Estimating Equipment

Productivities and
Unit rates for Road
Construction Works.
 PREAMBLE
Estimating for road construction works can be
described as an art and science of forecasting
the cost of executing every road work item or
operation in the road work project in order to
monitor, control and ascertain the actual cost of the
project and the possible overhead and profit . This
is done either during the project inception stage,
preliminary stage, tendering stage or prior to the
commencement of the road works .
 It should be periodical, since no two road works
are the same.
 PREAMBLE
The effectiveness and accuracy of this
operation (estimating) is critical not only to the
success of the project involved but also to help
the management in making some vital decisions
about the operations of the firm that will form a
baseline for other future projects.
 This paper shall discuss on how to achieve
this effectiveness and accuracy as regards to
equipment productivity in road construction
works since equipment cost alone contributes
between 25-50% of the total cost of the project’s
actual works (prel., labour, material, plant) .
 INTRODUCTION
Basically, the approach of this paper in
treating the topic (estimating equipment
productivities and unit rates for road
construction works) is to :
1. Define and discuss the concepts of the terms
involved in the topic.
2. Discuss the principles to adopt and the
factors that can act as a guide .
3. Discuss and explain with a worked example
4. Summarize and conclude based on the
findings
 DEFINITION OF TERMS
For clarity, I will briefly define and explain the
terms in this topic :
That is:

ESTIMATING (From the word Estimate)

EQUIPMENT PRODUCTIVITY (EQUIPMENT

AND
PRODUCTIVITY)

UNIT RATE
 ESTIMATING
In addition to what is in the preamble of this
paper:
Estimating Project cost means developing and
calculating the estimate (monetary resources)
needed to complete every activity in a work
breakdown structure (WBS) , summing these
estimates, and adding appropriate overheads.
These estimates are based on the information
available at a given time ( ref. FOCI Price Index,
Market price survey list, Schedule of Rates,
reliable historical data and experience of the
estimator.
 ESTIMATING
These estimates can be classified under 2 main
categories of cost elements:
DIRECT / OPERATIONAL COST: (Labor ,
Material, Equipment, Subcontractor). Directly
attributed to a particular item of work or activity
AND
INDIRECT COST : Costs related to management
and administration of the project that do not
become a final part of the activity, but are required
for carrying out the activity such as social charges,
taxes safety measures, site staff allowances,
welfare, transportation
 ESTIMATING

The Functional Estimating Methods are:

 Labour Cost Estimating
(Engineering,Tooling,Manufacturing
Planning, Production, Quality Assurance)
 Direct Material Cost Estimating
 Raw Material Cost Estimating
 Equipment Cost Estimating
 Subcontract Cost Estimating
 Indirect Cost
 UNIT RATES
A unit rate describes how many units of the first type of
quantity corresponds to one unit of the second type of
quantity.
unit rate is a ratio between 2 measurements in which
the second term is 1.

Is the cost per unit of an item (work).

UNIT PRICE/MEASURE AND VALUE

 COST CONFIGURATION

Cost Configuration.xlsx
 ESTIMATORS
An estimator is the professional who prepares cost
estimates and whose judgment and experience are
utililized in the application of scientific principles
and techniques to problems of estimation.
It is advisable that the estimator must be a cost
engineer that is familiar with road works or that
has been trained in the field of civil engineering.
Estimators must observe their profession’s ethic
codes
Estimators must be conversant with the metric
system and their conversions. (Linear, Square,
Land and Volume measurement)
 EQUIPMENT
Equipment in this context is talking about
Construction Equipment and this refers to both
Construction Plants which are essentially stationary
or fixed in a place or at the job site (such as
concrete batching plants, aggregate processing
plants, asphalt plant, and any other processing
plants) and machines/equipment which are
portable or mobile, ranging from small hand tools
through tractors, cranes, and trucks required in the
performance of construction works.
 For estimating purposes, plant and equipment
are grouped together as equipment cost.
 PRODUCTIVITY

Productivity is commonly defined as a ratio

between the Output and the Resources used
(input).
It describes how efficiently production inputs
(resources) , such as equipment, labour are being
used to carry out the required work item as stated
in terms of quantity, quality and duration (time).

It is different from efficiency in the sense that doing

unnecessary work efficiently is not productive.
 EQUIPMENT
PRODUCTIVITY
It can be defined as:
Top Equipment Performance = Lowest
Possible equipment hourly cost/Highest
possible hourly productivity.
Top Equipment Performance = Cost hr/Units
of material hr (Cost (N)/Units of material).

It is advisable to use hourly when estimating

for equipment productivity because of accurate
records as in case of any breakdown, repair
work, other usage and stand by time.
 EQUIPMENT
PRODUCTIVITY
There are two characteristics of the equipment and
the cycle that dictate the rate of output.

The first is the cyclic Capacity of the equipment

which establishes the number of units of work done
per cycle.

