CHAPTER 6

BUILD UP RATE
METHOD
 Introduction

In the construction works - there are hundreds item of

works involved. During the work - contractor will use
various methods and techniques to complete the work
including the use of building materials, labor and
equipment to work satisfactorily.

All the above work, require financial expenditure from

the contractors. For an experienced contractor, they are
less likely to be a problem because they usually keep all
information and data about the completed work.
 Introduction

However, prices for each materials be changing from

time to time depending on economic conditions, labor
problems, price increases, tax, legal requirements and
so on.

Therefore, knowledge of building materials prices, labor

market and the price of the plant is very important to
help a contractor and professional members in
determining the most reasonable price for each items of
the work.
 Uses and Importance of Built Up Rate

▪ To know the financial provision of the

employer
▪ To know the suitability of the design based on
the limits allowed by the employer
▪ For information and records for reference and
budget projects in the future.
 Policies of Built Up Rate

a. Material cost
b. Labour cost
c. Plant and machineries cost
d. Management cost
e. Profit and overhead
 Material Cost

Factors that determine the material cost are:

a. Actual material cost

The price is not including the rate of profit, the cost of
transportation and other. It is the factory’s price or the price of
materials from suppliers or also known as market prices. The
original price of materials will vary from time to time and from
place to place.
 Cont…

b. Transportation cost

The cost for transporting building materials to

construction sites includes any additional costs.
Usually, the supplier price is depending on the place.
The cost will be higher if the site from the factory or
warehouse is far. Transportation costs also include the
cost of carry down the materials whether using labour
or using machinery such as "fork lift" or use the crane.
 Cont…

c. Storage cost

The fragile material such as cement, glass and

tile or other combustible materials such as
wood should be stored properly for safety
purpose.
 Cont….

d. Wastage and damage

For materials that can easily be damaged or not fully treated, it is

included as wastage. It was estimated between ten to fifteen percent
of construction materials at the construction site is wastage and
damage. The value of wastage varies depending on the type of waste
material, the type of work and work efficiency. Waste is calculated
from the order to the construction process. In general, the values of
wastage followed by type of material are as follows:
Cement 5% - Roof Tile 2%
Wood 5% - Steel 10%
 Labour Cost

Labour cost is payment to somebody who done some works to

other person. The payment is vary depends on the skills of workers.
Generally, there are four types of labour in construction site:

a. Skilled labour

Somebody who has skills to complete work in trades such as

carpenters, blacksmiths, bricklayers, plaster, craftsmen, plumbers
and so on. Skilled worker will be paid followed day rate or hour rate.
The wage for skilled worker can be RM100.00 per day depends on
the types of works and skills of worker.
 Cont…

b. Semi skilled labour

Semi skilled labour is a worker who working as an assistant to an

artisan. Normally, semi skilled labour is needed as much as number of
artisan. The wages are between RM 70.00 to RM 85.00 per day.

c. Unskilled labour

Unskilled labour is needed for simple works such as cleaning the site,
transporting the materials and so on. Normally their wages can be RM
50.00 to RM 65.00 per day.
 Plant and machinery cost
A contractor will use many plant and machineries for complete their works on construction site. It
is use for save time and energy. It will be divided on two categories which are:

Manually

It is a basic tool in carpentry work. Normally, owned by the contractor. Example - an example
no mechanical plant is ladders, carts, hand tools, baskets, buckets and so on.

Mechanical plant

To use the plant or mechanical equipment, contractor shall provide a capital to buy or rent.
Therefore the capital should be include in built up rate with all related price such as the rent or
buy the equipment include the workers who operate the equipment.
The types of mechanical equipment such as trucks, bulldozers, concrete mixer, concrete vibrator,
compactor and so on. Mechanical equipment whether leased or purchased by the contractor
depends on the financial position or needs-based contractor, either continuously or sporadically.
 Schedule of Rates

In its most simple form, a schedule of rates can

be a list in a contract setting out the staff, labour
and plant hire rates the contractor will use for
pricing cost reimbursable instructed daywork.
 Advantage Schedule of Rates

The advantages of schedule of rates term contracts include:

▪ Variations are easier to estimate and normally cheaper than on fixed

price traditional contracts.
▪ The client can stop and start work at a pace that might be determined by cash
flow or funding.
▪ A larger pool of contractors can be asked to tender as the process is
inexpensive and quick.
▪ It is flexible in relation to scope and contractual commitment.
▪ As a fully-detailed design is not required the client can obtain tenders at the
early stages of a project and begin construction before completion of the
design. So to this extent it is 'fast track'.
 Disadvantage Schedule of Rates

The disadvantages include:

▪ Additional resources are required to measure work and certify payments.

