ENGINEERING COST ESTIMATING

DEPARTMENT OF CIVIL ENGINEERING

Chapter 1

BILL OF QUANTITIES AND ITS PREPARATION.

BILL OF QUANTITY

A Bill of Quantity (BOQ) is a document, which list all the items necessary for the completion
of project. Each item consists of
a. Description
b. Quantity
c. Units

The contractors estimator submits a rate against each item and price the work
multiplying the quantity by the rate. The estimate for the contract is the summation of all the
items in the BOQ.

An extraction from a typical BOQ

Ref. No Description Quantity Unit Rate Amount

C0l 1:3:6 (40) foundation concrete in 9.35 m3 3500.00 32725.00
wall
C02 Reinforced columns concrete 12.50 m3 5500.00 68750.00
1:2:4(20) in
C03 -doin beams 13.50 m3 6000.00 81000.00

Description
Written description of the items of construction work is usually a description of a finished
item of work based on the type of materials incorporated into the work. Standard
phraseologies are available to derive the description of work items.
Ex: Standard method of measurement of building works - SMM
It is always better to have a standard system so that every body understand the written
description.

Quantity
Every described item within the bill is allocated a quantity of measured units. This quantity is
measured off the drawing and represents the net quantity of material incorporated into that
item of work.
Allowances for wastage, bulk or compaction of the materials are not included in the
quantities. Those should be accounted in the unit rate.

Unit
Each item contains a unit of measurement. The unit may be linear, square, cubic or just a
number.

1
Descriptions, which are quantified, do not contain the unit but are described as item. Some
indication of length, width, height of the described construction work should be given on the
written description where appropriate.
Ex: Since plastering work measured in m2, the description should contain thickness

Rate
The price BOQ contains a unit rate along the quantity of the described items. This rate
represents the net price the contractor will be paid for the completion of one unit of work
described in the written description.

Price (Amount)
This is the amount, which is calculated by multiplying the quantity with the unit rate.

Steps in the Preparation of BOQ

Step 1
Taking off: - Taking off is making a complete list of items of work involved for the proper
Carrying out of the work and entering the items on the dimension paper.
In other words this is the measurement of the dimensions from the drawings.

T D S Description Remarks
2/ 50 1:1:5 cement: lime: and 15mm thick
30 plaster
3000

Column 1: - Timesing column

This is where multiplying figures or number of times are entered whenever there is more than
one particular item been measured.
Ex: two walls

Column 2: - Dimension column

Actual dimension scale or extracted from the drawings are entered in this column. Only one
line is entered if the unit is linear and two or three lines are entered if the unit is square or
cubic. Sequence of entering; (1). Length, (2). Breadth, (3). Height (thickness, depth)

Column 3: - Squaring column

Multiplication of the dimensions is carried out here.

Column 4: - Description column

Work items are described here. Necessary dimensions should be included in the dimensions.

Step 2
Squaring: -
After the taking off the next step is to multiply the dimension and derive the quantities.

Step 3
Abstracting:-
Collecting all the quantities, which could be grouped under particular item, and arranging
them according to trades or whole section after deriving the net quantities. Arrangement of
trades or work sections depends on the method of measurement

2
Step 4:
Writing the Bill of quantities.

Note 1: Entering Dimensions

It is essential that ample space be left between all items under dimension sheet so that it is
possible to follow the dimension easily to enable any item which may have been omitted
when the dimensions were first taken off be subsequently entered without clamping the
dimensions.

Note 2: Grouping of dimensions

Where there is more than one set of dimension related to the same description the dimensions
should be suitably bracketed so that it is clear.

T D S Description
Clay pipes laid and fixing with flexible joints
6.00 man-hole
5.25 1-2
12.00 2-3
10.00 3-4
4-5

Where the same dimension apply to more than one dimension the best procedure is to
separate each by the sign &and bracket the description.

T D S Description
10.0 Excavation for foundation & Filling to earlier
0.75 excavation trenchers
1.00

Note 3: - Dotting on

T D S Description
3/ 10.00 Excavation for foundation
. 0.75
1 1.00

When an identical item is found later it is dotted on to the previous dimension.

Note 4 :- Alteration of dimensions

Dimensions should never be erased or altered. To correct dimension cross them out and
write NIL in the squaring column.

3
 T D S Description
3/ 4.0 1:1:5 cement sand lime 15mm thick plaster
3.6 NIL
5/
3.02
2.85

3.50
1.75

4.50
3.06

When whole item has to be omitted because of a mistake then cross the full item and
enter the fresh.

