Calculating Labor Cost using Unit Pricing Method:

 Break down the project into individual tasks or units of work.

 Estimate the time required to complete each task.
 Establish the hourly rates for both skilled and unskilled labor.
 Determine the number of workers needed for each task.
 Multiply the hourly rate by the estimated time for each task to calculate the unit cost.
 Multiply the unit cost by the number of workers to determine the labor cost for each task.
 Sum up the labor costs for all tasks to find the total labor cost of the project.

Example: Construction of a small bridge

Tasks:

Excavation for foundation

Installation of support columns

Bridge deck construction

Installation of railings

Landscaping around the bridge

Time Estimation:

Excavation for foundation: 40 hours

Installation of support columns: 60 hours

Bridge deck construction: 120 hours

Installation of railings: 40 hours

Landscaping: 80 hours

Rate:

Skilled labor: PHP 450 per hour

Unskilled labor: PHP 300 per hour

Worker Allocation:

Excavation for foundation: 1 skilled worker

Installation of support columns: 2 skilled workers

Bridge deck construction: 4 skilled workers, 2 unskilled workers

Installation of railings: 2 skilled workers

Landscaping: 3 skilled workers, 2 unskilled workers

Unit Cost Calculation:

Excavation for foundation: PHP 450/hr × 40 hrs = PHP 18,000

Installation of support columns: PHP 450/hr × 60 hrs × 2 workers = PHP 54,000

Bridge deck construction: (PHP 450/hr × 120 hrs × 4 workers) + (PHP 300/hr × 120 hrs × 2 workers) =
PHP 216,000 + PHP 72,000 = PHP 288,000

Installation of railings: PHP 450/hr × 40 hrs × 2 workers = PHP 36,000

Landscaping: (PHP 450/hr × 80 hrs × 3 workers) + (PHP 300/hr × 80 hrs × 2 workers) = PHP 108,000 +
PHP 48,000 = PHP 156,000

Labor Cost Computation:

Excavation for foundation: PHP 18,000

Installation of support columns: PHP 54,000

Bridge deck construction: PHP 288,000

Installation of railings: PHP 36,000

Landscaping: PHP 156,000

Total Labor Cost:

Summing all the labor costs gives the total: PHP 18,000 + PHP 54,000 + PHP 288,000 + PHP 36,000 +
PHP 156,000 = PHP 552,000.

Calculating Labor Cost using Rule of Two Method:

 Determine the total projected cost of the construction project. This includes all expenses such as
materials, equipment, permits, fees, labor, and any contingencies.
 Labor costs typically range from 40% to 50% of the total project costs, based on industry
standards and past experience.
 Multiply the estimated total project costs by the chosen percentage (expressed as a decimal).

Construction of a small commercial building. After considering all expenses including materials,
equipment, permits, fees, labor, and contingencies, the estimated total project cost is PHP 2,500,000

Choose Labor Costs Proportion: Based on your experience and industry standards, you decide to use a
labor cost proportion of 45%

Apply the Rule of Two:

Labor Cost Proportion: 45% = 0.45 (as a decimal)

Labor Cost = 0.45 * PHP 2,500,000 = PHP 1,125,000

So, according to the Rule of Two, you estimate that labor costs for this construction project will be
approximately PHP 1,125,000
Calculating Material Cost:

 Determine the types and quantities of materials required for the project. This includes raw
materials, components, supplies, and any other items needed for construction.
 Obtain the prices of the materials from suppliers or market research. Prices may vary based on
factors such as quantity discounts, quality grades, and location.
 Multiply the quantity of each material required by its respective unit price. This will give you the
cost of each type of material.
 Add up the costs of all materials to get the total material cost for the project.

Example: Computation of Roofing Materials

Building dimensions: Length = 20 meters, Width = 15 meters

Roof slope: Assume a pitch of 20 degrees for a gable roof

Based on these assumptions, we can estimate the roofing area. Then, we'll calculate the material costs
for each component: roofing sheets, purlins, and trusses.

