decided as under :
'(a) As per work duration and work amou nt i.e. actual
labour cost as paid to daily wagers.
(b) As per unit work basis.
(c) As per perce ntage of material cost.
(a) Wor k dura tion and work amount. If the
wiring work is to be comp leted on the basis of work
durat ion and work amou nt, then the skilled workers are
employed on daily wages. The decis ion to employ
number of perso ns depen ds upon number of electrical
points to be wired, ~ssurning wirin g of main board
equiv alent to four point s and fitting of any switch board
equivalent to two electrical points. The number
of electr ician s, wirem an and other person needed for
the j ob can be determined on the basis of number of
points to be wired and numb er of days the job is likely
to be completed. The labou r rates are decided on
the basis of preva iling labou r rates in the city or s uburb
an area. ~ he numb er -of days a wireman and his
ass is tant are likely to take is calcul ated as under. ~

The number of days one wireman and one assistant

will take to comp lete the work
No. of points to be wired
' ·
- No. o f point s they ~Ee lik~ly t~ wire i!) one day
The numb er of points which a wireman and his assistant
are likely to wire, is menti oned in PWD (Elect.)
work sched ule o f the depar tment. The lab~~r rates for
all catagories of labou rers ar-e also mentioned in the
same Gaze tte. The labou r rates are revised by the depar
tmenr from-time to time. T he table mentioned below
is c ompl eted to ascer tain the total labour payment.

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 ELEMENTS OF ESTIMATING
1.7
I
Table 1.5. Labour rates and total payment
Sr. No. Class of labollr No. of Rate per day Total Payment Remarks
days
Rs. Paise Rs. Paise

(b) On Unit Work Basis. This is very simple and prevalent system to detennine lab?ur char~es for
a work. In this system, the total number of points in the building are counted which includes installation
of main board and switch boards. The labour rate per unit is paid to an approved contractor in the case of
govt. buildings and to an individual trained wireman in the case of private building. The total payment can
be calculated from the table mentioned below :

Table 1.6. Total Labour Payment

Sr. No. Description of unit work conduit/ No. of Rate _., Total Payment Remarks
Batten system of wiring points Rs. P. Rs. P. ·
I. Main board installation 4 20.00 80.00
2. 15 switch boards @ 2 poinJs for each
switch board 30 20.00 600.00
3. Installation of bell push button and
laying underground wiring up to main
gate @ 6 points per bell 6 20.00 120.00
4. Total points light/fan/sockets 46 20.00 920.00
Total labour charges Rs. 1720.00

(c) As per percentage of material cost. In this system a fixed percentage of the total material cost
is counted towards labour payment: This percentage may be 15%~ 20% or 25% depending upon type of
wiring. The payment of labour is calculated from the table given below : ·

Table 1;7. Determination of Labour Charges

Sr. No. Description of material Rate
Amount
Cost (say) % of total material Cost
I. To tal cost of wiring material 6115-00 15 percent 917-25
Rs. 920-:00
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1.4.5. Knowledge of Purchase System. It is the prime responsibility of head of the PWD-Elect. deg_artment
of the area to know the· system of purchase and make the desired wiring material available for the project
in hand. It is also the duty of the purchase officer of the departrpent to purchase the material at lowest market
rate.
 l.8 IJLECTRICAL DESIGN ESTIMA'f'ING AND COS TING

TI1 • . d I required for the completion of ele lr'

c matenal means the wiring material instruments nn too 5 . c 1ca1
part of ti
.
• ' .' lbl r10 proper storoge and issue of the m t •
le proJcct. TI1e department officer 1s nlso respons o r . , . . . a _cnaJ
requlred from time lo lime. TI1e deportment also ensures proper uuhty of material u nd er ~heir supervision
~nd also keeps a complete nccoun t of mnterlnl used on tho project from day_to d?Y· Any Ite m fallen short
in th e st0 re is purchnsed and arranged to issue the some ns nnd when necessity arises. Therefore, complete
knowJc?gc of purch ase syste m is compulsory on the part of deportment. The department has to ensure that
th e ProJccl work is not stopped due to lack of malerinl.
(a) Purchase system nnd duties of purchosing deportment: We know lhat th e purchase department
of the P\VD Elect. is responsible for making purchases nt lowest ma~ket rate a n<l_ make arrangement for
Slorage so that the material required for the project in hand is made available. For th1s purpose, the purchase
department should keep the following points in view : .
(r) Market survey should be conducted from time to time t~ know the lateSt pnces of the materials.
II ~~r) The material should be purchased, the quantity of which is ? n demand.
(m) The desired quantity of material for the project should be purchased on lowest market rates only.
(iv) The purchase officer should keep a record of latest rates of various items likely to be purchased.
(v) Some important material should be kept stored so that it is made available in emergency.
(vi) The purchase officer should seek approval of his sen'ior officer before initiating purchase system.
(vii) The quality and quantity shoutd be got varifi_c d from the officer-in•charge of the project or by a
team of experts appointed by senior officer before passing orders for.making payment to supplier.
(viii) The account should be maintained in such a way that the cost of rejected material (rejection made
by a committee of experts) is deducted from the bill . of the supplier.
(b) Procedure of Purchasing. The following sequence of procedure is adopted to purchase the material
desired in completion of the projec t :
(i) Requisition
(ii) Call of quotations
(iii) Comparative statement
(iv) Purchase order
I. (v) Inspection of material
(vi) Release of payment as per terms and conditions. .

I (i) Requisition : The demand of various items of material and quantity is obtained from various
departments of the project in hand. The list of itemss h·ould consist of complete ·specifications of each item
I a nd the quantity required. The list thus pre·pared is finally ,sent to the purchase department. The list is to
' be s ubmitted on a form called requisition fonn ·which· is:availabJe· in every departme nt. .
Table 1.8. Requisition F(?rm
;/ Requisition Serial No. _ _ _ _ __ Date _ _ _ _ __
To
I Senior Purchase Officer
PWD Electrical Department .
Looc hi Nagar \
NILOKHERI (Haryana) .• 1 . • •
~ndly make _arrangement for purchase of following it~ms of material for po~er wiring of P_olyteclwic
worksh op under construction upto-dated ______. . _ _ _ .. ,

Sr. No. Complete specification of 1J1aterial, . . ·Quantity? Remarks

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l. :
Ii "
2.
I 3.

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 1.9
ELEMENTS OF ESTIM ATING

_ _ __ _
Stock register serinl No. ___ ___ Stock alrem.l y in honcJ
Max imum demnnd qunntity _ _ _ _ __
Minimum demnnd qunntity _ _ _ _ __
Signature o f Requi si tion offi cer
Signa ture of Store Inchargc
Depar tment

Purchase order serial No. _ __ Name of firm given purchase order

For use by the
purcha se depart ment
Signa tu re of varifying office r _ __
Signa tu re of receiv ing office r _ __
Seal of departme nt

departme nt It is not possib le to make

The req uisition form is the basic docum ent of the purchase
the project incharge. The requis ition is alway s
departmenta l purchases without receiving requis ition form from
and the remaining two copies arc sent to
prepared in triplic ate. One copy is retaine d in the office record
ition form in their registe r and furthe r necess ary
purchase department The purchase department enters the requis
order by the purchase o fficer to the firm , one
action for purcha se is initiated. After issuin g the purchase
so that a co-ord ination is maint ained betwe en
copy is sent back to the office r who has sent the requis ition
supply order, date of suppl y order etc .
11. the two departments about the name of firm , conditi on o f
(ii) Call of quotations : A fter receiv ing requisition from
various departments, the purch ase department
list. Issuing registe red postal letters to vario us
issues letters to several registe red suppl iers for calling rate
g of quotati ons' . The quo tation s are called in
reputed suppliers for their compe titive rates is called 'callin
t•.vo ways :
(a) By issuin g individual letters by registe red post
letters to suppli e rs.