T D S Description
4.05
3.06 1:1:5 cement lime sand 15mm thick plaster

3.02
2.85

3.50
1.75

4.50 1:1:5 cement lime sand 15mm thick plaster

3.06

3.20
2.85

Note5:- Abbreviations

To save the spaces and time abbreviation forms must be used as much as possible in the
description column. Some of the common abbreviations are;
1. a.b -as before
2. a.d -as described
3. av -average
4. bk.wk -brick work
5. Bs -British standard
6. w.r.t -with respect to

Order of taking off

The order of taking off follows the order of construction. In a simple building the order of
taking off is as follows.
All the work unto & including DPC
Brick work and Block work
Floors
4
Roofs & including covering & rain water installation

Finishes of walls, ceiling and floors

Staircases
Plumbing installations
Drainage work
Other services
Other external work including roads fences etc.

Some important considerations in taking off

Wall thickness 230mm

1. Center line method

Total centerline; 10.23*2 =20.46

6.00*2 =12.00
1.50*2 = 3.00
35.46

When there is a recess twice the depth of the recess should be added to the lengths of the
sides.

5
Excavation work at corners

External length = (L1+x/2) + (L2+x/2)

Center line length = L1+L2

Therefore no correction for corners when the centerline method is adopted.

3. Excavation work at T-junction

Center line length = L1+L2+L3

Excavation length = (Ll+L2) +L3 -X/2
= L1+L2+L3 -X/2

Therefore at a T junction half the width of the trench should be deducted from the centerline
dimensions.
Note: calculation of centerline length of outer and internal walls is very important as having
once be made, it is often used not only for excavation but also for foundation work, brick
work, stonework.

6
4. Brickwork, Rubble work in foundation, plinth wall and super structure

For foundation plinth walls, DPC and super structure, the length of work will be calculated as
same as that of excavation work. No correction for corners and each T-junction deduct half
the width of the particular section of work from the centerline length. For ex: plinth wall
length = L-(w/2* no of Ts)

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Quantity for smaller foundation
Excavation length = L-w1 /2
Quantity = (L-w1/2) b1d

Quantity of concrete in base = (L- w1 /2) b1t + (w1 - w2) b1t1

2
Quantity of brickwork in plinth wall = (L-w1/2) b2t2

8
Chapter Two

Estimating and Tendering Process

Stages in Civil Engineering I Building Construction Project

Stage 1: Decision to build-by the client

Stage 2: - Appointment of the project manager- by the client (PM is given the authority to
plan and organize the project)
Stage 3: - Appointment of the consultant - by the project manager and the client.
(They are requested to prepare the contract documents)
Stage 4: Preparation of contract documents (Tender documents) by the consultant.
(a) Drawings
(b) Specifications
(c) Conditions of Contract
(d) Bill of Quantities
(e) Form of Tenders
(f) Form of Agreement
Stage 5: Call for Tender by the project manager and the consultant (open tendering or
selective tendering)
Numbers of contractors are requested to submit their bids for the work based on the contract
documents.
Stage 6: - Estimating and tendering.
The process carried out by the contractor to arrive an estimate for the work.
The consultant should also prepare an estimate for the comparison purpose.

Stage 7: - Bid opening meeting

Bids will be opened at the time mentioned in the bidding document in the presence of the
bidders representatives

Stage 8: - Bid Evaluation

Received bid in time will be evaluated by the TEC (Technical Evaluation Committee) and
TEC recommendation will be forwarded to the relevant procurement Committee for the
approval.

Stage 9: - Awarding of the contract

The client, the project manager and the consultant will decide the suitable contractor based on
the bid. Usually the lowest cost but not always.
Other factors that should be considered are:
a. Experience of the contractor
b. Acceptability of the rates
c. Equipment strength
d. Staff strength
e. Reputation

Estimating
Estimating is the process of calculating the probable cost to the contractor of carrying
out a construction work if he is awarded the contract to construct the project.

Tendering
Tendering is the process of establishing the final price and terms to the contract that
will be submitted to the client or his representative.

9
 This involves an assessment of the mark-up including the possible financial effect of
undertaking the project.

10
Chapter Three

TENDER DOCUMENTS (CONTRACT DOCUMENTS)

Contract documents form the basis on which a civil engineering contractor will prepare his
tender and carry out and complete the contract works. It is accordingly, essential that the
documents shall collectively detail all the requirements of the project. These documents also
identify all the rights and duties of the main parties to the contract. (ie: client and contractor).

Normally used contract documents in civil engineering contains;

1. Form of Agreements
2. Condition of Contract
3. Specification
4. Bill of Quantities
5. Contract Drawings
6. Form of Bid

1. Form of Agreement

The form of Agreement constitutes the formal agreement between the client and the
contractor for the execution of the works, both permanent and temporary, in accordance
with the other contract documents, and for the maintenance of the permanent works.

2. Condition of Contract

The Condition of Contract define the terms under which the work is to be undertaken, the
consultant and the contractor, the powers of the consultant and the terms of payment. For
many years it had been considered desirable to use standard set of conditions which could
be applicable to all civil engineering contracts. Any special conditions relating to an
individual contract can be added to the general clauses.

