PROBLEM WITHOUT ESTIMATION

 It becomes very difficult to purchase necessary material in the absent the list of material due to
work in not continuous uninterruptedly.

 The money is misused by purchasing smaller, or excess quantity of material from market and the
shortage of money can causes the stoppage of work in midway.

 Due to the above mention hurdles, the work can take more time for completion and it can affect the
other project which is related to the existing project in hand.

QUALITY OF GOOD ESTIMATOR

 The estimator should have through knowledge and practical experience about estimation.

 An estimator should go to the work place from time to time for inspecting the on going project on
his estimate.

 An estimator should have an imagination power & experimental power. He should have up-to-date
knowledge about design.

 A good estimator should always keep provision for future extension while estimating the project.

 An estimator should keep up to date knowledge of prices of material and for that he should keep on
changing the price lists maintained in his office

ESSENTIAL ELEMENTS OF ESTIMATING & COSTING

 Specification of material.

 Latest market cost of material.

 Price list & net price.

 Calculation of material and labour cost.

 Knowledge of purchase system.

 Labour cost.

Specification of material

The specification and cost of all necessary 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 the market
without knowledge of specification. For example if you want purchase lamp holder, but in market different
type of holder so there is problem to shopkeeper to provide correct material.

LATEST MARKET COST OF MATERIAL

 The market cost of material is the cost of material at which it can be purchased to the store at any
time. After estimating and costing of installation of the project, it becomes necessary to purchase
 the material. Market survey has to be conducted for estimating the cost of enlisted material so that
the shopkeeper could not deceive () us by overcharging the cost of the material. Market surveying
and purchasing of material is a very delicate job and one should be fully expert in this field. The
mistakes or carelessness shown in purchasing the material without any market survey will add to
the cost of electrical installation along with addition of time in completion of the product. Market
survey is an art in which only experienced persons succeed.

PRICE LIST.

 By market survey, the estimator gets the price list of the material from shopkeepers in which the
shop keepers give the retail & wholesale price according t local market rates. This list is up to dated
according to market rate from time to time. Hence at the time of estimating and costing, the price
list available at the time of the market should be taken into consideration.

Example of the Price list of the material shown here is………..

Sr. No. Name of the item with specification Unit Cost Remarks

1. Double pole main switch , iron clad, Each 90-00

250V grade 30 amp. Rating with both
fuses.

2. Iron clad distribution board, 4 way, 250 Each 60-00

volts grade with neutral link, 30 amp
rating.

3. MCB , 250 volts grade, 5,6,10 amp, Per unit 80-00

rating

Terms and conditions of supply:-

The above price list is latest and all the lists issued before this date should stand cancelled.

(ii). 10% discount will be given on bulk purchases.

(iii). All the prices in the list are ex-workshop.

(iv). The price of material can be increased or decreased due to change of prices from time to
time hence this price is only indicative one.

(v). One percent (1%) discount can be give on cash payment.

(vi). Packing, delivery, freight, insurances charges if necessary will be extra.

(vii). The payment is to be made within one week of delivery.

(viii). All taxes such as sale tax, local tax as applicable will be charged extra.

NET PRICES

Net price of an items is that price, in which all the imposed taxes such as sale taxes, central sales tax, excise
duty and other local taxes are included. Normally above-mention taxes are not mentioned in the price list.
If any discount is given by the factory, then shopkeeper will deducted the discount and then will charges
the tax from the consumer. For example, if a consumer purchase a 100 watt bulb of price 10 rupees and
factory gives a discount on this product 10-1=9, the sale tax at the rate of 5% will result in net price =
Rupees 9.00+0.45=9.45 rupees.

NAME OF ITEM RATE PER UNIT NET PRICE

Rs.

15 amp. Switch and socket combines, 3 40-00 40-00

pin lush type
-04-00
Discount 10%

Sale tax 5% 36-80

+01-80

Net price Rs. 38-60

DETERMINATION OF MATERIAL & LABOUT COST

– The total cost in the project is completed into two steps:-

(a). Quantity of material and cost determination.

(b). Determination of labour charges.

