Estimation & Costing

CH. 1 - ESTIMATION
 ESTIMATION
 Estimation is a technique of calculating the various quantities and
expenditure to be incurred on a work.

 Estimation is carried out to give –

i. Idea of the time required

ii. Idea of the cost required
iii. Idea of the quantity of material required
iv. Controlling the expenditure
v. Helps in inviting the tender
Following data are required for Estimation :-

1. Drawings

2. Specifications ( General and Detailed )

3. Unit rate of all items

Type of Estimation -

Estimation is divided into following two types-

1. Preliminary estimation

2. Detailed estimation
 PRELIMINARY ESTIMATION
This is also known as Approximate estimation or Abstract estimation or

Rough estimation.

It’s the estimate that is prepared in initial stage to know the approximate cost

or financial aspect of the project.

For this estimation no detailed knowledge is required as it mostly done on the

basis of practical knowledge.

Its done to obtain administrative approval of the project.

Approximate estimate can be done by following
method :-

1. Plinth area method

2. Cubical rate method

3. Unit rate method

4. Typical bay method

Classification of different area for a structure :-

i. Plinth Area

ii. Carpet area

iii. Floor Area

iv. Set back Area

v. Circulation Area
i. Plinth Area :-
• It is The built up covered area of a building measured at floor level of any
story.
In Plinth area following shall be included [As per IS 3861-
2002] :-

Area of wall at the floor level excluding

plinth offsets if any.

Shaft for sanitary, water supply

installation, electrical installation, fire
fighting, air conditioning, lift etc.

Area of stair case

In case of open verandah with parapet =

1) 100% area for the portion protected by projections above.

2) 50% area for the portion unprotected by projections above.

Protected verandah Unprotected verandah

For balcony =
1. 100%. of area of balcony protected
by projection above.
2. 50% of area of balcony unprotected
by projection above.

In case of ALCOVE made by

cantilevering slab =
1) 25% area of alcove of height 1m.
2) 50% area of alcove of height 1-2m.
3) 100% area of alcove of height more
then 2m.
Excluded in plinth area =

2. Area of architectural band, Cornice.

1. Area of Loft

3. Area of vertical
sun breaker.
 4. Open platform
5. Terrace
6. Open or service stairs case
7. machine room, towers above terrace
level.
9. Courtyard Area
8. Area of mumty
ii. Carpet Area :-
The covered area of the usable spaces of room at any floor is
termed as carpet area.
It is measured b/w walls to walls within the building.
It is the sum of actual area which can be carpet.
Followings are not included in carpet areas (lets termed as X) :-
 Wall area, veranda, corridors, passages, entrance hall, porch,
stair case, stair cover, lift shaft, bathroom, machine room, kitchen,
and pantry, store canteen, Ac duct, shaft for sanitary work.

 Carpet area = Plinth area - (X)

 Plinth area is 10-20% more than carpet area.

Type of Building Carpet area

Office 60-75%
Residential 50-65%
iii. Floor Area :-

It is the plinth area excluding area of walls or the total area of
floor in between walls and consists of floor of all rooms verandah,
passages, corridor etc.

Floor area = Plinth area - wall area.

iv. Set back area :-

Set back is the minimum open space required around any building.

This distance is provided to keep the construction away from roads, waters
bodies, and other buildings.

Its used for natural vegetation and to provide service line and rain water
disposal.

This value is provided as per city law & and its different for different cities.
v. Circulation area :-
Area that is helpful in movement of people through the building,
around the building or b/w the building is termed as circulation area.
Example: Verandah, Lobbies, corridors, stairs, lift, landing etc.

These are classified into two.

(1) Vertical circulation area (stair case, lift) = [3% of plinth area]

(2) Horizontal circulation area (corridor, passage, balcony, verandah,

lobby) = [7% of plinth area]
Floor area ratio (FAR)
1. Plinth area method :-
As per this method the approximate cost of the project can be calculate
by just multiplying the plinth are of the building for the different floors
with the rate of plinth area.

Approximate cast = Plinth area x Rate of plinth area

This method less accurate.

(2) Cubical content method
• It is more suitable to be applied for multistoried buildings.

Approximate cost = Volume x Cubical rate.

• More accurate then plinth area method or can say that This
method is most accurate in approximate estimation method
3. Unit rate method :-

 In this method estimate is made by considering the unit rate of

different items.
 Approximate cost = Number of units x unit mate.

Type of building Unit of measurement

School building Bench/student/classroom
Theatres/ stadium Seat
Bridge Span
Hospital Bed
water tank Liter
Highway KM
4. Typical bay method :-
In this method estimate is made by considering the cost of bay.

Approximate cost = Number of Bays x Bay rate (span rate)

This method is generally used for construction of bridges

 Detailed estimation
• This method is most reliable then previous methods.

• This detailed estimate is required for Technical sanction.

In this method estimate is prepared in two stages-

(i) In the first stage, different quantities or items of project are

calculated.

(ii) In the second stage, cost of each item is calculated.

Quantity of item is represented in form of "Measurement sheet"

and cost of item is reported in form of "Abstract sheet".