(b) B y newspaper advertiseme nts which is called

tender notice.
e r' or ' Open Tende r' and the quota tio ns
The adven iseme nts thro ugh newspaper are called 'Publi c Tend.
issue of quotation throug h newsp aper depen ds
called from registe red suppli ers are call ed 'limited tender' . The
purchases, the rate list i_s called from suppli ers
upon quantity and cost of materi al to be purchased but for small
_throug h reg istered letters .
office r afte r collecting quota tions from
Some e merge ncy purchases are made directly by the purch ase
limited period are called short tenders.
local suppli ers personally. Such quota tions coll ected within
to be purchased so that the correc t material
The suppli er is g iven compl ete specificati ons for the materi al
purcha se department should inform the suppli ers
·accord ing to laid specificati ons is supplied by the supplier. The
as to how long the _quotat ion is valid say for 6 month s or
one year. ..
A samrle letter fo r call ing of quo tation is given below .
.,.
 1.10 ELECTR ICAL DESIGN ESTIMATI NG AND COSTING

Registered
From
Principal,

I
I
I To
Govt Polytechnic Shnmgnrh
Haryann

Mis Ghnngns Enterprises Ltd.

G hangns Road, Khangura Nagar
Rara Sahib, Ludhiana
(Punjab)
Memo No. Q/PK/2/20()()
Dated
-----
Subject : Quotation
Dear Sir,
You are requested to send your lowest quotations and intimate the terms of payment and delivery period
o n our own terms and conditions :
1. The last date for the· receipt of quotations will be 15-3-2000.
2. The quotations will be valid for a period of two months from the date of issue of this letter.
3. Please submit the bill in duplicate for the cost of material supplied alongwith the material.
4. The payment of bill will be made within one month from the date of r~ceipt of material in good
condition . ·
5 . The material will be supplied by you exectly according to the specifications laid down as under.
6 . The railway re~_e ipt will be required to be despatched by 'registered post' direct to this office and
not through bank.
7. The envelope containing quotations will be subscribed as 'Quotation' .
Sr. No.
-
Description of Material Quantity Required
I. M .I. Ammeter portable type 0-5 A 15 Nos.
2. M oving coil voltmeter portable type 0-250 volts I
10 Nos.
,, 3.
4.
5.
t
Principal
Govt. Polytechnic SHAMGARH
(Haryana)
1.4.S.1. Opening the tender or quotation. Normally, the tenders or quotations are received before the last
date for receipt of quotations . The tenders or' quotations are registered in the receipt register m aintained in
the office. The tenders or quotations are opened by a committee of three responsible officers in the presence
of suppliers or their representatives on the date and time mention in the quotation-letters. To ensure that
there is no change of rates after o pening the tender/quotation, the committee of purchase officers put their
signatures on each page o f quotation/tender. Another entry to be made on each quotation/tender is that the
serial number of quotatio n opened out of the total number of quotations/ tenders received in the office. This
should be clearly written on each page of the tender/quotation and entry circled. For instance, if first quotation
I out of seven quotatiors is opened, it will be marked 1/7 in circle.
~ -

~
 ELEMENTS OF ESTIMATING
L.l l

purchas e clerk prepare s

1.4.5.2. Comparative statement. After openi ng the quotati ons/tenders, the
ng comparative stateme nt is
a compar ative stateme nt on a form avnilnb le in the offi ce. TI1e aim of prepari
offered by a supplie r can be
to make a compar ison of rates quoted by differe nt s uppliers. The lowest rates
condi tions and tenns of supply
seen directly from a single page. The comparative stateme nt should include
thoroug hly checked by an offi cer.
offered by each supplie r. TI1e comparative stateme nt thus prepare d should be
constituted to examine in detail,
A commi ttee of purcha se officer , technical advisor and a accounts officer is
by each firm are marked
the rates and terms of supply offered by each supplier. The lowest rates offered
is exectly as per specifi cations .
for issue of supply order after ensurin g that the material offered for supply
money becaus e, in case
The firm selecte d for issue of supply order is asked to deposit some earnest
is fore feited. In case he supplie s
the supplie r fails to supply the materia l within the due date, his earnest money
is returne d. Someti mes, all finns
the materia l well in time and also as per specifi cati ons, the earnest money
ith the quotati ons or tenders .
to whom letters of quotations are sent are asked to dep osit earnest money alongw
earnest money will be discuss ed
This way, the supplier is bound to supply the material in full . The subject of
in detail later on in this chapter.

Table 1.8. Comparative Statem ent

Name of Office of Date
Purchase Officer. _ _ _ _ _ __
Tender Quotat ion Notice No. _ _ _ __ Due D ate of opening - - - -- - . T im e _ _ _ _ __
Approved Requis ition No. _ _ _ _ __ No. of supplie rs to whom quotati o n letters sent _ _ __
No. of suppliers offered quo tations _ _ _ _ __
· l. 2. 3. 4

Quantity Mis - Mis - Mi s - Mis - Recom men-

Sr. No. Full specifications of item
Required dations

--- .
1.
2.
3.
4.

Name and designa tion of . Name and designa tion of Chief Purcha se Officer
person who prepared the statement inspection officer
Seal
/ Signatu re _ _ _ _ _ _ _ _ __
Signatu re _ __ _ _ _ _ _ Signatu re
cases such a~ hospita l, .
_The~e s~m~ld be at l~ast three quotations for issue of supply ~rder. In some
suppliers, the. supply order m ay
tec~nic al rns t1tut1on s, etc. 1f there are only two quotati o ns receive d from
red ink for clear ide ntification.
be issued to the party offering lowest ra_tes. The lowest rates are marked with
scale purchases after
1.4.5.3. Purchase Order. If the purcha se officer has to piace orders for large
's approv al is necessa ry so that
approval of quotati ons, then the admini strative officer and accoun ts officer
_
necessa ry fu nds are made available before issue of supply order.
l strictly as per quotati ons
The supplier selected above is issued purcha se order for supply 6f materia
If the supplie r fai ls to supply
offered b~ the p~rty on terms and conditi ons laid do wn on the quotati on form.
ed by the ·suppli er is forefeited.
the materia l or vi olates the tenns and conditi ons, the earnest money deposit
 DESIGN ESTIMATING AND COSTING
I. I 2 ELECTR 'CAL '

Specimen of Purehnse Order

From
Executive Engineer,
PWD Electrical Department,
Karna) (Haryann)
Memo No.
Dated : ------
To
Mis Ghangas Enterprises,
Ghangas Road, Khangura Nagar
Rara Sahib
Ludhiana (Punjab) .
Subject : Purchase order for supply of material to PWD Elect. Deptt.
Sir,
• letter No. _ _ _ _ _ d ated - - - -. The rates offered by you r
R e fierence to your quotation
firm have been found to be minimum and the terms and conditions offered by your firm have been acceptable.
Kindly supply the following material on terms and conditions ·already agreed upon.
Sr. No. Qffantity Rate Total Amount Remarks
Name of item with
r
full specifications I..