Quantity of material and cost determination.:-

While determining the quantity of material for any building it is essential to prepare the plan
of the building, marking electrical points, switch board and main board (Energy meter and main switch
board) on the plan through approved electrical symbols. The control route starting main switch board to
each switch board and then from switch boar\d to electrical points is marked on the plan. This is the basis
of the estimate. A wiring diagram is also separately prepared showing connection to each point.

DETERMINATION OF LABOUR CHARGES

 To arrive at a final conclusion for determination of labour charges for wiring a particular building is
very difficult. It is because of the fact that labour charges are different at different places. For
 instance, in cities, a trained electrician may charge Rs.150/- a day but in rural areas an equality
trained electrician may be available Rs. 80/- day. It is therefore necessary to arrive at a common
conclusion on the aspect to labour charges. The labour charges are decided as under:-----

 (i). As per work during and work amount i.e. actual labour cost as paid to daily wagers.

 (ii). As per unit work basis

 (iii). As per percentage of material cost

 Work duration and work amount.

 If the wiring work is to be completed on the basis of work duration and work
amount, then the skilled workers are employed on daily wages. The decision to employ number of
persons depends upon number of electrical points to be wired

assuming wiring of main board equivalent to four points and fitting of any switch board equivalent to two
electrical points. The number of electricians, wireman and other person needed for the job can be
determined on the basis of number of points to be wired and number of days the job is likely to be
completed. The labour rates are decided on the basis of prevailing labour rates in the city or suburban area.
The number of days a wireman and his assistant are likely to take is calculated as under.

The number of days one wireman and one assistant will take to complete the work

= (No. of points to be wired) / (No. of points they are likely to wire in one day)

The number of points which a wireman and his assistant are likely to wire, is mentioned in
PWD (Elect.) work schedule of the department. The labour rates for all categories of labourers are also
mentioned in the same Gazette. The labour rates are revised by the department from time to time. The
table mentioned below is completed to ascertain the total labour payment.

Labour rate and total payment

 Rate per day Total payment Rem--ark
Sr. Class of
No. of Days
No labour
Rs. Paise Rs. Paise

On Unit Work Basis:- This is very simple and prevalent system to determine to determine lab our
charges for a work , in this system 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. building and to an individual trained wireman in the case of private
building. The total payment can be calculated from the table mention below.

Total Labour Cost

No. of Rate Total payment Remarks

Description of unit points
Sr.
work conduit/ batten
No
system of wiring

1. Main board installation 4 20.00 80.00

2. 15 switch board @ 2 30 20.00 600.00

points for each switch
board

3. Installation of bell push 6 20.00 120.00

button and laying of
underground wiring up to
main gate @ 6 points per
bell
 Total labour charges Rs. 800

 As per percentage of material cost :- In this system fixed percentage of the total material cost is
counted towards labour payment. This percentage of 15%, 20% or 25% depending upon type of
wiring. The payment of labour is calculated from the table given below:-

Determination of Labour Charges

Sr. Description of Rate Amount

No. material
Cost (say) % of total Cost
material

1. Total cost of wiring 6115.00 15 percent Rs. 917.25

material

 Knowledge of purchase system:-

It is prime responsibility of the head of the PWD Elect department of the area to know the
system of purchase and make the desired wiring material available for the project in hand. It also the duty
of the purchase officer of the department to purchase the material at lowest market rate. The material
means, the wiring material, instruments and tools required for the completion of electrical part of the
project. The department officer is also responsible for proper storage and issue of the material required
from time to time.

The department also ensures proper utility of material under their supervision and also keeps a complete
account of material used on the project from day to day. Any item fallen short in the store is purchased and
arranged to issue the same as and when necessity arises. Therefore, complete knowledge of purchase
system is compulsory on the part of department. The department has to ensure that the project work is not
stopped due to lack of material.

Purchase system and duties of purchasing department :-

We know that the purchase department of the PWD Elect. is responsible for making purchases at lowest
market rate and make arrangement for storage so that the material required for the project in hand is made
available. For this purpose, the purchase department should keep the following points in view:

 (a) Market survey should be conducted from time to time to know the latest
prices of the materials.
  (b) The material should be purchased, the quantity of which is on demand.