Total actual cost = Quantity x Rate of item

Retailed estimate can be done by any of the following
method -

1. Revised estimate method

2. Supplementary estimate

3. Revised and supplementary estimate

4. Annual repair and maintenance estimate.

1. Revised estimate method :-
• It is done when cost of work exceeds by 5% of original sanctioned cost

or when cost of work exceeds by 10 % of administrative sanction or

when there is major deviation from the original proposal.

2. Supplementary estimate :-
This is fresh detailed estimate in addition to the original sanctioned
estimate prepared when additional work is also to be carried out in
the project.

The abstract of cost shows the amount of original sanctioned

estimate and supplementary amount for which the approval is
required.
3. Revised and supplementary estimate :-

• It is used when these is deviation in material, design and change in

construction or items of works which require both revised and

supplementary estimate.
4. Annual repair and maintenance estimate :-

This estimate is used for repairs and maintenance of structure like

painting, white washing, polishing, filling the leakage, pot holes

repair etc.
Sequence of preparing an estimate :-
Approximate estimation

Detailed estimation

Supplementary estimate

Revised estimate
Administrative approval
For any project to be executed by department, approval from
competent authority in required with respect to the cost of work on
the basis of approximate estimate and it is termed as administrative
approval.

Thus administrative approval denotes the formal acceptance by the

administrative department for the proposal of incurring expenditure
Expenditure sanction

It is done by financial department in which it allocates the

required fund for the execution of work.

Technical sanction

The sanction of the detailed estimate, design calculations, quantity of

works, rate and cost of the work by the competent authority of the

engineering department is known as technical sanction.

Schedule of Rates :-
• List of rate of all the items like labour, material, transportation etc are
mentioned in a book which is known as "schedule of rate book".

It in prepared by CPWD or PWD

It in divided into three types –

1. Common schedule rate (CSR)

2. State schedule rate (SSR) –

3. District schedule rate (DSR)

Degree of accuracy (IS-1200)
(IS-1200) = it deals with methods of measurement of building and civil
engineering work.

Dimension of a member shall be measured up to 0.01m.

[if it is more than 25m, it is measured up to 0.1m].

Area shall be measured up to 0.01 m²

volume is measured up to 0.01 m³

Mass shall be measured up to 1kg.

Wood work shall be measured up to 0.002 m³

Reinforcement shall be measured up to 0.005 m.

Thickness of slab projected outside the beam or column shall be

measured up to 0.005 m.
Types of work according to cost :-
 Work can be classified into there on the basis of cost of the work
as -

Work Cost
Petty work Less then 50,000
Minor work 50,000 – 2,00,000
Major work More then 2,00,000
LUMPSUM COST :-
• While preparing an estimate it is not possible to find the details of Petty
items hence their lumpsum value in considered.
• Petty items = These are minor or insignificant works in civil engineering.

• It includes –
1) Contingency
2) Work charge establishment
3) Tools and plants
4) Departmental cost
5) Sanitary and waters supply
6) Electrification
1). Contingency :-
Also known as emergency expenses

Its unforeseen or INCIDENTAL expenses which cannot be predicted

earlier and their character cannot be classified.

Example – accident at site.

Its value is taken as 3-5% of the estimated project cost.

2). Work charge establishment :-

During the execution of the project certain services are required, expense,

which is paid from work charge establishment.

Example – Work assistance, watchman, security camera, supervisor etc.

Its value is taken as 1.5 – 2 % of the project cost.

3). Tools and plants :-

• It is the cost of tools and machines purchased or hired for the

execution of the project.

• Its value is taken as 1 - 1.5 % of the project cost.

4). Departmental cost :-

This is also known as engineering cost.

It is the cost of engineer for certain work like designing, planning,

supervision etc.

Its value is taken as 10 - 15 % of the project cost.

Its value is maximum from all lumpsum cost.

5). Sanitary and waters supply :-
Its value is taken as 8 % of the project cost.

6). Electrification :-
Its value is taken as 8 % of the project cost.

7). Water charges :-

Its value is 1 -1.5% of the project cost.
ESTIMATION & COSTING

CH. 2 - SPECIFICATIONS
 SPECIFICATIONS
➢It is used to provide the description of the work required to
prepare the estimates.
➢Specifications are of following two types-

1. General specifications

2. Detailed specifications
General specifications
1. Provide general description of
work.
2. It specifies material, quantities,
proportion of material to be used
(e.g.- Flooring,)
3. It gives general idea of work
4. It is required to prepare
approximate estimate
Detailed specifications
1. Provide detailed description of
work.
2. Specifies quantities of material,
workmanship to be adopted in
detail. (e.g.- Concrete flooring)
3. It gives nature and class of work
in detail.
4. It is required to prepare detailed
estimate
Units of measurement of various items of work :-
S Particulars of item Units of Units of
No measurement payment

1 Earthwork
Per
1. Earthwork in excavation CUM
CUM
2. Earthwork in filling in foundation Per
CUM
trenches CUM
Per
3. Earth work in filling in plinth CUM
CUM
S No Particulars of item Units of Units of
measurement payment