Roofing Area:

Calculate the total roof area:

Total area = (Length × Width) × Number of storeys

Total area = (20 meters × 15 meters) × 3 = 900 square meters

Adjust for roof slope: Since we have a gable roof with a 20-degree pitch, the effective area will be greater
than the horizontal area. Let's assume a correction factor of 1.1 for this pitch.

Effective area = Total area × 1.1 = 900 square meters × 1.1 = 990 square meters

Material Costs:

Roofing Sheets:

Cost per square meter: PHP 300

Total cost = Area × Cost per square meter

Total cost = 990 square meters × PHP 300/square meter = PHP 297,000

Purlins:

Length of purlins required: Perimeter of the building (2 × Length + 2 × Width) × Number of storeys

Length = (2 × 20 meters + 2 × 15 meters) × 3 = 105 meters

Number of purlins needed: Length of purlins required / Standard length (let's assume 8 meters for this
calculation)

Number of purlins = 105 meters / 8 meters = 13.125, rounded up to 14 pieces

Cost per purlin: PHP 150 per linear meter

Total cost = Number of purlins × Length per purlin × Cost per linear meter
Total cost = 14 pieces × 8 meters × PHP 150/meter = PHP 16,800

Trusses:

Trusses are typically engineered and priced per piece. Let's assume the design and pricing are handled
separately by a truss manufacturer. For this calculation, we'll estimate PHP 50,000 for all trusses.

Roofing Underlayment:

Cost per square meter: PHP 50

Total cost = Area × Cost per square meter

Total cost = 990 square meters × PHP 50/square meter = PHP 49,500

Nails/Screws:

Estimate: 1 kilogram is sufficient for 10 square meters

Total kilograms needed = Area / 10

Total kilograms needed = 990 square meters / 10 = 99 kilograms

Cost per kilogram: PHP 100

Total cost = Total kilograms needed × Cost per kilogram

Total cost = 99 kilograms × PHP 100/kilogram = PHP 9,900

Total Material Cost:

So, the estimated roofing material cost for the 3-storey classroom building is PHP 423,200.
Calculating Equipment Cost:

Identify Equipment Requirements

Identify the types and quantities of equipment required for the project.

Example:

For a construction project in the Philippines involving earthwork, you might need excavators, bulldozers,
and dump trucks.

Determine Equipment Rates

Research or obtain equipment rental rates from reliable sources such as equipment rental companies,
industry databases, or government publications. Rates may vary based on factors like location, duration
of use, and type of equipment.

Example:

Excavator: PHP 3,000 per hour

Bulldozer: PHP 4,500 per hour

Dump Truck: PHP 2,500 per hour

Estimate Utilization

Estimate the number of hours each piece of equipment will be utilized during the project. This can be
based on historical data, project schedules, or expert judgment.

Example:

Excavator: 200 hours

Bulldozer: 150 hours

Dump Truck: 300 hours

Calculate Equipment Costs

Multiply the equipment rental rates by the estimated utilization to calculate the total cost for each piece of
equipment.

Example:

Excavator Cost = PHP 3,000/hour * 200 hours = PHP 600,000

Bulldozer Cost = PHP 4,500/hour * 150 hours = PHP 675,000

Dump Truck Cost = PHP 2,500/hour * 300 hours = PHP 750,000

Summarize Total Equipment Cost

Sum up the individual equipment costs to obtain the total equipment cost for the project.

Example:
Total Equipment Cost = PHP 600,000 + PHP 675,000 + PHP 750,000 = PHP 2,025,000

Consider Contingencies and Adjustments

Factor in any contingencies or adjustments such as fuel costs, maintenance expenses, or fluctuations in
rental rates to ensure the accuracy of the estimate.

Example:

Add a 10% contingency for fuel and maintenance: PHP 2,025,000 + (10% of PHP 2,025,000) = PHP
2,227,500
Calculating subcontracting Cost:

1. Identify Subcontracted Work:

Determine the specific tasks or portions of the project to be subcontracted.

Example:

Electrical wiring and installation

Plumbing and sanitary works

Painting and finishing

2. Obtain Subcontractor Quotes:

Request quotes from potential subcontractors for each identified task.