1.
11 2.
-
·I 3.
4.
'
5. . .
The terms a'nd conditions are once again reproduced here.
l . Last date for receipt of material is _ _ _ __
2. For all legal disputes, the jourisdiction will be Kamal.
3. Send 20% of the cost of material as earnest money before supply of material is undertaken.
4 . 50% of the cost of materi_al will be deposited in your bank accou!lt_and _the balance amount will
be paid only when the material quality and quantity is varified and material received in good condition.
5. Form 'D' will be issued to your firm for·exemption·in sales tax. '
6. The rates are F.O.R. nearest railway station.
7. All local taxes will be p~d by us.
I Signature
Executive Engineer PWD Elect.
\
Copies for information and necessary action to
1. Store incharge
2. Accounts branch n
3. Requisition 9fficer p
4 . Security officer of the department /.
5 . Copy for purchase office.
Signature
.0
Executive Engin~er PWD Elect.
 ELEMENTS OF ESTIMATING 1. 13

TENDER
An offer in tem1s of rates made by the supplier or manufoclUrer on a prescribed form enclosed in
a sealecf"envelope, in reply toiitcnder nolice for supply of material on the basis oT some terms and conditions
iscalled tender. Some money is deposited alongwith the tender which is called earnest money. The earnest
money is a guarrantec by the tenderer that the party is bound to s1,1ppJy the material if its te nder is fou nd
to be competitive but on pre-detcnnined eondit/ons only. 111c comest money is sometimes called scc~rity ¥
deposit. If the supplier fails to supply the mnlerial even after receiving the supply order, the earnest money
deposited by the supplier is forfeited.
Tender Notice : 111e informalion to be made available for certain heavy purchases through the news-
papers is called 'Tender Nolicc' .
The tender notice is given in all major news-papers of the region. The tender notice is given for large
scale purchases or for purchase of costly equipment such as installation of power wiring in a large ind ustry,
for installation of sub-station, for purchase of heavy duty generator etc. The tender notice co_ntains information
of material to be purchased, i.e. complete specifications, its approximate cost, quantity, last da te for. receipt
of sealed tenders, cost of tender form and the earnest mo~ey to be deposited alongwiOi the tender. The supplier
can quote ra tes only on tender form prescribed by the department. The tender form contains every information
(as given in tender notice) and complete specifications of the material, shape, size, rating and other relavent
information about the material to be purchased apart from blue print or drawing of the material (the drawing
is supplied where it is necessary). The tender notice contains terms and conditions of supply.
fiuide-lines for inviting Tender
1. The tenders are invited on a tender; form prescribed by the purchase department. Once the tender
notice is publishec:J in news-papers, the changes or amendments if any, are also got publis_h ed in the same
news-papers. The changes or amendments are first approved by the purchase officer.
2. The sealed tenders are invited publically through news-papers.
3. The tender notice should have f~Ilowing information mentioned clearly _:
(a) On what dates and timings the work site or further details o f purchases can be seen and examined
by the supplier_or contractor. The offices whe~e tender forms -<:>r relavent information is available.
The amount of earnest money etc.
(b) The date, time and place whe(e· ~enders are to be opened. ,
(c) The amount.of earnest money, security deposits and the mode of deposit i.e:, through bank draft,
1
cheque etc.
(.d) The officer authori~ed to accept, reject or open ·the tender.
1
4. For heavy purchases, the contractors or suppliers should be given at least one month \s time from
the date of issue of tender notifications t9 file their tenders.
5 . All tenders fo~ the concerned work should be opened in the presence of contractors · or their
representativers by the officer officially authorised by the department on the date and time, as, mentioned
1
in newspaper notific.ation. . · . \ .
· 6. The earnest money to the unsuccessful contractors or suppliers should be returned at the earliest,
pr:obably on the same day after the disposal of the tender.
7. Normally, the tender offering lowest rates is accepted but the contract can be rejected if full earnest
money is not depo'sited with the . tender. If the ~ontra~tor offering lowest rates has · complaints ~f poor
performa nce in the past contrac ts (it sh? uld be officially on record), his tender can be rejected.
AN EXAMPLE OF TENDER NOTICE
The tender notice is given in all the prominent daily news-papers of the country. A detailed example
,0f tender notice published recently in 'Hindustan Times' is reproduced here.
 1. 14
ELECTRICAL DESIGN ESTIMATING AND C OSTING

I Hnrynnn State Electricity Bo~;~ KV Grid Sub-Station

I. Ofli
ice of the Superintending Engineer (PurchnsCS)
Pnnchkuln (Hnrynnn)
II No. 2000/Pl<JHru-n 26 Tender Notice Dated : 10-2-2000

I at grid1. Scaled
b
t d . . . I ·
. en crs nrc mv1tcd for the purchnsc ond mslo lotion °.
f 132 kV/33 kV transformer for in tall .
h ) HSEB s al.Jon
Panchkula.
-
S r.
No.
su -stntto ns on fon11 'C • on behalf of Superintendent Engineer (Pure ases
· n of 111atc1inl
Dcscn ·p rro
Q11m1tity Approximate Earnest .
money
Cost of
tender
Date of Class of Date of
comple- contrac- opening
--
cost tion of
form tor of
work and eligible tender
date of f o r the wirh
receipt of contract time
Rs. tender
1. Power transformer -
20 MVA 20 32.5 5000I- 75/- 22-2-2000 class-1 27-2-2000
3 phase, 50 Hz, 132/33 Nos. Lac 22-4-2000 to 2 p.m.
kV• with all protective class V
a n ct :ap ch anger
I
components F .O .R .
·1I Panchkula HSEB store and .
I
installation at site

II Note : Earne~t money should be in the form of Demand Draft in favour of Superintendent Engineer
(Purchases) Haryana State Electricity ·B oard Panchkula. .
. For Special Attention of Contractors : Contractors mentioned at serial No. 8 above and registered
with Superintendent Engineer Chandigarh are eligible to apply for tender form. The tenders can also be
accepted from unregistered contracto·rs whose annual tum-over is Rs. 5000000/- and belonging to Panchkula
lI or Chandigarh. But such contractors should register themselves with' the Superintending Engineer in the
above mentioned class of contractors before their-tender form is accepted or within one month from the
date of submission of the tender form which ever the date falls earlier, otherwise, their tender is liable to
be rejected and earnest money forfeited. The contra~tors should know clearly that production of attested
copy of registration form alongwith ·application for issue of tender form is essential. Apart from this, the
contractors s hould also produce copy of their income tax return (copy of income tax return which is filed
a nnually with income tax department).
Availability of Tender Form : The tender forms will be available on payment of Rs. 50/- in cash
from the following office on any working day from 10 a.m. to 5 p.m.
(i) Executive Engineer l32 kV Sub-Station Ambala (Haryana)
I I (ii) Excutive Engineer 132 kV Sub-Station Sonepat (Haryana) ,
(iii) Excutive Engineer I 32 kV Sub-Station Hissar (Haryana)

I The tenders can be handed over by registered post or personally. It will be in·the intefest of the tenderers
that they should deposit the tender fo_rm·personally to avoid any delay or loss during tr~nsaction. No tender
will be accepted after due date.
Opening of tender form .
The tenders will be opened in the office of Superindent Engineer (Purchases) Panchkula on date and
I I time already mentioned in the tender form in the presence of Superintendent Engineer' and two other senior
officers authorised by Chief Engineer. The contractors are supposed to be present personally at the time
of opening of tender form . ·

j Terms and conditions .