3. Specification

The Specification amplifies the information given in the contract drawings and the BOQs.
It describes in detail the work to be executed under the contract and the nature and quality
of the materials, components and workmanship. It gives details of any special
responsibilities to be borne by the contractor, apart from those covered by the general
conditions of contract. It may also contain clauses specifying the order in which the
various section of the work are to be carried out, the methods to be adopted in the
execution of the work, and details of any Special facilities that are to be afforded to the
contractor.

4. Bill of Quantities

The Bill of Quantities consists of a schedule of the items of work to be carried out under
the contract with quantities entered against each item. The quantities shall be prepared in
accordance with the civil engineering Standard Method of Measurement.

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5. Contract Drawings

The Contract Drawings depict the details and scope of the works to be executed under the
contract. They must be prepared in sufficient details to enable the contractor to
satisfactorily price the BOQ. The contract Drawings will be subsequently used when
executing the works and may well be supplemented by further detailed drawings as the
work proceeds.
Existing and proposed work should be clearly distinguished on the drawings. Also full
descriptions and explanatory notes should be entered on them.

6. Form of Bid

The Form of Tender constitutes a formal offer to construct, complete and maintain the
contract works in accordance with the various contract documents for the tender sum. It
usually incorporates the contract period within which the contractor is to complete the
works.

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Chapter Four

ESTIMATING
Introduction

Estimating and tendering process within contractor's organization takes place between two
well-defined points, the decision to tender and the submission of the bids. Between these two
points there is a complex process that involves and depends on several different categories of
person within the contractors organization as well as essential external contribution by the
consultants staff, material suppliers, plant hire companies and specialist sub contractors.
The process includes collecting and calculating cost information, designing and planning
around construction method, selecting resources and production for output rate, combining
cost and resource usage to determine cost estimate, calculating site overheads, making tender
decision and preparing tender documents for submission.
The involved nature of the process and the reliance on different persons, outside
organizations for data and information demand that the process is carefully managed.
The unit rate that should be prepared by the estimator for pricing Bill of quantities can be
seen as having made up of three elements.
1. Direct cost
2. Site overheads
3. Mark-up

Direct cost

Direct cost are predominantly the labour, plant, materials and subcontractor cost involved in
executing the work. The direct cost has to include allowance for material handling and
wastage, plant non-working time etc.

Site overheads

These are costs, which can be directly attributable to a contract and costs associated with
administration such as to site staff, transport cost, site office cost and insurances and bonds.

Mark-up

The direct cost and site overheads together represent the cost to the contractor in undertaking
the contract. It is the responsibility of the contractors estimating staff to establish these costs.
The direct and site overheads are called the cost estimate for the construction work. The
tender total presented in the tender is the contractor-selling price. The selling price is arrived
by adding the mark-up to the cost estimation.
Therefore
Unit rate in BOQ = Cost estimate + Mark-up

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 Material cost
Labour cost Direct cost T
Plant cost E
Cost Estimate (Contribution cost)
S/C cost N
D
Site overheads
E
Mark-up R

The mark-up usually contains three elements; an allowance for company overheads, an
allowance for risks & an allowance for profits.
The evaluation of the mark-up and the determination of how the cost and mark-up will be
allocated to the bill items is the part of the process described as tendering.

The Importance of the Estimating

A contractors tender is based on an estimate of the cost to the contractor, of constructing the
work. The measure of the successful tender is one whose value is low enough to win the
contract and high enough to allow the contractor to finish the job and still show some profit.
In any tender 70% or even more of the tender sum is represented by the reminder-estimated
cost. The reminder being the contractors mark-up to cover risks, profit and company
overheads.
The proportion of the tender sum made up of estimation cost make it obvious that major
factor in determining the tenders success is the cost estimate.

Estimating the Direct Cost

The estimators task is to determine the cost to the contractor of executing the contract
defined in the contract document.
This cost estimate will be modified by senior management, in consultation with the estimator
to determine the tender or selling price. The estimator establishes the direct cost rates for each
item in the bill of quantities.
The direct cost rate is a rate for the labour, the plant, materials and sub contractors but
exclusive of site overheads, head office overheads and profit. Determining direct cost rate
involves selecting the appropriate resources of labour, materials, plant for the item of work,
selecting the output or usage rates for each resource and combining this with the cost
information collected.

To achieve this, the estimator should perform the following tasks.

1. Derivation of work norms (output or usage rates)

2. Quantitative analysis of material requirements
3. Collecting cost information on materials.
4. Wage analysis
5. Plant rate analysis
6. Production analysis
7. Calculation of transport cost

14
The estimator does not have to do all these tasks for every job since he can store the data
derived for previous contracts for the use of future jobs.
Books and public documents are available to extract the, data such as workers norms and
quantitative analysis.

Work norms
Work norms are set of standards specifying the no of works to be allocated for a job of work.
The estimator can always refer to publish standards to extract this information.