2 Concrete
1. Lime concrete in foundation CUM Per CUM

2. Cement concrete in lintels CUM Per CUM

3. RCC in slab CUM Per CUM

4. Cement concrete or RCC in chujja, sunshade CUM Per CUM

5. Lime concrete in roof terracing (thickness
SQM Per SQM
specified)
6. Cement concrete bed CUM Per CUM
7. Reinforced concrete sunshade (specified width
CUM Per CUM
and height)
S Particulars of item Units of Units of
No measurement payment
Damp proof course (DPC) Per
3 SQM
(thickness mentioned) SQM
S Particulars of item Units of Units of
No measurement payment

4 Brick work
1. Brickwork in foundation CUM Per CUM

2. Brickwork in plinth CUM Per CUM

3. Brickwork in super structure CUM Per CUM

4. Thin partition wall SQM Per SQM

5. Brickwork in arches CUM Per CUM

6. Reinforced brickwork CUM Per CUM

S Particulars of item Units of Units of
No measurement payment

5 Stone work
Per
1. Stone masonry CUM
CUM
S Particulars of item Units of Units of
No measurement payment

6 Wood work
1. Doors and windows frames or chaukhats, Per
CUM
rafters, beams CUM

2. Shutters of doors and windows (thickness Per

SQM
specified) SQM

3. Doors and windows fittings (like hinges, Per

Number
bolts, handles) Number
S No Particulars of item Units of Units of
measurement payment

7 Steel work
1. Steel reinforcement bars etc. in RCC and
Quintal Per Quintal
reinforced brick work

2. Bending, binding of steel reinforcement Quintal Per quintal

3. Rivets, bolts and nuts, anchor bolts, holding down

Quintal Per quintal
bolts

4. Iron hold fasts Quintal Per Quintal

5. Iron railing (height and types specified) Quintal Per Quintal

6. Iron grills SQM Per SQM

S Particulars of item Units of Units of
No measurement payment

8 Roofing
Per
1. RCC and RB slab roof (excluding steel) CUM
CUM
2. Lime concrete roof over and inclusive of
Per
tiles or brick or stone slab etc. (thickness SQM
SQM
specified)
Per
3. Centering and shuttering formwork SQM
SQM
Per
4. AC sheet roofing SQM
SQM
S No Particulars of item Units of Units of
measurement payment

9 Plastering, pointing and finishing

1. Plastering – cement or lime mortar (thickness and
SQM Per SQM
proportion specified)

2. Pointing SQM Per SQM

3. White washing, color washing, cement washing,

SQM Per SQM
(number of coats specified)

4. Distempering (number of coats specified) SQM Per SQM

5. Painting, varnishing (number of coats specified) SQM Per SQM

S Particulars of item Units of Units of
No measurement payment

10 Flooring
1. 25mm cement concrete over 75mm lime Per
SQM
concrete floor (including lime concrete) SQM

Per
2. 25mm or 40mm cement concrete floor SQM
SQM

3. Doors and window sills (CC or cement Per

SQM
mortar plain) SQM
S Particulars of item Units of Units of
No measurement payment

11 Rain water pipe / plain pipe RM Per RM

Per
12 Steel wooden truss Number
Number

Per
13 Glass panels (supply) SQM
SQM

Per
14 Fixing of glass panels or cleaning Number
Number
 Chujja, sunshade Thin partition wall

Arches
Reinforced brickwork
Doors and windows frames or chaukhats Rafters

Shutters of doors and windows Doors and window sills

Binding of steel reinforcement Anchor bolts holding down bolts

Iron hold fasts Iron railing Iron grills

Centering and shuttering formwork AC sheet

Plastering Pointing
Steel wooden truss Glass panels
 Major item of work
1. EARTHWORK :-

➢Measurement is done in - m3
➢Example - excavation, cutting, filling, banking etc.

But –

➢if Depth of excavation < 30 cm then measurement in (m²).

➢if trench width >1.5m and depth < 30cm measurement in (m²)

➢In earthwork lead is taken as 30 m and lift is 1.5 m.

Lead :-
It is the average distance between
source of soil to the deposition of soil.
The costing is done on the basis of
lead for metalled road and if the
surface is changed the a modification
is to be applied.
Type of surface Modification factor
Metalled 1
Cart 1.1
Sandy 1.4

Lift :-
It is the Average height from source
of soil to point of deposition.
 What is a metalled road?

✓Metalled roads are those constructed with cement,

concrete, or bitumen of coal. These roads can be used in the
rainy season as well. Thus they are also known as all-weather
roads. Unmetalled roads don't have road metal. These are
either natural pathways or mud roads.
2. STEEL WORK :-
➢Density of steel: 7850 kg/m³ -
➢Generally steel work is taken as 0.6 to 1% of total area.
𝒅𝟐
➢Weight of steel in 1 m = 0.00617 d² (kg/m) = (where- d = mm)
𝟏𝟔𝟐

➢Its measurement is done in QUINTALS for – [Rolled steel section

(T,L,C), Binding wire, fastener (bolt, rivet), wire netting ]

➢Measurement is done in SQM for - [Iron gate, rolling shutter, steel

doors, steel windows, iron grill, collapsible gate, GI sheet]
➢ Reinforcement, wire fencing = running meters.
➢Threading of bolts = running meters.
 fastener

Rolled steel section

GI sheet collapsible gate

wire fencing
Threading of bolts
3. Concreting:-
➢ Measurement is done in m³ for -
[RCC, PCC, CC, precast concrete, rcc chajja, lime concreting etc]

➢But Measurement is done in m² for –

i. DPC (damp proof course)

ii. Lime Concreting in roof terracing

iii. Concrete Jali and jefferie.

iv. Concrete floor

DPC (damp proof course) :-
➢Its Provided on plinth level.