▪ The client does not have a final price when committing to starting work.
▪ It is difficult for contractors to plan long-term resources and so might mean
changes to personnel with loss of continuity.
▪ Contractors may be tempted to front-load costs in case later work does not
materialise.
▪ There is no real incentive for contractors to treat such work with any sense
of urgency and its best staff will be placed on the projects where
the contractor is carrying more risk.
16

Variation

A variation (sometimes referred to as a variation instruction, variation

order (VO) or change order), is an alteration to the scope of works in
a construction contract in the form of an addition, substitution or omission
from the original scope of works.

Variation may include:

▪ Alterations to the design.
▪ Alterations to quantities.
▪ Alterations to quality.
▪ Alterations to working conditions.
▪ Alterations to the sequence of work.
17

Management Cost

Management cost is calculated as percent of the cost of materials, labour and plant of between
five to ten percent. Valuation per cent management cost is calculated by dividing the reversal of
money of the year by the total management cost.

Say, reversal money for a year is RM 1,000,000.00. The management cost is RM 50,000.00.

% Management cost = Managemnet Cost

Reversal money

= RM 50,000.00 x 100%
RM 1,000,000.00

= 5%
18

Profit Rate

To ensure contractor business can go on smoothly, company requires a little allocation to

support the liability and administration cost management for some contract.

Profit rate calculated by percent from all material cost, labour and plant. Profit calculated is
gross profit ( gross profit ).
Gross profit consisting of:
Nett profit
Overhead
 Overhead

▪ Overhead costs are generally divided into head office overhead

costs and site overhead costs.
• The head office overhead costs include items that cannot be readily
charged to any one project but represent the cost of operating the
construction company.
• The site overhead costs include all costs not chargeable to specific
item of work on a project.
▪ The major difference between the two is that the head office
overhead costs are incurred regardless of any specific project.
 Overhead cost

▪ Salary, allowance and other payment to staff.

▪ Office rental, workshop and store and etc.
▪ Electric bills, telephone bills, insurance and
etc.
▪ Office facilities such as computer, paper,
stationaries and etc.
 Profit Rate

To ensure contractor business can go on smoothly, company

requires a little allocation to support the liability and administration
cost management for some contract.

Profit rate calculated by percent from all material cost, labour and
plant. Profit calculated is gross profit ( gross profit ).
Gross profit consisting of:
▪ Nett profit
▪ Overhead
 Profit Rate

Percentage ratio which taken is different between firm because it

depend on contract size, nature of the work, present work load,
contract risk and time period of contract.
If contractor need 5% profit rate;
Gross Profit = Nett Profit + Management Cost
= 5% + 5%
= 10%

Normally net profit ratio is among 10-15%.

 BUILD UP RATE

1. Build up rate for concrete works:

a. Concrete work using hand
b. Concrete work using concrete mixing

2. Build up rate for Concrete Works

a. Excavation works using hands
b. Excavation work using machine

3. Build up rate for brick work

4. Build up rate for reinforcement work

 BUILD UP RATE FOR CONCRETE
There are two means mix concrete based on need and quantity concrete
mixed :

1. Concrete mix by hand

Using small equipment like hoe, spade and bucket. Suitable for small
quantity .

2. Concrete mix using machinery

Using special machinery. Suitable for large scope of work. Most

popular method used by contractor.
 Build up rate concrete by hand

The matter that should be taken into consideration when build up rate concrete work are as
follows :

a. Build up rate concrete material

To calculate the concrete material cost, need to know the concrete mixture ratio.
For Example:

Concrete mixture (1:2:4-20mm aggregate)

4m3 aggregate

2m3 sand

1m3 cement
 Cont…

Before continuing the calculation of concrete material cost, the

cement quantity need to determine first.

1 meter cube cement = 1436 kg

1 bag cement = 50 kg
If 1436kg = 1 meter cube = 1436
50
1 meter cube = 28.7 bag
 Cont….