Ex: Schedule of norms for 9 hours working day

Item Description Skilled Unskilled Quantity
labour labour
10a 230mm bk.wk. 1:5cement 3M 5L 14m2
sand mortar in ground floor

10b Concrete work.f.f. 1:2:4(20) 1M 12L 2.83m3

hand mixing

To establish work norms, as above it is necessary to study how exactly work is carried out.
This study is known as work-study.

15
Chapter Five

QUANTITATIVE ANALYSIS

Quantitative Analysis is carried out to determine the quantitative distribution of the basic
materials (cement sand aggregates) in a unit of measurement.

Ex 1m3 of concrete
1m2 of 230mm brickwork

Information of this regard can be obtained from the building schedule of Rate (BSR) or
Highway schedule of Rate (HSR) or public books.

Item Description Rate Amount

1:3:6 concrete in foundation

using mixer for8.50m3
36 bags of cement
5.l0m3of sand
8.5m3of metal
3 days mason
18 days of unskilled labour

Ex: Quantitative Analysis of 1m3 of 1: 2:4 (20) concrete

Required materials: Cement

Fine aggregates -sand
Coarse aggregates - metal

Concrete is proportion either by volume or by weight. For many years past it has been the
normal practice to proportion the materials on a volume basis. This practice is still largely
followed, but it is now recognised that proportion by weight and carefully controlling the
water cement ratio produce high quality concrete which is much more consistence because
better control of fraction quantity is possible.
For this reason mixing by weight has become popular where large volume of high class
concrete are required such as construction of airport runway, under water construction in
harbour
In specifying concrete ratio of mix by volume the proportionate refer to dry mixture.
Allowance must therefore be made for bulking in the aggregate due to moisture. Bulking may
be ignored in the case of coarse aggregates (metal) as their moisture content is very small.
However fine aggregates (sand) bulk appropriately due to the absorption of water and must
be counted for.

1. Cement
Cement is available in loose form or form of bag.
Specific gravity = 3.15
Bulk density - in bag form = 1442 kg/m3
-in loose form = 1232 kg/m3
Solid density = 3.15*1000=3150 kg/m3
Weight of a bag of cement =50 kg
2.Sand
Usually river sand is used

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 Specific gravity =2.65
Bulk density =1600 kg/m3
Solid density =2650 kg/m3

3.Metal
Specific gravity =2.8
Bulk density =1440 kg/m3
Solid density =2800 kg/m3

4. Water

Water is required for the chemical reaction of hydration of cement. Water cement ratio
required to chemical reaction is about 0.23. The amount of water in excess to this is to make
the mix more workable. The Department of Buildings specified water: cement ratio is 0.52
(by weight) to be used.

Example 1
We calculate the materials requirement for 1m 3. The method of calculation is;
Step 1: Calculate the yield of concrete per bag of cement.
Step 2: Calculate the bag of cement, sand and metal for 1m3 of concrete.

Yield per bag of cement for 1:2:4(20) concrete

Materials Volume of loose state (VL) Volume of Solid State (Vs) m3

m3
Cement 50=0.0347 50 =0.0159
1442 3150
Sand 2 * 0.0347 = 0.0693 0.0693* 1600 =0.0419
2650
Metal 4 * 0.0347 = 0.1387 0.1387*1440=0.0713
2800
Water 0.52 *50 = 0.026 0.026
1000

Therefore I bag of cement produce 0.1551 m3 of concrete.

For 1 m3 of concrete, cement requirement = 1 = 6.45 bags
0. 1551
Sand requirement =___1 *0.0693 = 0.447 m3
0.1551
Metal requirement =___1 *0.1387 = 0.894 m3
0. 1551
Water requirement = 1 *0.026 = 1.67 m3 =167L
0.1551

Result: - Materials requirement for 1m3 of concrete

Cement 6.45 bags
Sand 0.447m3
17
 Metal 0.894m3
Water 167 1

Note 1: It can be observed that volume of wet concrete (1m3) is greater than the volume of metal
(0.89m3).
Note2: Above quantities for 1m3 concrete are without allowing for wastage. Percentage is
allowed for wastage to account for handling waste, transport waste, mixing waste, bad
workmanship etc. Normally minimum of 5%-10% is allowed.
Therefore material requirement after counting 10% waste is

Cement 7.1 bags

Sand 0.5 m3
Metal 1 m3
Water 1841

Note 3: Wastage factor may differ from material to material. Ex: 10% for metal, 8% for sand, 5%
for cement.