1. The number of power transformers to be purchased and their installation can be 'incre~ed or decreased
,--. · depending upon situation. The number given in the tender form is just an estimaied requirement.
 I.I S
ELEMENTS or ESTIMAT ING
2. No lender without the enrnesl money cnn be accepted. The demand draft in favo ur of the said officer
should be pnyoble ol the local bnnk only. 111e demand draft should be valid for mmimum o f six
months durn1ion from the dole o f opening of tender fonn .
3. 171e responsibi lity o f dnmngc to the transfonner during transportation wi ll be that o f the
supplicr/conlrnctor. 171c deportment wi ll not be respons ible for that unde r any circ umstances .
4. T he 1rnnsnorlalion of 1rnnsfonner uplo worksite including load ing a nd unloading will be that of
the supplier.
5. Tenders should be subm illcd on prescribed tender forms duly signed by the te nde re r o n eac h page.
6. All entries by the tenderer should be in ink of some colour. Erasing ~nd ovcrwritings arc not allowed.
A ll corrections must be signed by the tende re r.
7. T he scaled tenders will be accepted. Unscaled Lenders will not be accepted.
8. T he scaled envelope contai ning tender fonn should also indicate o n it the (a) te nder notice number
_ _ _ _ _ _ dated _ _ _ _ __ (b) Name of newspaper in which te nder notice was p ublished
(c) Lnsl dale o f submissio n of tender form (d) name of tenderer should be very clearly w ritten.
9. One contractor ca n submit one tender form only.
IO. The tenders can be accepted only from registered contractors only. The unregistered contractor can
subm it the tende r fonn on certain conditions which can be seen in the above office personally.
11. T he Superintendent Engineer reserves the right to accept a ny tender or can approve any part of
the te nder. T he tenders can be rejected without assigning ·any reason.
12. T he parties whose tenders are found to be offering comparatively high rates w ill receive back their
earnest money on the same day.
13 . The party or contractor whose lender is accepted must sign the contract bond o therwise , their earnest
money is liable to be forefeited to Govt. and tender cancelled.
14. The m aterial as per laid specifications will only be accepted. Any m aterial found to be not as per
specifications will be rej ected and that material will be carried back by the contractor at his own
expenses.
15. ~f the party does not supply material even after acceptance o f the tender a nd issue of supply order,
in that case, his earnest money will be forefeited .
I 6. If the o fficer responsible for purchases and issuing tender notice d esires , he can exte nd the date
of filing o~ te~der._But this ex~ension o f date will appear in all m aj or newspape rs of the regio n.
17. The followmg mtenm penalty will be deducted from the bills of the contractor in case of slo w interim
progress of supply/work.
S. No. % of completion period % of progress required Panalty in default
I. 25% -10% I% of bonded amount
2. 50% 30% 3% of bonded amount'
3. 75% 60% 6% of bonded amount
4. 100% 100% l 0% of bonded amount

18. T he contra~tor will submit the following d ocume nts alongwith their bill :
(a) No c laim certificate.
(b) B a nd L form.
(c) H~~d ing o:er c harge paper on inventory · form duly signed by the user department concerned
failing which an amount to the e xtent o f 5% of the bill will be deduc ted which shall b '
refu nda blf ~ he n complied with. e
19. A ll bills .are su bject t~ a deduc tion o f 10% tow ards security which is refunda ble at the e nd o f o ne
year ma mtena nce pen od from the date of actual completio n of the work.

I
 1. 16 ELECTRICAL DESIGN ESTIMATING
ANoco
SllNc
20. The work/suppl y by the contractor can be got examined by the Govt., from any oth
, . . I 1· d . er auth0 .
even outside the department ond any defect m the work/maten a supp ie pointed out b th rity,
· d d d t' y eni ·
have lo be rectified by the contractors at their own cost an e uc ion proposed on acco Unt of w111
bad
· b' ll
w o rk or defeclive supply will be deducted from ti1eir I s.
21. All the papers signed by the parties to this contract ond bond .together and scaled shall b
. f e deern
d
to fom1 part of t11c contract bond ond shall be rend as con !lions o contract. Cd
Sd.
Superintend ent Engineer (P
. U~ h~e )
HSEB Punchk s
Ula
Haryana
E::dcnsion of Date of Tender
No. 2000/PK/H ar.n27 Date 22-2-20Qo
The tender notice published on behalf of Supdt. Engineer (Purchases) No. 2000/PKJH ar·1726 dated
_I 0-2-2000 in connectio n with purchase of 132 K.V. Power tr?nsformer, the date of receipt of tender forro
1s hereby extended upto 3-3-2000 ( 11.30 a.m.). The tenders will now ~e opened at 2 p.m . on the same day.
The terms and conditions will remain same.
Supdt. Engineer (Purchases)
HSEB _Panchkula Haryana

V Earnest Money : It is the money which is deposited by the.tenderer with the officer who has issued
tender notice as a guarantee to supply the material and also to abide by the terms and conditions laid down
in the tender notice on acceptance of his tender. The earnest money in the form of a demand draft payable
in favour of the officer is deposited alongwith the tender form. The. earnest money is refunded back to
unsuccesfu l tenderers and adjusted in the security deposits of the successful tenderer.
✓ Secu_r ity Deposits : It is that amount which is deposited by the ·succesful tenderer with the officer
responsibl e for purchases, as a guaranttee that the material will be supplied as per terms and conditions or
the work will be completed as per agreement and well in ~ime. A total of IOo/i: of the total cost of material
or 10% of the total expenditure agreed for the work is deposited. This amoun~ includes earnest money also.
The security can be deposited in cash or 10% of the amount is deducted from the running bills. The security
thus deposited is returned back to the party after satisfactory completion of work or after satisfactory supplies.
The security deposits are forefeited in the event of unsatisfactory work or supplies.
QUOTAT ION
An offer in cenns of rates made by the supplier or manufacturer in a sealed envelope in reply to a
quotation Jetter for s upply of material or undertaking some work on the basis of some terms and conditions
(

(
is called "Quotatio n". The letter of quotation is released to selected partie~/~uppliers only. 2