Other than material cost, factor of wastage and shrinkage need to be

taken because:

a. Concrete material when mixed with water will cause shrinkage.

b. Concrete mixture when compacted into formwork also cause

shrinkage.

c. Concrete mixture also will be wastage when lift and pour to particular
place .
 Example

1. Material cost
Calculation of concrete material mixture price (1:2:4-19mm aggregate)

1 m3 cement (28.7 bag) x RM 10.00 = RM 287.00

2 m3 sand x RM 15.00 = RM 30.00
4 m3 aggregate x RM 30.00 = RM 120.00
Cost of 7 m3 concrete material RM 428.32

Add 50% wastage and shrinkage

= 50% x RM 428.32 = RM 214.16
RM 642.48
Cost of 1m3 concrete material
= RM 642.48/7 = RM 91.78
 Build up labour for concrete work

To calculate the labour cost, thus need to know the labour constant for work.

Example: Labour constant for concrete work

a. Mixing concrete with hand, bring and lift if needed = 4.00 hour/m3
b. Filling the concrete into pad foundation at 50.0m distance = 1.31 hour/m3
c. Vibrate the concrete around reinforcement = 0.65 hour/m3
d. Levelling the concrete = 0.09 hour/m3

Labour cost can get by multiplying the labour constant with labour wage rate for one
hour.
 Example of labour cost calculation

a. Mixing concrete with hand, = 4.00 hour/m3 x RM 2.50 = RM10.00

bring and lift if needed
b. Vibrate the concrete = 0.65 hour/m3 x RM 2.50 = RM 1.63
around reinforcement
c. Levelling the concrete = 0.09 hour/m3 x RM 2.50 = RM 0.23
Labour cost for 1m3 concrete RM 11.86
 Example
Build up price rate for 1 meter cube concrete (1:2:4- 2. Labour cost
19mm aggregate) which mix by hand including fill, Mixing concrete by hand
compact and levelling the surface. 4 hour/m3 x RM 2.00=RM8.00
Filling, compact & levelling the surface
1. Material cost 2.05 hour/m3 x RM 2.00= RM 4.10
1m3 cement (28.7 bag) x RM 22.00 = RM631.40
2m3 sand x RM 30.00 = RM 60.00 Labour cost for 1m3 concrete = RM12.10
4m3 aggregate x RM 40.00 = RM 160.00
7m3 concrete material RM 851.40 3. Cost of concrete work
Add 50% wastage & shrinkage RM 425.70 Material cost + Labour cost
RM1277.10 RM 182.44 + RM 12.10 = RM 194.54
Cost for 1m3 concrete material RM 182.44 Add 10% profit & management= RM 19.45
Cost for 1m3 concrete work = RM 213.99
 Build up rate concrete work by machine

There are a few things that should be taken into

consideration to build concrete work rate mixed
with mixer namely :

1. Material cost
2. Machinery cost
3. Labour Cost
 Build up rate for concrete mixer machinery

▪ Before built up rate for machine price, we should

know the machine capability to do the job in
time determined.
▪ For concrete mixer, the load measured from the barrel
size.
▪ For example: concrete mixer size (7/5) means 7m3
concrete material included before mixing will become
5m3 after mixed.
▪ Other types of mixer is 5 / 3.5, 10 / 7 and 14 / 10 .
34

Example

Built up rate for concrete work using concrete mixer 7/5.

A. Capital cost

1. Original machine price = RM 15,000.00

2. Investment return for 5 years at 9%/year
9 x 5 years x RM 15,000.00 = RM 6,750.00
100
3. Repairing cost for 5 years (10%)
10% x RM 15,000.00 = RM 1,500.00
4. Transportation cost for 5 years (5%)
5% x RM 15,000.00 = RM 750.00
Total capital cost concrete mixer
for 5 years = RM 24,000.00
35

Cont…

Total cost for concrete mixer a year

= RM 24,000.00/ 5 year = RM 4,800.00
Total cost for concrete mixer a day
= RM 4,800.00/ 150 day = RM 32.00
36

Cont…

B. Operating cost Total price mixer machine usage a day

1. Driver + 1 hour for maintenance = capital cost + operating cost
1 x 9 hour x RM 10.00/ hour = RM 90.00 = RM 32.00 + RM 370.20
2. Labour ( 4 person) = RM 402.20
4 x 8 hour x RM 6.00 = RM 192.00
3. Petrol oil
3.41 litre x RM 2.50 x 8 hour = RM 68.20
4. Lubricant oil
0.5 litre x RM 5.00 x 8 hour = RM 20.00
RM 370.20
37