AND

The second is the cyclic rate or Speed (efficiency)

of an equipment piece.
ESTIMATING FOR
EQUIPMENT
PRODUCTIVITY
 Estimating for Equipment
Productivity
After breaking down of the work to be
done, the cost engineer should select the
specific equipment size and type that has a
production rate suited to the efficient and
economical performance of the work. The
size and number of units required will be
influenced by equipment production rate, job
size, availability of space for equipment
operations, and the project construction
 Estimating for Equipment
Productivity

Prepare a schedule for the various work

tasks, number of shifts to be worked, and
consider the availability and competence of
the equipment operators. Emphasis must be
placed on the importance of establishing a
reasonable production rate and managing of
the equipments.
FACTORS TO BE
CONSIDERED WHEN
ESTIMATING FOR
EQUIPMENT
PRODUCTIVITY
Important considerations in the
preparation of an estimate for equipment
productivity are :

1.SELECTIONOF THE EQUIPMENT

2.MANAGING OF THE EQUIPMENT
 SELECTION OF
EQUIPMENT
An important consideration in the
preparation of an estimate is the selection
of the proper equipment to perform the
required road works.
The cost engineer should carefully
consider type, size, and function of
equipment to arrive at optimum equipment
usage e.g. Excavator – mini, Small,
Medium or Large (130hp – 150hp)
 Some factors to consider during
the selection process are:
1. Equipment capabilities (size).
2.Nature and magnitude of the job.
3.Suitability of equipment
4.Type of materials.
5.Mobility and availability of equipment.
6.Job progress schedule (production rate).
7.Conformance to specification requirements.
8.Onsite batch or production plants.
9.Location (availability of space and site access).
 SOME FACTORS TO CONSIDER
DURING THE SELECTION
PROCESS ARE:
10.Peculiarity of the site area, city (Lagos traffic
and charges).
11. Distances material must be moved.
12. Steepness and direction of grades.
13. Weather conditions (Rubber duck & track)
14. Hauling restrictions.
15. Standby time. (safety talk, town restrictions)
16. Mobilization and demobilization costs
(loading and offloading of freight).
 MANAGING OF THE
EQUIPMENT
On Site and Workshop Maintenance,
services, repair and Checks.
 Spare parts.(Genuine and availability)
Record keeping and Monitoring
Familiarity with the equipment, make,
consumption and salvage.
Reference (s)
DAILY MACHINE COST AND WORK
RECORDS
FUEL CONSUMPTION
D A I LY M A C H I N E C O S T A N D W O R K R E C O R D S

DAILY MACHINE COST AND WORK REC

ORDS.docx
 FUEL CONSUMPTION
REPORT

Weekly Fuel Consumption Report.xlsx

 Contr actors can take the following
six steps to improve equipment
producti vity:
 Keep track of productive, standby and
nonproductive time.
 Consider the hourly cost of owning or renting
equipment.
 Monitor variable vs. fixed costs.
 Manage equipment maintenance and repair.
 Schedule equipment efficiently.
 Select the right equipment for the job.
 Fundamental estimation
questions

 How much effort is required to complete

an activity?
 How much calendar time is needed to
complete an activity?
 What is the total cost of an activity?
 Project estimation and scheduling are
interleaved management activities.
 STEPS
Reliable schedule of basic rate (foci, market survey).
Breakdown of every work item into various activities. (drain
work)
Identify the associated resources with each of the activities
(labour, material, equipment).
Establish quantities of the resources per unit of the activity.
(1m3 of concrete)
Ascribe costs to each of the resources. (direct & indirect
costs) based on a unit rate of the resources per duration.
Analyse the costs to arrive at the total cost for each of the
work item.
 COST RECONCILIATION

Cost Reconciliation - Badagry Road.xlsx

SUMMARY
(Reasons and effects of unrealistic
estimates)
 RE ASONS FOR UN REAL IST IC
ESTIMATE IN R OAD
C ONSTRU CTION W ORK S
Undefined objectives – what you really want
Dictated deadlines
Incomplete plans and inadequate data
Unrealistic resource assumptions and source
Naive estimates/costs
Lack of training in developing estimates (in experience
of the estimator)
Absence of Accountability
Lack of candor (honesty/directness).
Rigid component of work.
No local content/Government policies
 EF F EC TS OF UNRE ALISTIC
ESTIMATE IN R OAD
C ONSTRU CTION W ORK S
Unsatisfactory project outcomes (expected profit is not achieved)
Missed deadlines
Wasted resources (time, equipment, material) and talent (labour)
High costs – Variable & fixed costs, projects
Loss of credibility
Customer dissatisfaction
Uncompleted projects (Abandoned projects)
 Conclusions
 The single most important task of a road
construction work is : setting realistic expectations.
 We should know that the estimate defines the
budget and the work can be adjusted to meet the
budget.
 Lack of hands-on experience is associated with
massive cost overruns.
 Technical risks are associated with massive cost
overruns.
 Do your estimates carefully!
 Keep them up-to-date!

AND MANAGE THEM