➢Its function is to repels water from entering

into super structure from sub structure

➢Its thickness varies from 2 – 2.5 cm.

➢Its provided with concrete of M10 – M20

grade with water repellent chemicals like-
bitumen, stearic acid, oleic acid.

➢Its measurement is done in SQM.

 Concrete floor
Concrete Jali & jefferie.
4. Plastering :-
➢Its is done to provide finished surface for paint.

➢It protects the masonry work from wear and tear.

➢It not provided for strength as it does not give any strength to brick
masonry.

➢Lime and cement mortar is mostly used for plastering.

➢Its measurement is done in SQM (m²).

➢Thickness of inside plaster - 12mm

➢Thickness of outside plasters - 20mm.

5. Brick work :-
➢Its Measurement is done in CUM (m³) for thickness of
member is more then 10 cm.

➢But for -
i. Half brick work,
ii. partition wall,
iii. brick soiling,
iv. honey comb work, etc
whose thickness is ≤ 10cm the measurement should be done
in SQM (m²).
6. Wood work :-
➢Its Measurement is done in CUM (m³) For member Thickness > 10cm
Like- window frame, door frame, Rafter beam etc.

➢But if member Thickness ≤ 10cm then measurement should be done in

SQM (m²)
Like – window shutters, door shutters, showing of timber, timber wall etc.

Also –
➢Door and window fittings are done in NUMBER
Like – Bolt, Hinges, Handles etc.
7. Stone work :-

➢Any type of stone masonry Measurement should be done in CUM.

Like- Rubble masonry & Ashlar masonry.

8. Flooring :-
➢If the Thickness of floor is more then 7.5 cm then it should be measured
in CUM.

➢But if the thickness of the floor is less then or equal to 7.5 cm then it
should be measured in SQM.

➢Generally the thickness of the floor is varies from 2.5 to 5 cm.

9. Miscellaneous work :-
➢Works like- AC sheet, formwork, Pointing, shuttering, white washing,

colouring, Painting, Dado, Distempering, centering etc. should be

measured in SQM.

➢Electric work should be measured in POINTS or NUMBERS.

➢Works like- Skirting, Cornice, String course, Drip course, Edging,

Bend etc shall be measured in Meter or Running meters.

Difference between “Meter” and “Running Meter”

• In metres, width has to be calculated, whereas, in running

metres, you do not have to measure the width.
• Running metre is used as a unit of measurement if the height,
thickness or width of the product does not matter, such as
furniture, building materials, fabrics, carpets etc.
formwork Pointing
shuttering
 Rules of Reduction
1. Plastering :-

➢If the Area of opening less then 0.5 m² then no deduction should be made.
For members like - Jamb, soffit and sill.

➢If Area of opening is between 0.5-3 m² then Deduction should be made

one side only.

➢If area of opening is more then 3m² then Deduction should be made on
both sides.
2. Masonry work :-
➢No deduction in made for opening up to 0.1m²

➢No deduction is made for lintel, chajjas and offset.

➢No deduction for end of beam, soffit, rafter and purlin up to – 0.05 m²

➢No deduction for bed plate, wall plate, bearing of chajja up to 10 cm.
3. White-washing, colouring, distemper :-
➢During white washing, colouring, distemper on AC and GI sheet area of
washing, colouring and distemper is increased.
Member Area increased Area coefficient (for
one side only)
Corrugated GI sheet 14 % 1.14
Corrugated AC sheet 20 % 1.20
Semi-Corrugated AC 10 % 1.10
sheet

NOTE if these works are carried out on both the side the area
coefficient in doubled.
4. Steel work :-
Bar Bending schedule (BBS) :-
➢It’s a comprehensive list that describe the certain properties of each
reinforcement bar, which are –
1. Location
2. length
3. Mark
4. Numbers
5. bending details.
6. Type
7. Size
These all quantities can be calculated by design drawings except length of
the bar. Hence length is calculating as CRANK LENGTH.
CRANK LENGTH :-

➢The total length of the bar to be provided is termed as

CRANK LENGTH (L).

➢It include the length due to -

1. Bent up of bars

2. Hook length
1. Bent up of bars :-

Bent angle Additional

length
300 0.27 d
450 0.42 d
600 0.57 d
900 0.89 d
2. Hook length :-
Hook length depends on hook angle of the bar –
Angle of Bend for hook Hook length
900 6𝝓
00 or 1800 9𝝓
450 or 1350 12 𝝓

𝝓 = 𝑫𝒊𝒂𝒎𝒆𝒕𝒆𝒓 𝒐𝒇 𝒕𝒉𝒆 𝒃𝒂𝒓

Crank length = Actual length + bent up length + hook length

Brick Soiling :-
• The Process in which base of the brick is formed over the surface is
termed as brick Soiling.
➢Number of conventional brick in 1 M2 of FLAT Soling = 32 (1m2/L*B)
➢Number of conventional brick in 1 M2 of EDGE Soling = 54(1m2/L*H)

FLAT Soling EDGE Soling

Booking Dimensions:-

• The dimensions are booked in the sequence of Length –

Breadth – Height.