Example 2
Derive the material requirement for 1:3:6 (25) 1m3 of concrete

Materials Volume of loose state (VL) m3 Volume of Solid State (Vs) m3

Cement 50=0.0347 50=0.0159
1442 3150
Sand 3*0.0347=0.1041 0.1041 *1600 =0.0629
2650
Metal 6 * 0.0347 =0.2082 0.2082*1880= 0.1398
2800
Water 50*0.52=0.026 0.026
1000

1 bag of cement produce = 0.2446 m3

for 1m3 of concrete

Material Requirement Wastage factor Final
Cement 4.09 bags 5% 4.29 bags
Sand 0.426m3 8% 0.460m3
Metal 0.851m3 10% 0.936m3
Water 0.106m3=1061 10% 1171

Ex: 3 Quantitative Analysis for Rubber Masonry 1:3 cement sand mortar

In rubble masonry structures it can be considered that 1m3 of rubble stone willproducelm3 of
rubble masonry. In concrete construction all three materials are mixed together where as
rubble masonry similar to brick work.
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Materials
Random Rubble Masonry
Mortar: cement, sand, water
Since 1m3 of rubble stone is produced the 1m3 of rubble masonry it is assumed that the
mortar fills the voids.

Definitions

Vs-(volume of solid)

Vv-(volume of void)
Void Ratio =Volume of voids = Vv
Volume of solid Vs

Porosity = Volume of voids = Vv

Total volume V
V.R= Porosity
1-Porasity

Data: - porosity =0.4

Specific gravity =3.15
Water: cement =0.6
Mortar, =1:8 (cement: sand)

1m3 of rubblework needs 1m3 of rubble stone ie. 1m3 of rubblework produces 0.4m3 of voids
ie amount of mortar =0.4m3 for 1m3 Now we can calculate for requirements of 0.4m 3 of
mortar

Yield per bag of cement for 1:8 cement: sand mortar

Materials V1 Vs
Cement 50=0.0347 50=0.0159
1442 3150
Sand 8*0.0347 = 0.2776 0.20.2776*1600=0.1676
2650
Water 50*0.6 0.03
1000

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 1 bag of cement produces 0.2135 m3 of mortar For 0.4m3 of mortar;
Cement requirement =0.4 = 1.874 bags
0.2 135
Sand requirement = 0.4 *0.2776 = 0.520 1 m3
0.2135
Water requirement =0.4 *0.03 = 0.0562 m3
0.2135
Results
Materials requirement for 0.4m3 cement sand mortar

Material without wastage with 10% wastage

Rubble 1.0m3 1.1m3
Cement 1.874 bags 2.lbags
Sand 0.52m3 0.58m3
Water 56.2 1 62 1

Ex: calculate the materials requirement for I 00m 2 of 16mm thick 1:5 cement sand plaster
Water cement ratio is 0.6

Requirement of cement sand plaster 16*100 1.6m3

1000

Yield per bag of cement

Materials Volume of loose state (Vl) Volume of solid state (Vs)

Cement 50=0.0347 50=0.0159
1442 3150
Sand 5*0.0347=0.1735 0.1735*1600=0.1048
2650
Water 50 * 0.6 = 0.03 0.03
1000

1 bag of cement produce 0.1507 m3 of plaster For 1.6 m3 of plaster

Cement requirement = 1.6 = 10.62 bags
0. 1507
Sand requirement = 1.6 *0.1735 = 1.842 rn3
0. 1507
Water requirement = 1.6 *0.03 = 0.3 19 m3
0.1507

Results
After adding 10% wastage
Cement 11.7 bags
Sand 2.03 m3
Water 351 1

20
 Ex: 4 Materials requirement of 10m3 of 230mm brick work in 1:8 cement sand mortar
Water cement 0.6
Water absorption Ratio = Weight of water absorbed
Weight of dry brick
Size of a brick =225mm*lO5mm*65rnm
Density of bricks =l400kg/m3
Thickness of mortar =10mm

Effective size of a brick =225mm* 11 5mm 75mm

Effective volume of a brick =225*115*75
=1.941 *103m3
2
Volume of 10m , 230mm thick bk.wk. =10*230 =2.3m3
1000
ie number of bricks in 10m2, 230mm thick bk.wk = 2.3 =1185
1.941*10-3
Volume of a brick =215*105*65 =1.467*10-3
Volume of mortar for 10m2, 230mm thick bk.wk 2.3-(1.467810-3*1185) =0.56m3

Now calculate cement sand and water requirement for 0.56m3 of 1:8 cement sand mortar

Yield per bag

Materials V1 (m3) Vs (m3)

Cement 50=0.0347 50=0.0159
1442 3150
Sand 0.0347*8=0.2776 0.2776*1600=0.168
2650
Water 0.6*50 0.03
1000

1 bag of cement produces 0.2 139 m3 of mortar

Cement requirement = 2.63 bags
Sand requirement = 0.73m3
Water requirement = 79 1

Water requirement for wetting of the brick

Weight of water =0.2*weight of dry bricks
=0.2*(1.467*103* 1400) 1185
=486.8 kg
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 Volume of water =486.8 =0.486m3 (=486 1)
1000

Total water requirement = 79 1+486 1 =565 1

Ex: Materials requirement of 10m2 of230mm bk.wk in l:8 cement sand mortar
(alternation method)
Consider 1 0m2