Example Quotes (per square area):

Electrical: PHP 150/sq. meter

Plumbing: PHP 100/sq. meter

Painting: PHP 50/sq. meter

3. Negotiate Terms and Conditions:

Negotiate payment terms, schedule, and scope of work with the selected subcontractors.

Example Negotiated Terms:

Payment terms: 30% upfront, 70% upon completion

Schedule: Electrical - 4 weeks, Plumbing - 3 weeks, Painting - 2 weeks

4. Finalize Subcontractor Costs:

Finalize the costs based on the negotiated terms and conditions.

Example Final Costs (for 1000 sq. meters):

Electrical: PHP 150/sq. meter * 1000 sq. meters = PHP 150,000

Plumbing: PHP 100/sq. meter * 1000 sq. meters = PHP 100,000

Painting: PHP 50/sq. meter * 1000 sq. meters = PHP 50,000

5. Consider Contingencies:

Factor in a contingency allowance for unforeseen expenses.

Example Contingency (10% of total subcontractor costs):

Total Subcontractor Costs (before contingency): PHP 300,000

Contingency (10%): PHP 30,000

Total Subcontractor Costs with Contingency: PHP 330,000

Calculating Overhead Cost:

 Identify Overhead Costs

Administrative salaries for project managers, accountants, and administrative staff.

Office rent for the project management office in the Philippines.

Utilities such as electricity, water, and internet for the project management office.

Depreciation of office equipment used for project management.

Insurance premiums for the construction project in the Philippines.

Property taxes applicable to the construction project in the Philippines.

 Classify Overhead Cost

Fixed Overhead Costs: Administrative salaries, annual insurance premiums.

Variable Overhead Costs: Utilities (electricity, water) which may vary month to month.

Direct Overhead Costs: Administrative salaries directly related to managing the construction project.

Indirect Overhead Costs: Office rent, utilities, depreciation, insurance premiums, and property taxes.

 Allocate Overhead Costs

Allocate administrative salaries based on the percentage of time spent.

Allocate office rent based on the square footage of office space used for managing specific project.

Allocate utility costs based on the proportion of office resources used for managing the project.

Allocate depreciation costs based on the usage of office equipment for the project.

Allocate insurance premiums and property taxes based on the project's budget or duration.

 Determine Overhead Rate

Calculate the total overhead costs incurred for managing the project in the Philippines.

Determine the allocation base, such as total project cost or total direct labor hours.

Divide total overhead costs by the chosen allocation base to get the overhead rate in the Philippines.

 Apply Overhead Rate:

Apply the calculated overhead rate to various cost elements of construction project in the Philippines,
such as labor costs, material costs, and equipment costs.
Example: 3-storey Classroom

Identified Overhead Costs:

Administrative salaries: ₱200,000

Office rent: ₱50,000

Utilities: ₱20,000

Depreciation of equipment: ₱30,000

Insurance premiums: ₱25,000

Property taxes: ₱15,000

Allocation Base:

Total square footage of office space used for project management: 200 square meters

Calculation of Total Overhead Costs:

Total Overhead Costs = Sum of all overhead costs

Total Overhead Costs = ₱200,000 + ₱50,000 + ₱20,000 + ₱30,000 + ₱25,000 + ₱15,000

= ₱340,000

Calculation of Overhead Rate:

Overhead Rate = Total Overhead Costs / Allocation Base

Overhead Rate = ₱340,000 / 200 sq. meters

≈ ₱1,700 per square meter

Application of Overhead Rate:

Let's say the three-story classroom building has a total construction area of 500 square meters.

Overhead Cost = Overhead Rate * Total Construction Area

= ₱1,700 per square meter * 500 square meters

= ₱850,000
Calculating Profit Cost:

 Estimate Total Project Costs

o Calculate all direct costs (materials, labor, equipment) and indirect costs (overhead,
administrative expenses) associated with the project.
 Determine Desired Profit Margin
o Decide on the desired profit margin or markup percentage. This could be based on
industry standards, company policy, market conditions, and project risk.
 Add Profit Margin to Total Costs
o Apply the desired profit margin to the total project costs to determine the profit amount.
This is typically done by multiplying the total costs by (1 + profit margin).
 Calculate Total Contract Price
o Sum the total project costs and the profit amount to arrive at the total contract price that
the client will pay.
 Consider Contingencies and Risk
o Factor in contingencies and risk allowances to account for uncertainties and unexpected
events that may affect costs or profits during the project lifecycle.