 (c) The desired quantity of material for the project should be purchased on lowest
market rates only.

 (d) The purchase officer should keep a record of latest rates of various items
likely to be purchased.

 (e) Some important material should be kept stored so that it is made available in
emergency.

 (f) The purchase officer should seek approval of his senior officer before initiating
purchase system.

 (g) The quality and quantity should be got verified 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.

 (h) 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.

Procedure of Purchasing

The following sequence of procedure is adopted to purchase the material desired in completion of the
project:

 Requisition

 Call of quotations

 Comparative statement

 Purchase order

 Inspection of material

 Release of payment as per terms and conditions.

 Requisition

 The demand of various items of material and quantity is obtained from various departments of the
project in hand. The list of items should consist of complete specifications of each item and the
quantity required. The list thus prepared is finally sent to the purchase department. The list is to be
submitted on a form called requisition form which is available in every department.

Requisition Form

Requisition Serial No. –SJPP/EE/02-------- Date –8/9/2020-------

To
Senior Purchase Officer

----------------------------------

----------------------------------

Kindly make arrangement for purchase of following Items of material for power wiring of
Polytechnic Workshop under construction upto-dated __________

Sr. Complete specification of Quantity Remarks

No. material

1.

Stock register serial No. __________ Stock already in hand__________

Maximum demand quantity________

Minimum demand quantity_________

Signature of Store Incharge

Signature of Requisition officer

Department ________________

______________________________________________________________

For use by the Purchase order serial No. Name of firm given purchase order

purchase department

Signature of verifying officer ______________________________

Signature of receiving officer ______________________________

Seal of department

The requisition form is the basic document of the purchase department. It is not possible to make
departmental purchases without receiving requisition form from the project incharge. The requisition is
always prepared in triplicate. One copy is retained in the office record and the remaining two copies are
sent to purchase department. The purchase department enters the requisition form in their register and
further necessary action for purchase is initiated. After issuing the purchase order by the purchase officer to
the firm, one copy is sent back to the officer who has sent the requisition so that a co-ordination is
maintained between the two departments about the name of firm, condition of supply order, date of supply
order etc.

 Call of Quotations

After receiving requisition from various departments, the purchase department issues letters to several
registered suppliers for calling rate list. Issuing registered postal letters to various reputed suppliers for
their competitive rates is called 'calling of quotations'. The quotations are called in two ways:

 (a) By issuing individual letters by registered post letters to suppliers.

 (b) By newspaper advertisements which is called tender notice.

The advertisements through newspaper are called 'Public Tender' or 'Open Tender' and the
quotations called from registered suppliers are called 'limited tender'. The issue of quotation through
newspaper depends upon quantity and cost of material to be purchased but for small purchases, the rate list
is called from suppliers through registered letters.

 Some emergency purchases are made directly by the purchase officer after collecting quotations
from local suppliers personally. Such quotations collected within limited period are called short
tenders.

 The supplier is give complete specifications for the material to be purchased so that the correct
material

 according to laid specifications is supplied by the supplier. The purchase department should inform
the suppliers as to how long the quotation is valid say for 6 months or one year.

A sample letter for calling of quotation is given below

Registered

From

Principal

_____________

Haryana

To

M/s ………….

------------------
____________

Memo No. Q/PK/2/2000 Dated

Subject: Call of Quotation

Dear Sir,

You are requested to send your lowest quotations and intimate the terms of payment and
delivery period on our own terms and conditions:

1. The last date for the receipt of quotations will be 15-9-2020.

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 along with the material.

4. The payment of bill will be made within one month from the date of receipt of material in good
Condition.

5. The material will be supplied by you exactly according to the specifications laid down as under.

6. The railway receipt will be required to be dispatched by “registered post” direct to this office and not
through bank.

7. The envelope containing quotations will be subscribed as 'Quotation'.

Sr.N Description of material Quantity Required

o

1. M.I. Ammeter portable type 0-5 A 15 Nos. 10 No’s

2. Moving coil voltmeter portable type 0-250 volts 10 10 No’s

Nos.
3.

4.

