DCQ30112: ESTIMATING 1

R E PA R E D B Y :

AZIRAH ADNAN
 Course
Overview
ESTIMATING 1 focuses on the knowledge of
the determination of probable construction cost.
Many items influence and contribute to consider
in built up rates and tender pricing such as
material cost, labour cost, machinery cost and
profit and overhead. Each Item are analyzed,
quantified and priced.

Upon completion of this course, students

should be able to:

Apply concept of built-up rate in quantity

surveying practice for construction works

Build up the rate in quantity surveying practice

for construction works

Demonstrate cost estimate in quantity surveying

practice for in construction works
What is Estimating?
Estimation requires knowledge of construction, common sense and judgment.
(Peurifoy,R.L and Oberlander, G.D, 2002).

Cost estimating is a technical process in order to predict construction cost for

a proposed building. It can be done for either the whole building, building
components or construction item for each measured work (Abdullah, 2006).

A technical technical process process to predcit predcit the consturction

consturction costs (Enterkin & Reynolds 1978) •

A technical process to calculate the costs for construction through the

preparation of build‐up rate of each construction item in a tender (Ashworth
1996)
TOPIC 1:
Introduction to
Built-up Rates
1.Factors considered in built-up
rates

i. Material cost

ii. Labour cost

iii. Machinery cost

iv. Profit and overhead

2. Wastage factor in built-up rates

What is Built-
up rates?
Built-up rates start after the
construction materials quantities were
calculated (Taking-off).

Built-up rates is the process of

calculating/estimating the cost of each
material involved in a construction
project.

Built-up rates and estimating process

are made to predict how much the
project will cost.
What is Built-
up rates?
Built-up rates start after the
construction materials quantities were
calculated (Taking-off).

Built-up rates is the process of

calculating/estimating the cost of each
material involved in a construction
project.

Built-up rates and estimating process

are made to predict how much the
project will cost.
What is Built-
up rates?
Built-up rates start after the
construction materials quantities were
calculated (Taking-off).

Built-up rates is the process of

calculating/estimating the cost of each
material involved in a construction
project.

Built-up rates and estimating process

are made to predict how much the
project will cost.
Factors
considered in
Built-up Rates
1) Material cost

2) Labour cost

3) Machinery cost

4) Profit and overhead

1. Material cost

1. Material Cost

Materials cost include the cost of all materials that are

required to complete a building. The usage of materials is
referring to the bills of quantities that consist in tender
document. The cost of materials must include:

 
 Delivery charges from the factory to the site.

 The cost of unloading and storing. Construction sites

normally have limited space to store materials. The
contractor must allow for any double handling that may
be necessary due to the nature of the site, condition of
contract and other possibility.
 Waste should be allowed on all materials due to
handling process and the percentage of wastage is
dependent on the type of material used.
1. Material cost (cont’d)

Additional materials for fixing such as nails for roof, tying wire for
reinforcement, etc.

Increment in volume for example excavated materials that will

increase in volume influences the cost of removal.
Compaction and loss of bulk. Some materials reduce in bulk when
placed in position such as sand and hardcore.
 

Material cost is not constant, and it fluctuates depending on the supply

and demand in the market. Quantity surveyor must use current material
price in the cost estimating.
 2. Labour Cost

Labour cost is important component in overall project cost. Types, categories

and performance of labour must be early determined before make the
estimating because it will cause different cost implication. Labour cost is divided
into two categories:

i. Direct Cost

 Direct cost is the fee for the labour after they completed the work given.

 Labour fee is different according to skills, gender, market condition,

location of the site, work condition, etc. This cost must be included in
the price estimating.

 The labour fee is paid by the daily hour worked that is 8 hour per day.

 For project that needs to be finished early, the labour must do overtime
and the overtime fee also must be included in the estimating.
2. Labour Cost (Cont’d)
The skills of the labour also will affect the labour cost. Generally, labour
can be divided into two categories that are:

a) Unskilled labour

Unskilled labor is generally characterized by low education

levels and small wages. Work that requires no specific education
or experience is often available to workers who fall into the
unskilled labor force. They do easy works such as mixing
concrete, lift building materials and assist the skilled labour.

b) Skilled labour

Skilled labour is workers who have specialized training or a

learned skill-set to perform the work. These workers can have
varied levels of training or education. In many cases, skilled
labour are those who have received enough training to become
licensed or certified in a particular trades field. Some examples
of skilled labour are industrial electricians, commercial
plumbers, heavy equipment operators, concrete finishers and
more.
2. Labour Cost (Cont’d)

  ii. Indirect Cost

 Indirect costs must also be considered when

making a budget price. This cost is usually not
included in the price of work but priced at the
preliminaries.