The quotation letter addressed to various suppliers/manufacturers for supply of material upto a maximum C

of Rs. 20,0001= sho~ld contain 1~omplete. ~pecificati~n of material, quantity, last date .of receipt of offer,
date and time of openmg of quotatlon, cond1t1ons of dehvery, payment of local taxes, rates .valid upto (months) (

from the date of issue of quotatiqn etc. · a

C
The quotations· are called 'f or small purchases where as tenders are called for1Jarge scale purchases/
sales or a work exceeding the amount of Rs. 2?000-_00.
0
The requisition form, quotation form, compara!iv~ statement form and purc~·a se order form are same
as L\Sed -for tenders. . .
/
 ELEMENTS OF ESTIMATINO 1.17

1.5. OTHER IMPORTANT FACTORS OF ESTIMATING AND COSTING

111e factors mentioned below rtre nlso equally lmportnnl in eslimnllng ond costing. The subject will
remain incomplete if due wcightngc is not given to the undcnncntioncd factors :
1. Contingencies.
2. Overhead charges.
3. Supervision charges.
4. Production cost.
.)
5. Profit.
a 6. Storage charges.
a 7. Tools and plant charges.
8. Total cost.
1. Contingencies : During completion of the project, there can b'e certain emergency expenses which
cannot be calculated while calculating the material, cost and labour expenses for the project. These additional
emergency expenses which may be due to any reason such as increase in cost of material or increase in
m labour rates etc. Such additional expenses are called contingencies. For this, 3% to 5% of the material cost
.y. and direct labour cost is estimated to be on contingencies. This amount fully compensates additional material
cost, labour cost and other allieds expenses which could not be accounted for. These expenses may be due
~s)
to natural calamities such as floods , earthquake, storms, hailstorm etc.
_n a
2. Overhead charges : In addition to the total estimated expenditure involved on material, labour
etc., for completion, maintenance and proper functioning of the project, there are other expenses which are
1ed to be incurred such as Govt. taxes, Additional expenses on labour etc. are called overhead charges.
wn These overhead expenses are incurred daily in one form or the other for instance, purchase of petty
ble items of material, salary of administrative staff, rent (if any), travelling expenses, advertisements, insurance,
to electricity, water, transport, procurement of machines for use in project, instruments, tools, depreciation, repair
office stationery and maintenance of buildings etc. are part of overhead expenses.
Normally 10% to 15% of the total estimated material and labour expenses are spent on overhead
.cer
expenses. For convenience on administrative point of view, the overhead expenses are divided into two
5 or
catagories :
:rial (a) Maintenance overhead charges on installation .
.lso. (b) Administrative overhead charges.
1rity (a) Maintenance overhead charges : This expenditure is on keeping the machines in working order
lies. i.e. expenditure involved on over hauling and spare parts of the machines which normally occur due to wear
and tear of the machines. Apart from this, the water charges, electricity charges, house tax and depreciation
charges on components and instruments also fall in this catagory.
(b) Administrative overhead charges : Funds are required to run the admlnistration of various
to a departments and their employees properly and efficiently. The expenditure involved on functioning of the
fons departments such as purchase section, sale section, salaries section, accounts section etc. fall in administrative
overhead charges catagories. The other expenses such as, office furniture, stationery, reception and stay
arrangements of guests, payment of commission on sales, publicity of products, despatch of material, price
11um
control, transport, sales tax, pay~ent of salaries t~ employees etc., are part of administrative overhead charges.
)ffer ,
nths)
3. Supervision charges : A contract is given to professionally trained and expert engineers to supervise
the project work and offer expert opinions on various aspects of the project. The payment of contract money
and other expenses involved on the team are called supervision charges. The expenditure on supervision
1ases/ charges is 1% to 1.5% of the total cost.
4. Production cost : When cost of' material fo~ the prpject is added to labour cost on the project and
same overhead charges on this product, it is called production cost or1 '
 1 .18 ELECTRICAL DESIGN ESTIMATIN G AND
cosi-1Nc;

. . I + Overhead expenses (mamtena ncc ' adrn1. n1strat· ELE~

Produet1on cost = Cost of matcnal + Labour c iarges IVc
, ,
Ood superv1s1o n charges)
arc n
S. Profi ts : 111c profits nrc calculated on the basis of total expenses involved on lhe project the \
up to completio n stage nnd the contract money signed while signing on agreement on lender. Thi so far d1ffc
can be from 10% lo 30% or even more if expenditures nre controlled andI full' effi.ciency is excrciscds Pro_fit
d %11
c
working on tJ1e project. 111c profit percentage cnn foll in the event of poor p annmg, 1110 equate and incffi not ,
staff, lock of proper su1,crvision, purehnsc of inferior qunlily b rnotcriol on comparati vely higher rat cnt
ic1
II df · · cs etc
. °
If esLimatc has been prcpnrcd occuratcly, definite percentage hos cen owe or conttngencies and stand·
· (clas
ing or p1
charges. then some percentage of profit is added. It Is profit lo contractor.
6. Storngc char<>cs : After 1,urchnsc of moterinl, the cost involved to transport the material to store
"' . b I d' Wh~
g the mnterinl 10 work site, lo our expensesI on oa ing and unload'ing the·
transpm1 expenses. on transportin
• .
material arc called storage expenses. TI1e expenses arc 2% to 3% of the Iota coSl on purchase of material high,
by tt
7. Tool
•
and plant charges : 111c machines, equipments and tools arc .required to conduct the Work
on the proJcct. TI1c expenditure on purchase of tools components and machmcs arc not accounted C as u,
overhead charges. TI1is expenditure is .made a part of depreciatio n on tools, equipmen as
ts and machincsorand
. Thi .
expenses . on damage and breakage losses are called tools and plant expenses. s 1s 2% of the total cost
on a
on matcn al. there
h
8. Total. cosL The total cost on the project means, product of material cost, labour charges and ove re~ offie,
charges, contmgen cies and supervision charges. The total of all expenses thus occurred on the project 15 profc
t called total cost. 111e total cost on the project can be calculated as shown in the table below.

I Sr. No.
Table 1.9.