• 250X125X75 CONVENTIONAL TYPE BRICKS

ESTIMATION AND COSTING
CH.3 - CONTRACTS & TENDERS
 CONTRACTS
➢It is an agreement between the owner and contractor which is
enforceable by court of law.

➢contract is made so that contractors execute the work as per

specification.

• Contract should be -
(i) contract should be in written.
(ii) subject should be simple and understandable.
(iii) It should be enforceable by court of law.
(iv) There must be free consent by both parties.
(v) Both the parties must be competent to sign the contract.
Contract document Should contain -
(i) Title page :- It has name of work mentioned overs it.
(ii) Index page:- It has page reference with content.
(iii) Tender notice :- It consist of brief description of work, cost of project and
completion time and amount of Earnest money.
(iv) Tender form :- It consist of bill of quantities, contract Rate, and total cost.
(v) Schedule of Rate
(vi) General specification
(vii) Detailed specification
(viii) Drawing at work
(ix) conditions of contract
(ix) conditions of contract.

a) contractors shall deposit 10% of estimated cost as security deposits,

[ it includes 2% of earnest money ]

b) work is open for specification inspection. –

c) For bad work, that work can be dismantled.

d) The work shall be done with specification mentioned in the contract

e) The work shall be completed within project period.

Type of contract contracts :-
1. Item-rate contract :-
➢Its also termed as unit rate or schedule rate contract –

➢In this the contractors undertakes the execution of work on the item
rate basis.

➢The amount to be received by the contractors, depends upon the

quantities of various item of work actually executed.

➢This type of contract are used for public or government projects.

Advantage
i. There is no need of detailed drawing at the time of allotting the contract.

ii. The payment to the contractors is done on the basis of actual work.

Disadvantage
i. The total cost of work in not known at the start of work.

ii. To increase profit, contractor may use poor quality of item.

(30 ka maal 300 me)

2. Percentage rate contract :- (wooden work)
➢It is modified form of item rate contract.

➢In this contract the payment to the contractor are made in percentage of the
work done value.

➢This method is used in state department work.

Advantage

▪ It is profitable to contractors.

Disadvantage

▪ No incentive to finish the job.

▪ Total cost is not known before the start of project.

3. Cost plus fixed fee contract:- (daily basis workers)
➢In this system fixed fee is given as contractors profit irrespective of
total cast of work.

Advantage :- This is to control the tendency of the contractor to increase

the cost of project unnecessarily.

Disadvantage :- Smaller the completion time, More is profit and hence

contractor hurries in this case to complete the project thus compromising
with quality.

➢This type of contract is generally not used.

4. Cost plus variable fee contract :-
➢Its also known as scale of fee contract

➢In this type of contract the contractors is paid by the owner the actual
cost of construction plus an amount of fees inversely variable according
to increase on decrease of the estimated cost.

Advantage :- In this case the contractors shall not try to increase the cost of
project unreasonably.

Disadvantage :- In this case the quality of material can be compromised by

contractors to increase profit.
5. Cost plus fixed percentage contract :- (Aamir ki movies)

➢In this type of contract the contractors is paid the actual cost by the owner

with a certain percentage as fees as agreed in contract.

➢Contractor gets profit as percentage of cost incurred by him.

➢The profit increases with an increase in total cost.

➢In this type of contract, proper control has to be exercised by the owner in

the purchase of material and in managing the manpower.

6. Lum-sum contract :- (bina bataye kaam dena)
➢This is single fixed price contract.

➢In this contract, contractor agrees to perform specific job for fixed sum.

➢The owner provides the contractor exact specification of work.

➢In this contract both parties try to fix the condition of work as precisely as

possible.

➢In this contractor undertakes the construction of a work with all contingencies

to complete in specified time and cost.

Advantage :-
i. Owner is aware of cost of the project before the starting of project.

ii. It is suitable to be used for small project.

Disadvantage :-

i. It is very difficult to accommodate any change in project during it's

execution.

ii. In case of any unforeseen hazard, the entire burden is over

contractor.
7. Labour contract :-

➢ In this owner (dept) pay to the contractor for only the use of
labour in project and all the materials for construction are
arranged by Department.
8. Negotiated contract :-
➢When work is allotted to the contractor by mutual

understanding between the two parties and the cost can be

negotiated, then it is termed as Negotiated contract.

9. Target contract :-

➢In this type of contract additional fee is also given to the

contractor on completion of pre-specified target.

10. Turnkey contract :-

➢Owner is desired to deal with contractor which performs

all the aspect of the project like - planning, drawing,

execution, maintenance.
11. Package contract :-

➢In this contract two or more related jobs are given to a

particular contractor in the form of package.