Principal

_________________

(Haryana)
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 maintained in the
office. A committee of three responsible officers in the presence of suppliers opens the tenders or
quotations or their representatives on the date and time mention in the quotation letters. To ensure that
there is no change of rates after opening the tender/quotation. the committee of purchase officers put their
signatures on each page of quotation/tender. Another entry to be made on each quotation/tender is that the
serial number of quotation 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 out of seven quotation's is opened. it will be marked 1/7 in circle.

Comparative statement. After opening the quotations/tenders, the purchase clerk prepares a comparative
statement on a form available in the office. The aim of preparing comparative statement is to make a
comparison of rates quoted by different suppliers. The lowest rates offered by a supplier can be seen
directly from a single page. The comparative statement should include conditions and terms of supply
offered by each supplier. The comparative statement thus prepared should be thoroughly checked by an
officer. A committee of purchase officer, technical advisor and a accounts officer is constituted to examine
in detail, the rates and terms of supply offered by each supplier. The lowest rates offered by each firm are
marked for issue of supply order after ensuring that the material offered for supply is exactly as per
specifications. The firm selected for issue of supply order is asked to deposit some earnest money because,
in case the supplier fails to supply the material within the due date, his earnest money is forfeited. In case
he supplies the material well in time and also as per specifications, the earnest money is returned.
Sometimes, all firms to whom letters of quotations are sent are asked to deposit earnest money along with
the quotations or tenders. This way, the supplier is bound to supply the material in full.

Comparative Statement

Name of Office of Date _________

Purchase Officer.________________ Tender /Quotation Notice No._______

Due Date of opening___________Time____________ Approved Requisition No._______

No. of suppliers to whom quotation letters sent__________________

No. of suppliers offered quotations ……………………

Sr. No Full Quantity M/s M/s M/s Recommendations

specifications Required
of item

1.

2.
 3.

Name and designation of person who prepared the statement __________________ Signature
___________________

Name and designation of inspection officer __________________________________

Signature ___________________

Chief Purchase Officer ____________________________________________________

Signature ___________________

There should be at least three quotations for issue of supply order. In some cases such as hospital, technical
institutions, etc. if there are only two quotations received from suppliers, the supply order may be issued to
the party offering lowest rates. The lowest rates are marked with red ink for clear identification

 Purchase Order If the purchase officer has to place orders for large scale purchases after approval
of quotations, then the administrative officer and accounts officer's approval is necessary so that
necessary funds are made available before issue of supply order. The supplier selected above is
issued purchase order for supply of material strictly as per quotations offered by the party on terms
and conditions laid down on the quotation form. If the supplier fails to supply the material or
violates the terms and conditions, the earnest money deposited by the supplier is forfeited.
 Specimen of Purchase Order

From

___________

___________

___________

Memo No…………… Dated:…………..

To

M/s __________

______________

______________

Subject: Purchase order for supply of material to PWD Elect. Deptt.

Sir,

Reference to your quotation letter No._______ dated _________.The rates offered by

your 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. Name of item with Quantity Rate Total Remarks

No. full specifications Amount

1.

2.

The terms and conditions are once again reproduced here.

1. Last date for receipt of material is _______________

2. For all legal disputes, the jurisdiction will be __________

3. Send 20% of the cost of material as earnest money before supply of material is undertaken.

4. 50% of the cost of material will be deposited in your bank account and the balance amount will be paid
only when the material quality and quantity is verified and material received in good condition.
5. The rates are F.O.R. nearest railway station.

6. All local taxes will be paid by us.

Signature

_____________

Copies for information and necessary action to

1. Store incharge

2. Accounts branch

3. Requisition officer

4. Security officer of the department

5. Copy for purchase office.

Signature

______________

 Tender :- An offer in tenders of rates made by the supplier or manufacturer on a prescribed form
enclosed in a sealed envelope, in reply to a tender notice for supply of material on the basis of some
tender and conditions is called tender. Some money is deposited along with the tender, which is
called earnest money. The earnest money is a guarantee by the tenderer that the party is bound to
supply the material if its tender is found to be competitive but on pre-determined conditions only.
The earnest money is sometimes called security deposit. If the supplier fails to supply the material
even after receiving the supply order, the earnest money deposited by the supplier is forfeited.