Detail of expenditure of all types Expenditure Remarks

S. t-

in l.Acs

1. <:;ost of material for the project 7.00

2. Expenditure on labour 0.75
3. Contingen cy emergency expenditure on
material and labour 3%· of cost of material 0.21
4. Overhead expenditure on cost of material and
labour 11 % i.e. 11 % of 7.75 Lacs 0.85
No . .
5. Total 8.81 Subn
6. Supervision overhead charges on all above
expenses @ I .5 % 0.13
Total cost 8.94
R ounded off to Rs. 9.00 office
of th
BRIEF QUESTIONS WITH ANSWERS . put tc
repai1
Q. What is the difference between .a tender and quota tion.?
•
Ans. 1. The quotations are called for purchases/sale or a wo k ti the amount not exceeding 000/- of thi
whereas tender notice is issued where the work costs beyond rRs.or20 OOO/= Rs. 20, -
beyo,
2. Earnest money is to be deposited by contractors alon with th~ · . . • ·t in the n
the office but no earnest money is required to be submitted gl . tender form_ while submitting I
a ong with the quotation. ,
 l. 19
ELEM ENTS OF ESTI MAT ING
n 1n lhc te n<lc r
sed if the te rms ond cond il1o ns agrce<l upo
3 . M odc rnte to heav y pena lty can be impo no t comp lete
pena lty c nn be impo sed 1f the cont rac to r docs
are no t ho nour ed by the conl rocto r. Por ins tance , the c c an he a mino r
docs not motc h the give n s pecificati o ns . ( fhcr
the work well in time o r the m ateri al s uppl ied
o utrig htly rejec ted).
differen cc, othe rwise mate rial s uppli ed is the ma terial
impo sed o n the cont rac to r o r s uppl ie r bul
In the case of q uo tatio ns, no pe nalty can be t c ase .
ted ond no pny men l ca n be re lease d in tha
no t confonni ng to laid s pecif icati ons is rcjee catago ries
natio nal level news pape rs for notice to vario us
-4.- TI1e tende r notic e is publ ished in nil loca l nnd repu ted s uppl iers
quo tntio n lette rs ore issue d to s e lecte d a nd
(clas s A, class B , c_!pss _C ) o f cont rac to rs but
ri nl).
o r purc hase rs (in case o f dis posa l o f mntc ) thro u gh a u ctio n .
Q . Wha t is m ent by nucl io n ? Som e old m achi nes nre to h e dis p os ed off (sold
m achi nes ?
com plete p roce dure r ight from s ubm issio n of s urve y r epor t upto disp osing ofT the
Wha t is the pers o n o ffe ring
disp osing off o r sell ing the mater ial to the
A n s. A u ctio n . Auct ion mean s, proc ess o f com m ittee form ed
rs (bidd ers) at the spo t in the prese nce of the
hig hest rate in com pe titio n with othe r purc hase
by the senio nn ost offic er. tio n is give n
os ing off (se ll ing) the mate rial thro ugh a uc
Proc edur e. The com ple te proc edure for disp
as unde r. the m achi nes
rt is to be subm itted by the perso n in char ge of
I . TI1e repo rt popu larly know n as surve y repo omic al repa irs ,
ines a re no t in worki ng o rder a nd beyo nd econ
o n a presc ribed fonn in lrip licate that the mach d to the scni onno st
o ff. The s urve y repo rt s ho uld be s ubm itte
there fore, the m ac hines sho uld be dispo sed ed ia te boss . The
thro ug h prop er c hann e l i.e. throu g h h is imm
offic er by the perso n inch arge o f m achin es
n as unde r :
profo rma as a samp le s urve y repo rt is gi ve NA
TOO L FAC TOR Y RAR A SAH IB LUD HIA
GHA NGA S CO- OPE RAT IVE MAC HIN E
SUR VEY REP ORT OF STO RES
Rema rk
nj,1io11 -Va/11 e 011 the book Date Present Remarks by Rema rk
S. No. N11m ber or · Desc or orders
of va/11e the Oi l 011
Q11a11tity of Article Rate A11101111t of
receipt ca11se of article orders
f or being of COIi- sanction-
Rs. P. Rs. P. ing
11nservica ble trolling
offic er a11thority

N o . __ __ _ D ated _ _ _ __
N o. _ __ _ D ated _ _ __ nece ss ary
R eturned to _ __ _ __ _ _ _ __ for
Subm itted to _ _ __ for orde rs
S-d _ _ __ actio n as per rem arks/ o rders note d abov e
Sd _ _ __ Sd _ _ __
D esig natio n Desig na tio n
hy the perso n inch arge o f mach ines a nd
forw arde d by his
2 . A fter recei ving a s urvey repo rt s ig nt::d ffice orde r for insp ectio n
an inspe ctio n COfll miue e ttirou g h a n o
offic er, the he_a d o f offic e will no w co ns titute achi nes are fit to be
the ,con~ itio n of mac~ ines. Whe lher the m
o f the m achi nes a n~ to repo rt ~ac ~ abo ut bey o nd econ omic al
uld ;be dis posed off o n .acco unt o f m achi nes
put to use after re pai rs or the m achrn es sho
re pairs . mme ndat io n
o n com mitte e, the offic er w ill s tud y the reco
3. After recei ving the repo rt fro m the ins pecti t the mac hine s a re
co mmi ttee and deci de acc<? rding ly. If the ins pecti on com mitte e recomme nds tha
of the elf and insp ect
sed off, the head o f o ffice w ill then s atisf y hims
beyo nd econ o m ical repa irs and .sho uld be dispo -........_/
the mach ines in pers on.
 1.20 ELECTRICAL DESIGN ESTIMATI NG
;\No ca
Sl'JNo
4 . After arriving nt the final decision thnt the mochines should be disposed off th rough . ELEMENTS OF
will depend upon the original value of the machinery whether it is to be disposed off thro ugha~ction. 01
o r by c oll ing ' Tenders' ). TI1e officer will now issue auction notice under tho seal of his office a~ uclion• 6. The
o rder N o . nnd date of his office under his signature. . Office be a
7. In ca
The auc tion notice will be sent to minimum four or five reputed parties, Apart from issui day,
. e to reputed parties, the auction notice cnn be got pubhs ' Iicd '" I IocoI d31'JY news papers. IfnghauCtion
' tic
no tic 1 8 The
o f machines under disposal process is loo high , the ouclion notice con be got published in nat·1ona1 c Value
1
newspapers. TI1is sample of auction notice is given os under : ever
Auction Notice Endorse
From Dated
Copies ,
Managing Director,
I . Incha
Ghangas Co-operative Machine Tool Factory,
2. Supe1
Rara Sahib, LUDHIANA
3. Oft'ic,
J>unjab 4 . Sccur
To
5. Offic,
All parties interes ted in acquiring machines through auction. 6. Store

Q. Why
Auction Notice No. _ _ __ machfo es/mat,
D ated Ans. ( I)
Subject : Disposal of old/outdated machines through auction. the purchase p,
the profit amon
Sir,
the material O\I
The following machines arc to be disposed off through auction, you are reques ted to participate in (2) Wher
the auction if you nre interested to acquire the machines, the detailed specifications of which are given below: finger is pointe<
- doubtful. The o
Sr. Ducription of Machine Quantiry Reserve Amount of Remarks
No. Price securiry payable to be very care
Rs. at rhe rime of Q. What
aucrio11 Ans. Afte
Drilling machines fitted with 2 HP 3 phase · compiled in the
1.
3 Nos. 20:00-00 Rs. 500-00 items are encircl,
induction motor
Old model shaping machines including 5 HP 3 statement form. 1
2.
phase electric motors in working order 2 Nos. 5000-00 Rs. 1500-00 officer.
3. Lathes of different sizes including IO HP, 3 phase The suppl)
electric motors 3 Nos. - 12000-00 Rs. 3000-00 keeper also. In r
4. j Electric welding set of single phase rating 2 Nos. 6000-00 Rs. 2000-00 bill is entered in
bill of material is
officer about the
Terms and conditions and other Relavent Information physically in the
L The a uction of a bove material will be catagorywise as mentioned above. and quantity (as
2 . The m a terial can be inspected on any working day from 9 A.M. to 4 P.M. (a} Certifi<
3 . The person interested in the auction will have to deposit the security amount to become eligible (b} Certifo
to take part in the auction. . (c) Cer1ifie
4 . The auction will take place in the office of the undersigned on dated _ _ __ at _ _ _ _ (time)
in the presence of the committee of the department.
5 . The undersigned reserves the right to accept or reject the offered amount without assig ning any reason.
cosnNa 1.2 1
ELEMENTS OP ES TIM ATING