Example:

Estimate the profit for a civil engineering project to construct a bridge.

Total Project Costs:

Direct Costs: ₱10,000,000

Indirect Costs (Overhead, Administrative Expenses): ₱2,000,000

Total Costs = ₱10,000,000 + ₱2,000,000 = ₱12,000,000

Desired Profit Margin: 15%

Profit Amount:

Profit = Total Costs * Profit Margin = ₱12,000,000 * 0.15 = ₱1,800,000

Total Contract Price:

Total Contract Price = Total Costs + Profit Amount = ₱12,000,000 + ₱1,800,000 = ₱13,800,000
Calculating Earthworks Cost

 Quantity Takeoff
o Calculate the volume of earth to be excavated or filled based on the building's footprint
and site conditions.
 Soil Analysis
o Analyze soil samples to determine soil type, density, and any potential complications
(e.g., rock formations, groundwater).
 Equipment and Labor Requirements
o Determine the equipment needed for excavation and hauling (e.g., excavators, dump
trucks) based on the volume of earthwork. Estimate labor requirements for excavation,
compaction, and site preparation.
 Material Costs
o Estimate the cost of materials such as soil, gravel, and geotextiles required for
earthworks.
 Overhead and Contingencies
o Allocate overhead costs (e.g., project management, site facilities) and contingencies to
account for unforeseen circumstances.
 Total Cost Calculation
o Sum up the costs of equipment, labor, materials, overhead, and contingencies to
determine the total earthworks cost.

Example:

Estimate the earthworks cost for a 500 square meter apartment building construction.

Quantity Takeoff:

Assume an excavation depth of 1.5 meters for the building's foundation and site preparation.

Volume of earthwork = Area * Depth = 500 sqm * 1.5m = 750 cubic meters (assuming both cut and fill)

Soil Analysis:

Assume the soil type is cohesive clay, which requires moderate excavation effort.

Equipment and Labor Requirements:

Equipment: Excavator (medium size), dump trucks.

Labor: Excavation crew, site supervisor.

Material Costs:

Assume a material cost of ₱400 per cubic meter for excavation.

Material cost = 750 cubic meters * ₱400/cubic meter

= ₱300,000

Equipment Costs:

We'll estimate the equipment costs based on typical rates for medium-sized excavators and dump trucks.
Assuming 10 hours of equipment usage:

Excavator cost: 10 hours * ₱2,500/hour = ₱25,000

Dump truck cost: 10 hours * ₱1,800/hour = ₱18,000

Total Equipment Costs = ₱25,000 (excavator) + ₱18,000 (dump truck) = ₱43,000

Labor Costs:

Assuming a crew of 4 workers, with a daily rate of ₱800 per worker:

Excavation crew cost: 4 workers * ₱800/day/worker * 2 days = ₱6,400

Additionally, let's include the cost of a site supervisor at ₱1,500 per day for 2 days:

Site supervisor cost: ₱1,500/day * 1 supervisor * 2 days = ₱3,000

Total Labor Costs = ₱6,400 (excavation crew) + ₱3,000 (site supervisor) = ₱9,400

Total Direct Costs:

Total Direct Costs = ₱300,000 (material) + ₱43,000 (equipment) + ₱9,400 (labor)

= ₱352,400

Overhead and Contingencies:

Overhead: 10% of ₱352,400 = ₱35,240

Contingency: 5% of ₱387,640 = ₱19,320

Total Earthworks Cost:

Total Earthworks Cost = ₱352,400 (direct costs) + ₱35,240 (overhead) + ₱19,320 (contingency)

= ₱406,960

So, the estimated cost of earthworks for the 500 square meter apartment building is approximately
₱406,960. Adjustments may be necessary based on specific project requirements and site conditions.