 Tender Notice: The information to be made available for certain heavy purchases through the news-
papers is called 'Tender Notice'.

 The tender notice is given in all major newspapers 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
industry, for installation of sub-station, for purchase of heavy duty generator etc. The tender notice
contains information of material to be purchased, i.e. complete specifications, its approximate cost,
quantity, last date for receipt of sealed tenders, cost of tender form and the earnest money to be
deposited along with the tender. The supplier can quote rates 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 relevant 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 tender and conditions of supply.
  Guidelines for inviting Tender

 1. The tenders are invited on a tender fonD prescribed by the purchase department. Once the tender
notice is published in news-papers, the changes or amendments if any, are also got published in the
same news-papers. The changes or amendments are first approved by the purchase officer.

 2. The sealed tenders are invited publicly through news-papers.

 3. The tender notice should have following information mentioned clearly:

 (a) On what dates and timings the work site or further details of purchases can be seen and
examined by the supplier or contractor. The offices where tender form or relevant information is
available. The amount of earnest money etc.

(b) The date, time and place where tenders are to be opened.

(c) The amount of earnest money, security deposits and the mode of deposit i.e., through bank draft, cheque
etc.

(d) The officer authorized to accept, reject or open the tender.

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 to file their tenders.

5. All tenders for the concerned work should be opened in the presence of contractors or their
representative’s by the officer officially authorized by the department on the date and time as mentioned in
newspaper notification.

6. The earnest money to the unsuccessful contractors or suppliers should be returned at the earliest,
probably 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 deposited with the tender. If the contractor offering lowest rates has complaints of poor
performance in the past contracts (it should be officially on record), his tender can be rejected.

AN EXAMPLE OF TENDER NOTICE

The tender notice is given in all the prominent daily newspapers of the country. A detailed example of
tender notice published in a paper

------------------------------------------------------------------------------

Haryana State Electricity Board

Office of the Superintending Engineer (Purchases) 132 KV Grid

Sub-Station

Panchkula (Haryana)

Tender Notice
No. 2000/PK/Harn26 Dated: 10-2-2000

1. Sealed tenders are invited for the purchase and installation of 132 kV /33 kV transformer for installation
at grid sub-stations on form 'C' on behalf of Superintendent Engineer (Purchases) HSEB Panchkula.

Sr. Descriptio Qty. Approximat Earnes Cost Date of Class of Date of

No n of e cost t of completio contracto openin
. material money tende n of work r eligible g of
r and date for the tender
of receipt contract with
form of tender time

1. Power T/F 20 32.5 lac 5000/- 75/- 22-2-2008 Class-1 27-2-

NO` 2008
20MVA, 3 s 22-4-2008 To
phase, 2p.m.
50Hz, Class-V
132/33
KV, with
all
protective
and tap
changer
component
s F.O.R.
Panchkula
HBSE
store and
installation
at site

Note:- Earnest money should be in the form of demand draft in the favour of Superintendent
Engineer (Purchases) Haryana State Electricity Board 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
contractors whose annual turn-over is Rs. 5000000/- and belonging to Panchkula 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 contractors should know clearly that production of attested copy of registration form
along with application for issue of tender form is essential. Apart from this, the contractors should also
produce copy of their income tax return (copy of income tax return which is filed annually 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 132 kV Sub-Station Ambala (Haryana)

(ii) Excutive Engineer 132 kV Sub-Station Sonepat (Haryana)

(iii) Excutive Engineer 132 kV Sub-Station Hissar (Haryana)

The tenders can be handed over by registered post or personally. It will be in the interest of
the tenderer’s that they should deposit the tender form personally to avoid any delay or loss during
transaction. No tender will be accepted after due date.

 Opening of tender form

 The tenders will be opened in the office of Superintendent Engineer (Purchases) Panchkula on date
and time already mentioned in the tender form in the presence of Superintendent Engineer and two
other senior officers authorized by Chief Engineer. The contractors are supposed to be present
personally at the time of opening of tender form.