1ction. Ot 6. Th e success fu 1 bI'dd er w1·111,ave to deposi't the full amount on the same day. No part payment will
'Auction· be occepted. , ( II t
nd office 7. In cose, the successful bidder (offering ma,omum price) fails to deposit the u amount on t 1e same
doy, his security will be forefcitcd nnd Auction cancelled. ,
s auction 8. 11,e security amount wi ll be refunded lo All unsuccessful bidders on th e sam;dd_a_y_ . _ _ _ __
the Value Managing Director
nal leveJ
Endorsement No. _ _ __
Doted _ _ _ _ _ _ _ _ .
Copies of the above forwnrded to the followi ng for Information nnd necessary ncli on :
I . lnchnrge machines.
2. Superintendent o f the workshop,
3. Of11cer inchnrge accounts.
4. Security offi cer of the workshop.
5. Officer incharge purchase and disposal.
6. Store incharge. Sd_ _ _ _ _ __
M anaging DireGtor
Q. W hy the auction system is not considered safe and effective in disposing off the
machines/material ?
Ans. ( 1) The di sposal of material/machines through auction m any times gives bad results b~a~sc
the purchase parties taking part in auction arc known to each other and they t ry t? fonn a pool_and div~de
the profit among themselves. In such cases, they offer very low value of the m atcnal under aucllon, putting
the material owners at great loss.
:ipate in (2) When lowest prices arc offered for the machines/material and the o ffe r is accepted, an accusing
below: finger is pointed at the officer for accepting the offer and in most cases, the dignity of the officer becomes
doubtful. The officers are scared of disposing off the machines/material through a uc tion. The officer has
?emarks
to be very careful in such cases.
Q. What is the role of store keeper in the purchase process ?
Ans. After receiving the quotations from different suppliers, the rates offered by different parties are
compiled in the comparative statement form. The lowest rates offered by different s uppliers for different
items are encircled in red ink and parties selected for supply of different items are recorded on the comparative
statement form. The comparative statement form is signed by three officers and approved by the senior purchase
officer.
The supply orders are issued to selected parties and copies of supply orders are endorsed to the store-
keeper also. In response to supply order, the material alongwith the· bill is supplied by the supplier. The
bill is entered in the receipt register of the office and the material is handed over to the store-keeper. The
bill of material is also sent to store-keeper from the main office. The store-keeper will then inform the store
officer about the receipt of the material. The boxes containing the material are opened and material counted
physically in the presence of store officer. The certificate from the technical expert varifying the quantity
and quantity (as per supply order specifications and quantity) is recorded on the bills as ·under :
:ligible (a ) Certified that the material is in good condition as per supply order.
(b) C ertified that the material quantity is as per supply order.
(time) (c) C ertifi ed that the quality of the material conforms to the standard la id down in the supply order.

·eason.
 --,werw
1.22 ING
ELECTRIC AL DESIG N ESTIM ATING /\ND COST
EL:

The s1ock reg· 1er page No. nnd entry seri nl number will nlso be recorded on 1he bil l by 1he sto,·c ·
kecpc r ·i,HI· c
IS
• be senl back to office for further
. .. ' ountc rs igned by lhe store offi cer inchnrge. The hill \viii then lht
store-keeper till ii is finall y issued 10 the perso n who
~c_ll_o n. The mnte rinl is now plncetl in the chnrge of an
11111 tnled the requ ision.
of
t form .
Q. Whn t is indent ? Give n speci men copy of Inden fo1
in the form shnpe in the indent book for gett ing
Ans. An indent is n numbered dupl icnte nppli cntio n
mnte riol issued from the store .
the approvnl ol' contro ll ing offic er for gell ing the SU
osed lo fill the inc.Jeni form in dupli ca1e, enter lb
T he perso n requiring the mnte rinl f1 om the store is supp
i11de111 recon1111e11dec.J from immediate office r and rhen lo
the mate rial in his penm nnl ~tock register, gel the
lhe nprro v11I of lhe contr olling offi cer, the inden t Tl
appro ach lhe con1rollin g offi ce r for his nppro vnl. After m
is sent lo store -keeper. an
intlenl form wi th him after issuin g the material
The store kee per will keep the ori ginn l copy o f lhe
store. The slore-kecr er wil l laler make ent ries in his
Ill
anti obtainin g signature of 1he perso n receivi ng lhe
is given below :
stock regi ster. The snmple copy of the indenl form an
ORIGINAL cc
1he avai lability of lhc rnalerial.
Before inucn1ing, pleas e enquire from the store nboul m
lntlen l No. _ _ _ _ Daled _ _ __ ro
Bollk No. __ __
si,
To
The General Manager
Looe hy Spinning Mills Ltd. Rarn Sahib . ar
Ludhiana pr
Sir. of
from the store may kindly be accorded.
Approval l'or getting the following maleri.ll issued
Q11a11tity E11try made i11 Remarks
D<'scri111io11 of Q11m11ity
required iss,u!tl ' stock regist<'I' at
.,·tore•
page
id
th
S(
01
\I,

I e:
a,
Controlling Officer's approval __ __
Recommended by _ _ __ \I

The material should be delivered to _ _ __

0
Sd _ _ __ SI
Date _ _ __
Indenting Oflicer II
ition p
Received the material specified ahove in good cond Sd _ _ __ {r
I Dated _ _ __
Rece iving person fl

\ Sd _ _ _ - /.
Store-keeper a
I Da1cJ _ _ __
Q. Expl ain how the mark et surve y is done while
purc hasin g the mate rial for your institute '?
(SBTE H a r •w11w , J1111e, / 998)
I
 ELEMENTS or ESTIMATING 1.2]
::; AND COSTING