12. Continuing contract :-

➢ In this type of contract new or additional work is awarded to the

contractor on same agreed term and conditions.

13. Running contract :-

➢Such contracts provides goods and services at specified intervals or

when required by the owner.

➢ In this case price in not fixed and payment is on the basis of

number of unit purchased.

14. Build - Operate - Transfer (BOT) Contracts :-

➢It is a contract in which contractor built the project, operate it and

transfers the work after the completion of the project period.

➢Most of the Highway work projects in India are working on this

contract.
15. Departmental contract :-

➢If no contractor is willing to accept the project on given set of

conditions, then the project is executed by the department itself.

16. Void contract :-

➢If the contract is done with a minor person [below 18 years age]
or without free consent then that contract is not valid and
declared as a void contract.
➢A void agreement is one which cannot be enforced by law.
 Tenders
➢It’s the process of inviting bids or proposals in response to an invitation.
➢It is also defined as an offers in writing to execute the work as specified
by the owner.
Notice inviting tender (NIT) :-
➢It is prepared by administrative department after getting all the
necessary approvals.

➢Sealed tenders are invited by giving advertisement in leading newspaper,

on notice board/ website and sending the letters to prominent contractors.

➢In this notice - description of work, estimated time, Estimated cost,

Earnest money, are mentioned.
Types of tender :-
(1) Local tender :-
In this the tender in invited for any type of work in local area or
surrounding area.

(2) Global tender :-

For a big project, the specified work or designs are required, which
are available in global market, hence for these type of work global
tenders is invited.
(3) Open tender :-
The client advertises this tenders offer in the local newspaper and
its available for all interested contractors.

(4) Sealed tender :-

It in invited for important and big projects.
(5) Limited tenders :-
It is only available for selected contractors.

(6) Single tenders :-

Invitation is given only to one firm to render the service by quoting
their Rates.
Procedure of inviting tender :-
Tender is invited in following steps :-

(i) Preparation of Tender documents

(ii) Issuing of notice inviting tinder

(iii) Submission and opening of tenders and their scrutiny takes place

iv) Acceptance of tender and award of contract.

Tender document
➢A Tender document consist of following –
a) Tender drawings

b) Specification ( General & detailed )

c) Bill of quantities

d) Condition of contract

e) Form of tender

f) Form of agreement

g) Form of Bond
Important terms used in tendering :-

Earnest money :-

➢Its also termed as earnest deposit.

➢Its value is taken as 1-2 % but mostly taken as 2%.

➢It is a guarantee amount deposited by the contractors along with the

tender document to the department to show his seriousness for the

execution of proposed work and to avoid false bid.

Security deposit :-
➢Its value is taken as 5 - 10% but mostly taken as 10%.

➢It is the deposit made by the contractor after acceptance of his tender

➢Its purpose is to get the work done by the contractors as per specification

in stipulated time.

➢This security deposit includes 2% of Earnest deposit.

➢This security deposit is returned after the project is completed.

Tender time limit :-

➢This is also known as Tender validity period.

➢It in the time up to which quoted bid by the contractors is valid.

➢Generally it is in the range of 30-90 days.

Extra item :-
➢Items which are not specified in the tender but are used in

actual during the execution of project are termed as extra

items.
Arbitration :-
➢It in the process of settlement of dispute between contractor

the and the owner.

➢Arbitration is a form of alternative dispute resolution that

resolves disputes outside the judiciary courts.

➢Person who settles the dispute is termed as arbitrator. –

➢The result of arbitration in termed as award.

 Maintenance period :-
➢This is also known as Defect liability period.

➢In this period contractors is required to maintain the entire work, in case
any defect in observed in it.

➢Maintenance period = maximum of (one monsoon period or 6 month after

completion of the project)
Liquidity damage :-

➢It is the amount of compensation paid by the

contractors to the owner in case of any delay of work.

Corrigendum :-
• It is the process of extension of tender notice is termed as corrigendum.

Conditions of issuing corrigendum

a) Not sufficient tender form received.

b) Tender prepared is short for the contractor.

c) major change in specification or drawing or materials.

Envelope systems :-
➢It’s the Procedure to submit the tenders.
a) Envelope - 1 = Earnest money
b) Envelope - 2 = Contractor technical certificate, work experience form,
registration form, tax detail etc.
c) Envelope - 3 = Tender form.
d) Envelope – 4 = It contains all above three Envelops.

➢Opening of the Envelope = [4 1 2 3]

Work order :-

➢After acceptance of tender the work order is issued and

time limit in given to the contractors to pay the security

deposit.
Act of God :-
➢All the natural disasters comes under the act of god.

➢In such case, contractor is not liable for delay in the project
and owner is not liable for any damages.
Mobilization advance :-

➢Some amount of money is given to the contractors for

mobilization of resources to the site is termed as mobilization

advance.
Rejection of particular tender :-
• A particular tender is rejected in following conditions -

(a) Earnest money is not deposited

(b) Tender is not signed by contractor.

(C) contractor is not experienced.

Rejection of all the tenders
All tenders are rejected in following conditions -

a) when there in a fight between the contractors.

b) when any fraud is detected in the submission of tendons.

c) when group formation is suspected between the contractors.