Total number of brick courses = 2*103 =26.67

(65+10)
Hence no of stretcher courses = 13.67
No of header courses = 13
No of bricks per stretcher course = 5*103*2 = 44.44
(215+10)
No of bricks per header = 5* 103 =43.48
(105+10)
Total no of bricks = (44.44* 13 .67)+(43.48* 13)
= 1173

Material Cost

The unit costs of materials (ex: cement, sand

etc) can be obtained from material suppliers.
This price may vary from place to place
depending on location and availability. The price may also depend on quantity of requirement
due to discount facilities.
The contractor usually consults their regular suppliers and maintains an up to date price list
with them. Estimator can directly refer to these files and extract the relevant prices.

Material cost for Bill items

Once the quantitative distribution of materials is known the material cost for that item of
work can be calculated using the unit cost of materials.

Ex: Material cost of 1 m3 of 1:2:4 (20) concrete.

Data: 1 bag of cement =Rs. 350.00
I m3 of metal (20mm) =Rs. 1200.00
3
I m of sand =Rs 425.00
1000 bricks =Rs.1650.00
3
1 m of water =Rs 25.00

Material Requirement Unit cost (Rs) Amount (Rs)

Cement 7.1 bag 350.00 2485.00
Sand 0.5m3 425.00 212.50
Metal 1.0 m3 1200.00 1200.00
Water 0.185rn3 25.00 4.62
3 902.00/ m3
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Labour Cost
Any construction activity involves labour. Therefore cost of labour should be included in the
direct cost unit rate. Requirement of labour for different work item can be obtain from work
norms. Unit cost of labour (cost/day or cost/hour) should be calculated for each category of
labour by carefully analysing the remunerations, working days, sick leaves, holydays, etc.
This analysis is called the wage analysis.

The labour can be broadly categorized into two sections;

1. Skilled labour; mason carpenter, steel fixer etc.
2. Unskilled labour; labours

Some time there is another category referred to as semiskilled labour. (Cleaners, greasers)

Basic wage: - This is the amount of money a worker earns without any allowances and can
be calculated as Rs/day

Gross wage: - This is the total amount of money a worker earns including allowances,
provident funds, pensions and other welfare facilities can be calculated as Rs/day.

Effective wage: - This is the wage that should be used for calculation of unit rate. This is the
total amount of money a worker obtains a day of productive time inclusive of benefits. That is
money, the worker earns distributed over the effective working day. Infact it is the cost of the
labour considering productive time. It can be calculated as cost/day or cost per hour.
In computing the effective wage the estimator should take into account public holydays,
casual and sick days, attendance at the site, loss, of production due to bad weather and strikes.

Calculation of Effective wage in relation to gross wage (For year 2001)

No of days =365
No of Saturdays and Sundays =104
No of working days =365-104 =261
No of public holydays =23
Casual /Sick leaves etc =42
No of days loss due to bad weather and strikes =20
Effective working days = 176
Total money earned =gross wage *working days
=G.W. * 176
Effective wage G.W. * 176
Effective working days
=G.W. *261
176
Effective wage = 1.48 G. W.

Labour Cost:
Ex:1m3 of 1:2:4 (20mm) concrete in manual basis. From work norms labour requirement
for 2.83m3 of work, per day
1 mason
12 labours

From wage analysis unit cost of labour

Mason Rs 300 /day
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 Labour Rs200/day
Labour cost for 2.83 m3 (1*300+12*200)
Labour cost for 1m3 =Rs.954

Plant Rate Analysis and Production Analysis

It is carried out to determine the cost of operating a plant for a unit period of time.
Ex: cost of mixture = Rs /plant

Production analysis is carried out to determine the time requirement to carry out a unit of
work.
Ex:No of hours to lift concrete 2m3 for 2ndfloor

Plant Cost

Production Analysis Plant Rate Analysis Results

Time taken for mixing Cost of operating the Ti*Ri/m3
1m3 of 1:2:4(20mm) concrete mixture per
concrete =T1 hrs hour =R1/hour

Time taken to excavate cost of operating the T2*R2/

l00m3 of (surface excavation) excavator =R2 /hour 100
soil =T2hours

Account for wastage

According to SMM all work must be given NET and the allowances should be made for
wastage when quantities are given in the BOQ. Therefore when calculating unit rate
provision must be made to take into account the wastage. The estimator may increase the
price of the material (or the unit rate) to allow for wastage. Usually a percentage is decided
on the wastage account and the unit rates are calculated accordingly with additional.