The Terms and conditions number of power transformers to be purchased and their installation can be
increased or decreased depending upon situation. The number given in the tender form is just an estimated
requirement.

1. No tender without the earnest money can be accepted. The demand draft in favour of the said
officer should be payable at the local bank only. The demand draft should be valid for minimum of six
months duration from tI:1e date of opening of tender form.

3. The responsibility of damage to the transformer during transportation will be that of the
supplier/contractor. The department will not be responsible for that under any circumstances.

4. The transportation of transformer upto worksite including loading and unloading will be that of the
supplier.

5. Tenders should be submitted on prescribed tender forms duly signed by the tenderer on each page.

6. All entries by the tenderer should be in ink of same colour. Erasing and over-writings are not allowed.
All corrections must be signed by the tenderer.

7. The sealed tenders will be accepted. Unsealed tenders will not be accepted.

8. The sealed envelope containing tender form should also indicate on it the

(a) Tender notice number dated (b) Name of newspaper in which tender notice was published
  (c)Last date of submission of tender form (d) name of tenderer should be very clearly written.

9. One contractor can submit one tender form only.

10. The tenders can be accepted only from registered contractors only. The unregistered contractor
can submit the tender form on certain conditions, which can be seen in the above office
personally.

11. The Superintendent Engineer reserves the right to accept any tender or can approve any part of
the tender. The tenders can be rejected without assigning any reason.

12. The parties whose tenders are found to be offering comparatively high rates will receive back
their earnest money on the same day.

13. The party or contractor whose tender is accepted must sign the contract bond otherwise, their
earnest money is liable to be forfeited to Govt. and tender cancelled.

14. The material as per laid specifications will only be accepted. Any material found to be not as per
specifications will be rejected and that material will be carried back by the contractor at his own expenses.

15. If the party does not supply material even after acceptance of the tender and issue of supply order, in
that case, his earnest money will be forfeited.

16. If the officer responsible for purchases and issuing tender notice desires, he can extend the date of filing
of tender. But this extension of date will appear in all major newspapers of the region.

17. The following interim penalty will be deducted from the bills of the contractor in case of slow interim
progress of supply/work.

Sr. No. %age of completion %age of progress Penalty in default

period required

1 25% 10% 1% of bonded amount

2. 50% 30% 3% of bonded amount

3. 75% 60% 6% of bonded amount

4. 100% 100% 10% of bonded amount

18. The contractor will submit the following documents along-with their bill:

(a) No claim certificate.

(b) B and L form.

(c) Handing over charge paper on inventory form duly signed by the user department
concerned, failing which an amount to the extent of 5% of the bill will be, deducted which
shall be refundable when complied with.

19. All bills are subject to a deduction of 10% towards security, which is refundable at the end of one-
year maintenance period from the date of actual completion of the work.

20. The work/supply by the contractor can be got examined by the Govt., from any other authority,
even outside the department and any defect in the work / material supplied pointed out by them
will have to be rectified by the contractors at their own cost and deduction proposed on account of
bad work or defective supply will be deducted from their bills.

21. All the papers signed by the parties to this contract and bond together and sealed shall be deemed to
form part of the contract bond and shall be read as conditions of contract.

Sd.

Superintendent Engineer (Purchases)

HSEB Punchkula

Harya

Extension of Date of Tender

No. 2000/PK/Har. 27 Date 22-2-2008

The tender notice published on behalf of Supdt. Engineer (Purchases) No.

2000/PK/Har.n26 dated 10-2-2008 in connection with purchase of 132 K. V. Power transformers, the
date of receipt of tender form is hereby extended up-to 3-3-2008 (11.30 a.m.). The tenders will now
be opened at 2 p.m. on the same day.

The terms and conditions will remain same.

Supdt. Engineer (Purchases)

HSEB Panchkula Haryana

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 along-with the tender form. The earnest money is refunded back
to unsuccessful tenderers and adjusted in the security deposits of the successful tenderer.