II hy lhe slorc- Ans. T he hcnd o f 1hc office c:.on<;l1lulcs a purc ha <;c c:.01m11111ec of rc<;poM1hlc nfr,'-er~ for pllrchn'<c or
flicc for further ihe mntennl from loLnl m:ukcl 11,c i:ommittcc 1s hc:idcd hy a sen ior office r :1<; chairma n o f 1hc committee
the person who nnd rest of the two or three officers ns me mhcr!. The list of m:iterrnl wllh complete and dctn1lcd s pecrf1c:11 1on<;
of encl, 11 em nlongw,th tcnns nnd conditions of the suppl y ,s handed over to the ch:mman of the com m,uec
for purc hn!-c of mntcr rnl nfler do111g marke t 1,urvey.
The commi llee visit!. vnriou~ reputed business estnhlishrnent!. o f the ci ty o r town nnd deliver,; to the
,ook for gelling
i,u pphen,, n copy of li~t of mat er inl to the purc hased and gets s uppl ier's signature on the office copy o f the
li!-1. 17,e suppliers nrc requested to put up the mate ri al for inspection and the suppliers arc al.~o requested
duplicate, e nter offer ra tes of ench item on the hn,;1s of s pec ificntlon11 of the material ond terms and condrtrons of supply
10
>fficcr and I hen The mies (qu olntio ns) nre o ffci-cd hy the !iUppliers o n n printed pad o f the firm or in the form o f printed
iccr, the indent materinl li!>L TI,e rnlcs (quolntions) nrc enc losed In on envelope nnd chat envelo pe is scaled by the s upplier
and handed over to 1hc chnirmnn o f the committee pcrsonnlly. S lm ilnrly market survey is done, material
ng the rnalcn nl inl-pcctcd and scnlcd quotntion nre collec ted from vnrious rcpu1cd supplie rs.
:e entries rn his t\fler collec ling the scaled quotations pcrsonnlly, these arc opened by the commrttee nnd enve lopes
nnd quotntion pnpcrs nrc signed by nil members of the committee incl uding chairman. Thereafter. the
comparative· statemenl is prepared and material items showing lowest rares nre encircled with red ink. The
al. material having lowcsl rates belonging to concomcd supplier is finalised . Now, the purc h ase order is prepared
11ed _ __ _ for s upply of material to various s uppliers whose items of mnterinl have been selected . The purchase orders
signed hy the chainnan of the committee ore given to variou5 suppliers for supply of the material.
Q . Whal is estimate ? Give definitions of estimate.
Ans. An estimate is the anticipated or tentative, or probable cost of work and is us ually prepared before
any proj~c t work is taken up. It i~ indeed calcu1ntions or computnllor o f various items of on engineering
project to have first hand knowledge of approximate cost which is likely to be inc urred including quantities
of various materials required and labour involved for satisfactory completio n of the work.
:corded.
The actual cost on the projec t in hnnd can be known from the accounts of the completed projecL
Rc111aii-.s Q. What is preliminary estimate or rough cost or approximate cost or abstract estimate ?
Ans. The rough cost estimate is prepared to decide the financial aspect nnd policy matter, giving an
idea of the cost of the proposed project. The preliminary estimate is taken up after toking int(_) consideration
the requirements of the department concerned regarding the project to be taken up. The rough estimate is
sent 10 the competent sanc tioning authority for administrative approval. The rough cost estimate is prepared
on the basis of practical knowledge and cost of similar projec t completed earlie r. The estimate is a ccompanied
with a detailed report, the necessity and utility of the proposal. ·
Q . What is detailed estimate ? Give a brief note on iL
Ans. After receiving the administrative approval from the department for the rough estimate, the detailed
estimate is prepared prior lo the process of invi ting the tenders. The detailed estimate is sent to competent
authority for gelling the 'Technical Sanction'. The detailed estimate, the whole project is divided into sub
)val _ _ __
works . The cost of each s ub work is calculated separately and then added together to give the total cost
of projec~. The cost of each item is worked out according to the prevailii.g market rates or from the sanctioned
Sd _ _ __
schedule of rotes. In case of non-schedule rotes, the proper analysis of rates are prepared and attached with
,denting Officer the detai led estimate. If the projec t under consideration is ·located far away at a remote place, additional
provi~ion f~r carri.a ge of the material sh~ll also be added in the estimate. The unforeseen expenses
Sd _ _ __ (contrngencres) which may not be covered m the classified head of items of work estimate due to vario us
eceiving person reasons, such as c hange in design, natural calamities etc., may be taken 3% to 5% and included in the estimate.
Sd _ _ __ Apart from the above, about 2% of the estimated cost ·is also included for work charged establishment so
Store-keeper as lo avoid any excess over the adminis!ratively approved estimate later on. The detailed estimate should
,our institute ? include the cost of labour, mate rial, equipment, overhead charges, profits e tc.
IIU, }111/ l', / 998)
 ELEC TR !CAL DESIGN EST IMATING AND COSTING
l .24

The following documents should be attached wi rh the del l}iled es1i111a1e :

(a) Dctnilcd drnwi ng (different drawi ngs for d ifferent works).
(h) Detailed specification s for the execution of work.
(c) Cnlculnrio ns and design of vnrious works.
(d) S~hcdule of rotes followed .
(e) Analysis of roles for non-schedul e ra te items.
(/) A detai led report. the
Q . Whal is supplcmcnt nry cstlmo(c ? eqt
Ans. When some nddit ions ore proposed in the original work proposal or estimate, o fresh detailed (Pa
estim111e is prepared 10 supplement the original work. TI1is estimate is called supplementa ry es timate. It is Ma
nlso required to be accompanie d by nil relevant papers such as drawing, design, estimate report explai ning 'Li1
the necessity of 1he add itional work etc., and sent to higher authorities for their final approval.
Q. Whal do you mean by ' Annual Repair' or annual maintenanc e estimate? Ma
'Li1
Ans. Every electrical structure, wiring, machinery or electric control system need some repair to be
cnrricd o ut nnnunlly so 1hat the sys tem remains in working conditions all the time, for that, an annual repair
or annual mai ntenance estimate is prepared. This estimate s nould not exceed than 1.5 % of the capital cost Dis
'Lii
of the wo rk .
Q. What is revised estimate ?
Dis
Ans. A revised eslimale is a detailed estimale and is prepared afresh like escimate ori ginally prepared 'L ii
when the origi nal snnclio ned detailed estimate exceeds by 5% or more, either due to the revised rate scheduled
or due to major changes in lhe project or due Lo some other reason.
Ma
The revised es timate should be accompanie d by all the papers as in the case of detailed es timate and ' Po
also should include the comparative s tatement, showing the variation in each item o f work, its quantity, rate
and original cost and revised cost or saving and giving the reason of excess expenditure or saving in case Ma
o f each item. 'Po
Q. What 2re important factors which should be considered for the preparation of a detailed
estimate nnd economical execution of work ? Dis1
fl Ans. Following factors are important for preparing the detailed estimate : ' Po
I I. Q11a111ity of Material. To purchase large quantity for large projects and to purchase small quantity
for small projects will make lot of difference so far as rates are concerned. The large quantity can be purchased DiS'
at a cheaper mte as co mpared to smaller quantity of material. So, the rates should be framed out according 'Po·
to the volume of work.
2. A i·aila/Jility of Material. The material required for the project is to be made available to the workers Bre
at works ite, otherwise , the workers and supervisors will remain idle due to this. The estimated cost of project
will he higher due to non-availab ility of material at the worksite. Apart from increasing the cost, it will also
affect the progress of the work so, a foolproof system should be devised so that the material is made available WI
at the works ite. The purchase section should be made 'responsible for that.
3. Tm11sportatio11 of Material. The cost of transportation of material small in quantity will be costly Ger
as compared to transporcatio n of material in large quantity. This important aspect may be considered for
economic reasons.
Wir
4_. 0catio11 of Site. If th~ site of projec! is located at remote or odd place for which frequent loading,

\
unloadmg 1s necessary several limes, due to different modes of transport, damage.or toss of material should
be considered carefully.
., Wir
wiri
5. _A vailabil_ity of Labour. !,lnskilled o~ se!71is killed local labourers at daily wages will be economical
and con_s1dcred helore tl_1e preparation of an estimate. Availability of labour locally will be cheaper as compared
to o utsH.le ,lahour required to work on the project.
I

I~