Direct Cost Rate Calculation

Ex: 1:2:4 (20mm) concrete of 1 m3 (extract from aBSR)
5.75 bags of cement 330.00 1897.50
0.5m3 of sand 400.00 200.00
lm3of20mmmetal 1000.00 1000.00
0.35 daysofmason 300.00 105.00
2.83 days of unskilled labour 200.00 566.00
Allow for water nih
Allow for wastage 10% 376.85
Allow for profit 30% 1243.30
5388.65

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Chapter 5
Estimating Practice of Contractors

INTRODUCTION
The work of contractors can be categorized as:
(a) getting work at the right price; and
(b) doing the work within that price.
Any contractor or construction organization growth and survival depends on the efficiency of
estimating and tendering department. If a company fails to win contracts or wins contracts
with an inadequate price the company will bankrupt. Therefore estimating is more than a
simple calculation of costs it is also a management function because the process of producing
an estimate and a tender is complex, involving many different tasks and personnel within the
company and external organizations such as the suppliers, sub-contractors and plant hire
companies. The process has to be managed within time frames: the tender deadline must be
met.

TENDERS
The method of obtaining tenders are in broad categories:
1. Selective tendering; (Private organizations, special categories)
2. Open tendering (government); and
3. Negotiation (large projects, special work etc.)

CONTRACTS
The following types of contracts are being used in the
construction industry.
1. measurement contracts.
(a) Bill of quantities
(b) Schedule of rates
2. lump sum contracts
3. Cost reimbursement
4. all-in contracts
Generally in Sri Lanka more than 90% contracts are measurement contracts.

TENDER EVALUATION
In preparing a report on the tenders received the evaluations by the Engineer's staff will
comprise:
(a) Consideration of any qualification, if allowed; included by the tenders.
(b) Examination of rates quoted for work in order to identify
- Unrealistic rates
- Rate loading
- Tactical pricing aimed at taking advantage from
Possible design or quantity changes
- Errors or omissions.

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THE DECISION TO TENDER
The decision to tender is the starting point of the whole process. A contractor receives most
of the opportunities to tender through being invited from selected lists or by responding to
advertisements. The invitation to tender or advertisement may consists of the following:
1. The client and consultant
2. location
3. A general description of the work involved
4. Approximate cost range of the project
5. Nominated sub-contractors
6. The form of contract (ICTAD, JCT, ICE etc.)
7. The procedure to be adopted in examining and correcting priced bill(s).
8. Whether the contract is to be under seal or under hand.
9. The anticipated date for possession of the site
10. The period of completion
11. Tender submission date
12. The duration of the tender period
13. The period for which the tender is to remain open
14. Anticipated value of liquidated damages
15. Details of bond requirements
16. Any particular conditions relating to the contract.

Based on above senior management takes the decision to tender or not. The decision is based
on the following factors.
1. The company's current workload, turnover and recovery of overheads.
2. The company's financial resources
3. The availability of resources to undertake the work.
4. The location of the contract
5. The type of work
6. The identify of the client and consultant

ESTIMATING PROCESS
The process of estimating consists of the following:
1. Programming the estimate
2. Preliminary project study
3. Material and sub-contract inquiries
4. Project study, construction method and planning
5. Calculating labour and plant costs
6. Estimating the direct costs
7. Calculating on-costs
8. Preparing reports for the tender meeting

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THE CALCULATION IN THE ESTIMATING PROCESS
The calculation in the estimating process can be divided into two broad categories. They are:
(a) Calculating costs; and
(b) calculating direct cost rates for items of work.

For the above calculation the following rates are required.

1. "All-in" labour rates already done
2. "All-in" plant rates already done
3. Cost of materials already done
4. Direct cost rates

DIRECT COST ESTIMATING

Appropriate rates for the resources required to complete the project and quantity of each
resources required for various items are required to calculate the cost rates.

The all-in rates for labour and plant are calculated at the start of the estimate. Materials and
subcontractors quotations are obtained during the tender period.

The out put rates or production times used in calculating the direct cost may be obtained from
unit rates or operational rates. Unit rates are based upon output or usage rates which may be:
1. Abstracted from previously recorded company manuals
2. published books (BSR)
3. Taken form the estimator's "personal" manuals
4. "Known" to the estimator by his experience.
All such output or usage rats are subject to modification by the estimator.

The alternative to using such rates is to estimate the duration of the activities or operations
involved and to base the calculations on the estimated costs of the labour and plant required
for the duration of the work.

These durations are derived:

1. From the planning exercise where logic sequences determine the duration; or
2. By building up form several assumed output rates or
3. by experienced judgment.

Calculations based on their duration of construction activities or operations are known as

operational estimating. Operational estimating is particularly prevalent in civil engineering
estimating because such contracts have a large "plant" element and plant is susceptible to idle
time and it is difficult to incorporate in unit rate estimating.

An example of unit rate estimating

In unit rate estimating the calculations of a labour, plant or material rate is based upon a
predetermined output or usage rate and the quantity of work stated against the bill item.