Security Deposits

It is that amount which is deposited by the successful tenderer with the officer responsible for
purchases, as a guarantee that the material will be supplied as per terms and conditions or the work
will be completed as per agreement and well in time. A total of 10% of the total cost of material or
10% of the total expenditure agreed for the work is deposited. This amount 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 forfeited in the event of unsatisfactory work or
supplies.

QUOTATION
An offer in terms of rates made by the supplier or manufacturer in a sealed envelope in reply to a
quotation letter for supply of material or undertaking some work on the basis of some terms and
conditions is called' 'Quotation". The letter of quotation is released to selected parties/suppliers only.

The quotation letter addressed to various suppliers/manufacturers for supply of

material upto a maximum of Rs. 20,000/= should contain complete specification of material,
quantity, last date of receipt of offer, date and time of opening of quotation, conditions of delivery,
payment of local taxes, rates valid up-to (months) from the date of issue of quotation etc. The
quotations are called for small purchases where as tenders are called for large-scale purchases/ sales
or a work exceeding the amount of Rs. 20000-00.

The requisition form, quotation form, comparative statement form and purchase order
form is same as tested for tenders.

OTHER IMPORTANT FACTORS OF ESTIMATING AND COSTING

The factors mentioned below are also equally important in estimating and costing. The subject will

remain incomplete if due weightilge is not given to the under mentioned factors:

1. Contingencies.

2. Overhead charges.

3. Supervision charges.

4. Production cost.

5. Profit.
6. Storage charges.

7. Tools and plant charges.

8. Total cost.

Contingencies: During completion of the project, there can be 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 labour rates etc. Such additional expenses are called contingencies. For this, 3% to 5%
of the material cost and direct labour cost is estimated to be on contingencies. This amount fully
compensates additional material cost, labour cost and other allied expenses, which could not be
accounted for. These expenses may be due to natural calamities such as floods, earthquake, storms,
hailstorm etc.

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
to be incurred such as Govt. taxes. Additional expenses on labour etc. are called overhead charges.
These overhead expenses are incurred daily in one form or the other for instance, purchase of petty
items of material, salary of administrative staff, rent (if any), traveling expenses, advertisements,
insurance. 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 expenses. For convenience on administrative point of view. The overhead expenses are
divided into two categories:

(a) Maintenance overhead charges on installation.

(b) Administrative overhead charges.

(a) Maintenance overhead charges: This expenditure is on keeping the machines in working order
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 category.

(b) Administrative overhead charges: Funds are required to run the administration of various
departments and their employees properly and efficiently. The expenditure involved on functioning of the
departments such as purchase section, sale section. Salaries section, accounts section etc. fall in
administrative overhead charges categories. The other expenses such as, office furniture, stationary.
Reception and stay arrangements of guests. Payment of commission on sales. Publicity of products,
dispatch of material, price control, transport, sales tax, payment of salaries to employees etc. are part of
administrative overhead charges.

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
charges is 1 % to 1.5% of the total cost.

4. Production cost: When cost of material for the project is added to labour cost on the project and
overhead charges on this product. it is called production Cost or Production cost = Cost of material +
Labour charges + Overhead expenses (maintenance, administrative and supervision charges

5. Profits: The profits are calculated on the basis of total expenses involved on the project so far up to
completion stage and the contract money signed while signing an agreement on tender. This profit can be
from 10% to 30% or even more if expenditures are controlled and full efficiency is exercised while
working on the project. The profit percentage can fall in the event of poor planning, inadequate and
inefficient staff, lack of proper supervision, purchase of inferior quality material on comparatively higher
rates etc. If estimate has been prepared accurately, definite percentage has been allowed for contingencies
and standing charges, then some percentage of profit is added. It is profit to contractor. 6. Storage
charges: After purchase of material, the cost involved to transport the material to store, transport expenses
on transporting the material to work site, labour expenses on loading and unloading the material are called
storage expenses. The expenses are 2% to 3% of the total cost on purchase of material.

7. Tool and plant charges: The machines, equipments and tools are required to conduct the work
on the project. The expenditure on purchase of tools components and machines are not accounted for as
overhead charges. This expenditure is made a part of depreciation on tools, equipments and machines and
expenses on damage and breakage losses are called tools and plant expenses. This is 2% of the total cost on
material.