 Among the indirect costs that should be

considered are insurance, EPF and SOCSO
contributions, workers basic amenities such as
housing, electricity and water supply, transport
and so on.

 However, quantity surveyor shall include any

indirect costs that are not listed in the preliminary
requirements to the rate of the price -E.g.Covid
test-kid
3. Machinery / Plant Cost

The plant can be divided into two types of mechanical equipment

and no mechanized equipment.

 No mechanized equipment including hammers, hoes, baskets,

curtains, benches, stairs and so on. The costs of using this type
of equipment are included in the overhead costs.

 Mechanized equipment includes trucks, excavators, concrete

mixer, vibrator, and compactor and so on.
 3. Machinery / Plant Cost
(Cont’d)
Costs related to plant can be calculated in two ways.

 First, the cost of the plant is taken into account in

calculating the rate of the specific work. For example, the
cost of backhoe taken into account in the rate of
excavation work, concrete mixers costs in the price of
concrete and the like.

 The second way is to include the cost of the plant in the

preliminary requirements. This method is suitable for a
plant that can be used for many type of work and
therefore its costs cannot be calculated in the related
work. These items include vehicles for construction site
staff, an elevator for worker, tower cranes, generator sets
and so on.

Many construction projects, especially high rise project need the use of
machinery. Normally, contractors will not maintain their own machinery to
avoid the additional cost during bad times due to uncertain demand in the
industry. Therefore, rental of such machineries are common practice in the
industry. However, big firms will normally have their own machineries.
4. Profit & Overhead Cost

 Profit and overhead must be included in the estimating to cover the

management cost for the project and gain some profit from the work
done.

 Management cost can be divided in two category, site management

cost and general management cost or overhead. Site management
cost must be put in the preliminary and overhead cost must be
included in the work price estimation.

 Site management cost and overhead is fixed expenses incurred in

managing the construction company such ad staff salaries, office
rental, stationery, utility bills, professional fees such as accountants'
fees, interest on loans and mechanized equipment such as hammers,
hoes and so on.

 The rate of profit is at the discretion of the contractor itself. Usually,

the contractor determines the rate of profit using the same
calculation for overheads. The profit percentage also based on
competition in the market. During high competition, the percentage
of profit will be low.
5. Wastage Cost
The efficient use of materials on site can
help reduce costs due to minimum wastage.
Construction sites usually have very high
material wastage.
Materials like cement, aggregates and sand
contribute higher wastage because it needs
to be transferred from one place to another.
Fragile materials such as glass, tiles and
bricks require higher percentage of wastage
to be allowed in the calculation.
For materials made from timber or steel,
which have been cut to fit the required size,
there is usually no allowance for wastage
must be made.
Before we start on the Built-up
Rates Topic, let’s do some “Ice-
breaking” activity first..

Pn . Azirah wants to order 10 pieces of cake

for a party at her house and she asks you to
make the cake for her.. Hence, lets calculate INSTRUCTION:
the cost for the cake..!
1. Prepare a list of ingredients to make a cake
including the quantity of ingredients needed.
2. list the price for each of these ingredients.
3. list other necessary materials such as equipment
that needs to be used including the price.
4. list the required cooks and state the duration of the
time required to prepare the cake.
5. Prepare the built-up rates for a piece of cake

Note: Students can use mind map format

 FACTORS TO BE CONSIDERED IN BUILT-UP RATES

MATERIALS COST LABOUR COST PLANT COST WASTAGE COST PROFIT & OVERHEAD

 Delivery charges  Direct Cost – fee  Non-mechanized –  Cement, sand,  Profit – gain
 Unloading & according to skill hammer, hoes, etc. aggregate – due to
Storing (unskilled & skilled) transportation  Overhead –
 Wastage  Mechanized – expenses (utility
 Additional  Insurance, EPF, excavator, crane,  glass, tiles– fragile bills, site office, etc.
Materials SOCSO truck, etc.
 Volume Increment  Timber,
 Compaction & lost  Cost can be reinforcement –
of bulk. included in two need to be cut for
way: in specific the required size.
works or in
preliminaries.