Cont…

c. Machine production cost

Mixer concrete (7/5) can mix 2m3 for 1 hour.
So, for 1 day (8 hour), machine can mix = 2m3 x 8 hour = RM 16m3
16m3 concrete mixed with RM 402.20
So, 1m3 concrete = RM 402.20 = RM 25.14
16m3
Add profit & management (10%) = RM 2.51
Total cost for 1m3 concrete = RM 27.65
 Build up rate for Brick work

Brick Work calculated by using square metre unit with

mention the wall thickness. Price unit for a square metre
brick work calculated based on following thing :

a. Material
b. Labour wage
c. Profit and management
 Material used to build a brick wall

a. Brick
▪ Standard size for brick is 213mm length x 102.5mm width and 65mm thick
▪ Brick price calculated according to unit or number.
▪ Total brick in a square metre depend on size and bond type.
 cont….
Usually, brick bound using 10mm vertical and
horizontal mortar.

Length Thick
Height
Brick measure 215mm 65mm

mortar 10mm 10mm

225mm 75mm

Length
 Cont….

Brick surface area = 225mm x 75mm

= 16875mm2

1 metre square area = 1000mm x 1000mm

Number of brick for 1 metre square = 1000 x 1000

16875
= 60 brick
 Cont…

b. Mortar

Mortar is a concrete and sand mixed according to certain

ratio. Mortar cement ( 1 : 3 ) is mortar mixture according to rate of 1 part
of cement and 3 part of sand. Measure for this part is in cubic meters.

Mortar price calculation also must considered

the wastage, shrinkage and consolidation like concrete calculation.

The actual mortar cost for brick work should based

on mortar requirement for each meter square of brick wall.
 Labour Wage

A bricklayer can bound 45 brick in one

hour. Bricklayer need an assistant ( common
labour ) to carry out work. Usually two
bricklayer ( craftsman ) need one assistant.
That’s mean to each bricklayer working
hours assisted half an hour by common labour.
44

Cont..
Bil Work Description Bricklayer Labour Mortar Num of
(hour) (hour) (m3) Brick
1 230mm thick brick wall 2 2/5 1 1/5 0.05 118

2 115mm thick brick wall 1 1/2 9/10 0.03 60

Example of Labour constant and material used for 1 meter square brick wall
45

Profit and management

Additional percent profit and management should be

made to get back the capital that was spent.

This percentage depend on individual but usually

between 10% to 15%.
46

Example Question

Calculate the price for 1 meter square brick wall

115mm thick which bound using mortar cement.
47

Answer

1. Material cost
a. Brick
60 brick @ RM 0.18 = RM 10.80
b. Mortar
0.03 m3 @ RM140.45 = RM 4.21
Total material cost = RM 15.01
48

Cont…

2. Labour cost
Bricklayer = 1 ½ hour @ RM 4.00 = RM 6.00
Labour = 9/10 hour@RM 2.75 = RM 2.48
RM 8.48
Cost of Brick Work = Material cost + Labour cost
= RM 15.01 + RM 8.48
= RM 23.49
49

Cont…

3. Profit and management (10%)

10% x RM 23.49 = RM 2.35

Cost for 1 meter square Brick Work

= RM 23.49 + RM 2.35
= RM 25.48
50

Exercise Question

230 2438 610

Diagram showed the

house fence made
115 mm 762
from brick with
dinding bata
1.219 m
high. Calculate the
brick wall area and
2134
get the construction
cost. The thickness
of all externall
wall is 230mm.
51

Cont…

Data Given: 230mm thick brickwall Data Given: 115mm thick brickwall
Number of brick =118 Number of brick =60
Brick price = RM 0.25 Brick price = RM 0.25
Mortar = 0.05m3 Mortar = 0.03m3
Mortar price = RM140/m3 Mortar price = RM 140/m3
Labour constant Labour constant
Bricklayer = 2 2/5 hour Bricklayer = 1 ½ hour
Labour = 1 1/5 hour Labour = 9/10 hour
Wages Wages
Bricklayer wage = RM 10.00/hour Bricklayer wage = RM 10.00/hour
Labour wage = RM 5.00/hour Labour wage = RM 5.00/hour
Profit & management = 15% Profit & management = 15%
52