Types of bill :-
(a) first and final bill :-
This bill is used for making payments to the contractors for their work
as well as supplies in a single go for small projects.

(b) Running account bill (RA Bill) :-

It is issued by the contraction upon completion of a part of work.

(c) Final bill :-

Addition of all running account bill is termed as final bill.
Various account form used in estimation :-
• Form no 7 = Cash book

• Form no 21 = Nominal muster roll

• Form no 24 = First and final bill

• Form no 25 = Running account bill

• Form no 26 = Final account bill

• Form no 29 = Measurement book

 Nominal muster roll :-
It is used for keeping a complete record of

(i) Attendance

(ii) Payment.

(iii) Unpaid wages.

(iv) Work done by daily labours on project.

Organization chart of PWD
The organizational structure has six tier hierarchy -

i) Engineer in-chief

ii) chief engineer.

iii) superintending engineer

iv) Executive engineer

v) Assistant engineer

vi) Junior engineer

ESTIMATION AND COSTING
CH. 4 - VALUATION
 VALUATION
➢ It is the process of fixation of cost or return expected of a
building/structure at prevalent rates.

➢This value of structure depends upon the present utility of the

structure.
➢Factors considered for valuation are as follows -
(a) Type of building
(b) Location of building
(c) Building structure and durability.
(d) Quality of The material used.
(e) size of building.
Necessity of valuation of a property :-
1) Mortgage loan

2) Taxation

3) Rent fixation

4) Sell and purchase.

5) For insurance premium

6) For assessment of stamp duty.

COST :-

➢It’s the original cost of construction.

➢It is used to find loss or profit of property value due to

various reasons.
VALUE

➢The preset cost of any engineering structure (sellable value)

is termed as value.

➢It may be less or more then the COST.

Price :-

• Total cost including profit is termed as price.

Price = C + Profit
Gross income :-

➢It is total amount of the income including all receipt from

various sources.

➢The outgoings, the operational cost and collection charges are

not deducted from this.

Net income :-

• It is the amount left after deducting all the outgoings operational

cost and collection charges.

Outgoings :-
• The expenses that are required to be incurred in order to maintain the
revenue of the structure is termed as the outgoings.
• It includes –

(a) Taxes
• These are annual taxes paid by the owner such as - wealth tax, property
tax and municipal tax etc.
• (It varies b/w 10-25% of net income).
(b) Management
• Up to 10% of gross income is used for management purpose which
includes security guard, sweeper etc.
(c) Repairs
• 1.5% of total construction cost is set aside for annual repairs of
building. –
• These repair are must to maintain the building. –
• It is also calculated as 10% of gross income.
(d) sinking fund
• A certain amount of the gross rent is set aside annually as sinking fund
to accumulate the cost of construction at the end of design life.
(e) loss of rent:
• This is also an outgoing in case a building not fully occupied by the
tenants.
(f) insurance
• Premium given against fire and theft is also a type of outgoing.
(g) miscellaneous
• lighting of common area, expenditure of liftman etc. –
• It is applicable for big buildings only.
 Perpetual income :-
• Income received for indefinite period is termed as perpetual income.
E.g. - Pension, royalty

• Royalty refers to a contractual payment by a person for the use of

assets belonging to another person. The payment includes royalty for
the use of intangible assets, such as copyrights, trademarks, or
franchise model agreements. Royalty is also paid for the use of natural
resources, such as mining leases.
Scrap value / Junk value:
• It is defined as the value of an asset or property afters being dismantled.
• It is generally taken to be 10% of the cost of structure.

• This value in computed by subtracting the cost of dismantling the

structure from the cost of dismantled material.

❖scrap value = cost of dismantled material – cost of dismantling the

structure[i.e. Labour cost].

➢This value can be positive, negative or zero.

➢It is positive for steel structure.
➢It is negative for concrete structure.
➢And zero for RCC structure.
Salvage value :-

• It is the value of a building or asset or structure at the end of its utility

period without being dismantled.

• It can also be positive, negative or zero based on the type of building.

Distress value :-
• When the property is sold or purchased at a lowers value than its
market value is termed as distress value.

• -It is observed in following situations –

• like - war zones, Riots, earthquakes, financial problem of seller etc.

Sentimental value :-

➢When the property is sold or purchased at higher rate than it's market

value due to attachment of the some sentiments of the seller or buyer,

it in termed as sentimental value.

Market value

➢It is defined as the value which a property can fetch when sold

out in open market.

➢This value in variable, depending upon the will to buy on sell.

Speculative value :-

➢When the property is purchased at lower rate but it is sold

at higher value it is known as speculative value.

(SHARE MARKET)
Potential value :-

➢When a property is capable of fetching higher value than its

actual cost due to its alterative use it in termed as potential

value.

➢RESIDENTIAL BUILDING CAN BE USED AS SHOPS &

RENT/OFFICIAL
Monopoly value :-

• If the owners demands higher value of the property due to

some advanced feature of property like - location, size,

shape etc, it is termed as monopoly value.