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Item Description Qty. Unit Rate Amount
01 Concreting in the Basement raft and lift pit 190.0 Cube 14682.60 2,789,694
1:2:4 (3/4) mix and grade 20 concrete
including Burying all piping, Conduits, pockets,
Pits, etc.,
From Building Schedule of Rates (BSR):
Item 21 per 1 cube
Materials
18 cwt cement (50 kg bags) 330X18 = 5940.00
0.50 cubes of sand 0.50X1400 = 700.00
0.88 cubes of metal 0.88X2400 = 2112.00
1/3 day hire of mixer 0.33X800 = 264.00
water - (120 gals) = 10.00
Total cost of material and plant = 9026.00

Labour
1 skilled labourer 1X350 = 350.00
6 days U/SK labourere 6X250 = 1500.00
Labour Total = 1850.00

Total cost of material, labour and plant = 10876.00

Rate with 35% overheads and profits = 14682.60

An example of operational Estimating

Operational estimating is the calculation of a direct cost rate for labour and plant based upon
the total quantity of work involved and the total period that resources will be required on site.

Example
Item Description Unit Quantity rate Amount
F723 Placing of reinforced m3 12.71 546 6939.66
concrete Grade 20 to
bases thickness 300-
500mm

The above item is a one item of concreting in a particular contract. To price the above item
firstly the estimator need to find the plant required to place concrete. From the bill he knows
the total amount of concrete (eg.4000m3). Assume that average rate of concrete placement as
105m3/week while gives a total duration of 38 weeks. Concrete will be delivered by "ready
mix".

He decides that the plant he will need for the placing of the concrete will be:
2No. 20 Ton cranes
4No. Concrete buckets (skips)
6No. Dumpers
6No. Vibrators

The plant will be hired and held on site for the full 38 weeks and used solely for the purpose
of placing concrete. The total plant cost for the operation is therefore:

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Item No Weekly rate No. of weeks Cost
Crane 2 6000 38 456000
Concrete buckets 4 600 38 91200
Dumpers 2 2500 38 190000
Vibrators 4 2000 38 304000
Total direct plant cost 1041200

Plant cost per m3 of concrete (1041200/4000) 260.30

A similar calculation will be undertaken to calculate the labour cost of placing concrete per
cubic meter.

Item No. Weekly rate No. of weeks Cost

Supervisor 3 1800 38 205,200
Labour 18 1500 38 1,026,000

Labour cost per m3 1,231,200

Labour cost per m3 1,231,200/4000 = 307.8

Total labour and plant cost per cubic = 307.8 + 260.3

meter for the placing of the concrete = 568.1

Price of ready mix concrete = Rs. 4300

Total cost of placing concrete = Rs. 4300 + 568.1
= Rs. 4868.1

When the average cost of placing a cubic meters has been calculated the rate may be applied
to all the bill items that make up the total quantity of 8000m3 involved in the calculation.

In the case of some bill items the estimator may combine a unit rate and an operational
estimating rate. In the example below, the provision of concrete is on a unit rate basis and the
placing involving labour and plant is on an operational basis.

Item Description Unit Quantity Rate Amount

A In-situ concrete 1:2:4 m3 45.1 4868.1 219,551.31
to bases thickness
300-500mm

The smaller items

A bill of quantities may contain several thousand items. If items are ranked largest to
smallest and plotted against the cumulative value of the bill, then it may be seen that a large
proportion of the total value of the contract is contained within relatively few bill items. This
is illustrated in the Figure below, in this case 80% of the value represented in 20% of the
items.

The distribution of contract value is important to the estimator in both the attention given to
the bill item and the method of estimating. many of the bill items are not very significant to
the total value of the bill and are, therefore estimated as quickly as possible using methods
which do not involve a detailed assessment of the resources requirements to complete the
item of work. These methods of estimating include:
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 * spot rates
* Included in

Spot rates
A method for the less significant items is to estimate the cost rates for each cost code
category (labour, plant and material). This method is known as estimating by "spot" (or gash)
rates. The rates for each cost category are included in the item rate based upon the estimator's
previous experience.

The estimator simply entire the appropriate rates directly on to this work sheet.
Labour = 2000 Rs/m3
Plant = 1500 Rs/m3
Total rate = 2000 + 1500
= 3500

Item Description Unit Quantity Rate Amount

Included in
The estimator may simply mark a bill item as "included in" another. This indicates that the
work involves has been considered within the general contest of the project but that it is not
considered appropriate to enter a rate against this item separately.

Provisional sums and Prime costs

Some of the items within the bill of quantities included within their detailed description,
information from the engineer as to how they must be priced. Included with this category
are:
* Provision sums
* Prime cost sums

Provisional sums
This is a sum reserved for the execution of work the supply of goods, material or services or
for contingencies. At the time the tender documents were issued these requirements could
not be entirely foreseen, defined or detailed.

Prime cost Sums

A prime cost item is an item which provides for work or services to be performed by a
nominated sub-contractor, statutory authority or department or for goods to be obtained from
nominated
supplier.

30