Answer
1. 230mm thick brick wall area Profit & management (15%)
2.438m x 1.219m = 2.97m2 15/100 x RM 66.50 = RM 9.98
3.048m x 1.219m = 3.72m2 Cost 1m2 = RM 76.48
2(2.896m x 1.219m) = 7.06m2
= 13.75m2
Construction cost for 230mm thick
2. 115mm thick brick wall area
brick wall = 13.75m2 x RM 76.48
0.762m2 x 1.219m = 0.93m2
= RM 1,051.60
3. Cost for 1m2 230mm brick work
Material: Brick=118 x RM 0.25 = RM 29.50
Mortar= 0.05 x RM140.00 = RM 7.00
Labour: Craftmen = 2 2/5 x RM 10.00= RM24.00
Labour = 1 1/5 x RM 5.00 = RM 6.00
RM 66.50
53

Cont…

4. Cost for 1m2 115mm brick work Profit & management (15%)
Material: Brick=60 x RM 0.25 = RM 15.00 15/100 x RM 38.70 = RM 5.81
Mortar= 0.03 x RM140.00 = RM 4.20 Cost 1m2 = RM 44.51
Labour: Craftmen = 1 1/2 x RM 10.00= RM15.00
Labour = 9/10 x RM 5.00 = RM 4.50 Construction cost for 230mm thick brick
RM 38.70 wall = 0.93m2 x RM 44.51
= RM 41.39

Total construction cost

= RM 1,051.60 + RM 41.39
= RM 1,092.99
54

Build up rate for reinforcement work

▪ To get the strength and fully grip towards concrete in a

building structure, steel ( reinforcement ) will used together the concrete.
▪ Reinforcement work usually involve the work as cutting, bending and put at
workplace.
▪ The factor that should be considered to get the reinforcement work price are:
a. Labour cost
There are two types of labour needed in reinforcement work namely skilled
labour (cutting and bending) work and common labour ( transporting and
place) work.
55

Example of Labour constant table

Bil Reinforcement diameter Wall, floor & roof Beam, column Foundation

1 Not exceeding 10mm 6 hour 4 hour 3 ½ hour

2 10mm to 16mm 4 ½ hour 3 hour 2 ½ hour

3 Exceeding 16mm 4 hour 2 ½ hour 2 ¼ hour

Table: Labour constant for cutting, bending and place the reinforcement for each 50kg
56

Cont…

b. Material cost
▪ Material cost depend on types and reinforcement size used.
▪ There are two common types of reinforcement namely mild steel reinforcement
and high steel tensile. Usually mild steel used as a link while high steel tensile
used as a main reinforcement.
▪ Reinforcement used will be cut according to length and specification
requirement. and deduction. This deduction called wastage. Therefore, need to
be added a five percent as wastage factor when calculating material cost.
57

Example 1: Calculation for 1 kg reinforcement work

10mm diameter steel a. Cost 1 tonne (1000 kg) steel 10mm= RM1850.00
b. Labour wage/day (skilled labour) =RM 40.00
in building foundation c. Labour wage (common labour) = RM 25.00
including cutting, d. Labour constant for cutting and

bending and placing. bending 50kg = 2 ½ hr

e. Labour constant for lift and placing = 2 ½ hr
Calculate the price for
1 kg steel work.
58

Answer

a. Material cost b. Labour cost

1 tonne (1000 kg) steel 10mm =RM 1850.00 Skilled labour wage/hour = RM 40.00/8
Cost for 50 kg = RM 1850.00 x 50 = RM 5.00
1000 Labour wage for cutting and bending
= RM 92.50 = 2 ½ hr x RM 5.00 = RM 12.50
Add wastage 5% = RM 4.63 Common labour wage/hour= RM 25.00/8
Steel price for 50kg = RM 97.13 = RM 3.13
Labour wage for lift and placing
= 2 ½ hr x RM 3.13 = RM 7.83
Total labour wage for 50 kg = RM 20.33
59

Cont…

Cost of steel work for 50kg = Material cost + Labour cost

= RM 97.13 + RM 20.33
= RM 117.46
Cost of steel work for 1 kg = RM 117.46
50 kg
= RM 2.35
Add profit and management (10%) = RM 0.24
Cost of 10mm steel work in foundation for 1 kg = RM 2.59
60

Tutorial Question

Estimated totaled 35 kg 12mm diameter steel size used in column stump construction.
Calculate the steel cost for this column if there are eight column that want to be built.
Assuming the price for 1 tone steel 12mm diameter size is RM 1250.00 including
transportation.

Data Given:
Price for 1 tone (1000 kg) = RM 1250.00
Labour constant cutting & bending = 3 hour
Labour constant lift and placing = 2 ½ hour
Wastage = 5%
Skilled labour wage/day = RM 120.00
Labour wage /day =RM 80.00
Profit & management = 5%
61

End….