Accommodation value :-

➢when agricultural land is converted into developed land then,

suddenly cost of land increases, that in termed as

accommodation value.
Rateable value

➢Its also termed as rentable value.

➢It is the net annual letting out value of a property obtained after
deducting the amount of yearly repairs and maintenance cost from
gross income.

Rateable value = Gross income - repair and maintenance cost.

Book value :-
➢It’s the value of property or asset as being entered in account book,
after allowing necessary depreciation up to that time.

➢It is independent of the market value.

Book value = original cost - depreciation

➢At the end of design life book value is equal to scrap value or salvage
value as the case may be.
Depreciation :-

➢It is defined as loss in value of an assets or building due to its

continuous use over the period of time.

➢This decrease in value takes place due to wear and tear, impact
Corrosion, change in fashion or design of the structure or assets.

➢A reverse fund must be created in order to realize the total

depreciation at the end of design life.
 Types of depreciation

Physical depreciation Functional depreciation

Contingent depreciation
➢ It in due to change in ➢ It is due to contingency.
➢ It is due to wear and
function, fashion or ➢ E.g - accident, fire, flood,
tear design. earthquakes etc.
E.g - construction ➢ Also known as
equipment - like Obsolescence
tractors, Cranes etc. E.g - electronic
commodities
Depreciation can be computed by any of the following method :-
(A) Straight line method:-
➢In this method it is assumed that the value of an asset or building
decreases by constant amount every year.

Orignal cost (C) − Scrap value (S)

Annual depreciation (D) =
life of structure (𝒏)

➢This method in
recommended for all the
assets which have constant
demand and does not face
obsolescence.
(B) Constant percentage method :-
➢Also known as Declining balance method
➢In this method the property is assumed to loose its value by a fixed
percentage of its book value known as fixed decl9ining book value
(FDB).

Depreciation after x years = C (1 – D)x

(C) Sum of the year's digit method :-
• This method also fall in the category of accelerated type of
Depreciation method like Declining balance method.
• In this method the digits corresponding to the number of each year of
list are listed in reverse order.
• The sum of these digit is then determined
• A depreciating factor for any years in calculated as follows –

𝒐𝒓𝒅𝒆𝒓 𝒏𝒖𝒎𝒃𝒆𝒓
DF =
𝑺𝒖𝒎 𝒐𝒇 𝒕𝒉𝒆 𝒚𝒆𝒂𝒓𝒔

• the depreciation of any year by this method is given as -

D = (C – S) x DF
(D) Sinking fund method :-
• In this method, depreciation of property is assumed to be equal to sinking
fund plus interest over it.

Sinking fund :- It is the required amount to be invested or separated at

fixed interval of time (one month, one year etc), such that at the end of
design life of structure or assets it is equal to the cost of assets or structure.
• Annual sinking fund = sinking fund x sinking fund factors

• ASF =

• Depreciation for any year (m) = ASF x (1+i)m-1

• Where, i = rate of interest per year

(E) Quantity survey method :-
➢In this method, Highly qualified experienced surveyors are required
to compute the detail studies of property cost and depreciation cost.

Life of structure Annual Total Cumulative

(years) depreciation depreciation depreciation
0-5 0% 0% 0%
5-10 0.5 % 2.5 % 2.5 %
10-20 0.75 % 7.5 % 10 %
20-40 1% 20 % 30 %
40-80 1.5 % 60 % 90 %
Free hold property :-

• Any properly which is in complete possession of the owner is known as

free hold property.

• The owners can use this property in a way he likes.

Lease hold property :-

• Any property which is given to some person on yearly payment bases

by the free holder, then the property is termed as lease hold property.

• Lease in India is for 9 to 99 years in case of Structure.

Mortgage loans :-

• Loan which in being raised by the owners against the

property is termed as mortgage loan.

Sinking fund :-
• It is the amount which if it is kept aside annually, at the and of design
life of the building or structure or assets would be equal to an amount,
by which construction, replacement and repairs of building can be
carried out.

• Annual sinking fund = sinking fund x sinking fund factors

Annual sinking fund =

Capital Cost :-

➢Cost of land along with cost of building is termed is termed as

Capital cost.
Year purchase :-

➢It is a Capital sum required to be invested in order to receive the

net income of 1 rupees at the certain rate of interest.

𝟏
Year purchase =
𝒊

Where i = rate of interest

Capitalized value :-

• It is defined as the amount of money whose annual interest at the

highest prevailing rate of interest is equal to net income from the
property.

Capital value = Net income x Year purchase

Annuity :-

• Annual instalment of sinking fund is known as Annuity

Repair :-
• Amount used for repair of structure is termed as follow Repair.

• Repair Amount = 1-1.5% of monthly rent or

= 10-15% of Gross income or
= 1-1.5 % of total cost of the project
Management and collection charge :-

➢Some staff is required for maintenance of the building

➢E.g.- sweeper, liftman, guards etc.

➢The costing of the staff is considered in these charges.

➢It is taken to be 5-10% of gross income.

Methods of valuation :-
• Valuation can be done by any of following methods.

(a) Depreciation method of valuation.

(b) Valuation based on cost.

(c) Valuation based on profit.

(d) Valuation by development method.

(e) Valuation by rental method.