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Kwame Nkrumah University of Science and TechnologyKumasi – Ghana
Institute of Distance Learning
BT 358 Construction Estimating and Price Analysis
(Credits: 3)
Kwame Ofori-Kuragu
Course AuthorKWAME OFORI-KURAGU is a lecturer at the Department of Building Technology at the Kwame Nkrumah University of Science and Technology, Kumasi. He holds a Bachelor of Science in Building Technology from the Kwame Nkrumah University of Science and Technology and a Master of Science in Construction Project Management from Loughborough University in the United Kingdom. He is member of the Chartered Institute of Building (CIOB), UK member of the American Association for the Advancement of Cost Engineering (AACE), member of the General Teaching Council (GTC) of Great Britain and the Design and Technology Association (DATA), Great Britain.
His main teaching and research interests are in the areas of Improving Productivity in Construction, Construction Cost Reduction Strategies, Innovation in Construction and Project Management Excellence.
Table of Content
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sUNIT 1 THE COST ESTIMATING PROCESS..........................................................11
Session 1-1 The Estimating and Tendering Process......................................................121-1.1 Stages in the Estimating and Tendering Process...................................................12
Session 2-1 Preparations for the Estimate.......................................................................18
UNIT 2 PRINCIPLES FOR COMPUTATION OF ESTIMATES...............................40Session 1-2 ‘All-in Rates” and Unit Rate Computation..........................................40
1-2.1 All-in Rates..................................................................................................40
1-2.2 All-in labour rates.................................................................................................44
1-2.3 All in-rate for Plant.........................................................................................47
1-2.4 Composition of net unit rates...............................................................................48
Session 2-2 PC Sums, Provisional Sums and Overheads......................................532-2.1 PC Sums Nominated suppliers..........................................................53
2-2.2 Provisional sums............................................................................................56
Session 3-2 Project Overheads (Stage 8).................................................................603-2.1 Classification of project overheads.......................................................................62
UNIT 3 BID SUBMISSION AND ACTION AFTER SUBMISSION........................66Session 1-3 Completing and submitting the bid...........................................................66 2-3 The Final Review, Mark-up and tender Submission...........................................73
2-3.1 Estimator’s report...........................................................................................73
2-3.2 Final review...................................................................................................75
Session 3-3 Tender submission and beyond............................................................783-3.1 Tender submission..........................................................................................78
3-3.2 Action after Submitting Tender (Stage 10)......................................................78
UNIT 4 BUILDING UP ESTIMATES.........................................................................84Session 1-4 Preparing Estimates for Excavation, Concretework,
1-4.1 Preparing estimates for Excavation.........................................................841-4.2 Estimating for Concrete..................................................................................90
1-4.3 Preparing Estimates for Structural Steelwork.....................................................104
2-4.4 Estimating for Metalwork............................................................................106
Session 2-4 Estimating for Roofing, Walling, Woodwork, Finishes, Painting and Decoration……………………………………………………………………………108
2-4.1 Estimating for Roofing.......................................................................................108
2-4.2 Estimating for Blockwork and Brickwork..........................................................116
2-4.3 Estimating for Woodwork..................................................................................123
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2-4.4 Estimating for Painting and Decoration..............................................................125
2-4.5 Estimating for Floor, Wall and Ceiling Finishes.............................................127
Session 3-4 Preparing Estimates for Plumbing and Electrical installations, Glazing and Preliminaries…………………………………………………………………….129
3-4.1 Estimating for Plumbing Installation..............................................................129
3-4.2 Estimating for electrical installations..................................................................131
3-4.3 Estimating for Glazing........................................................................................134
Unit 5 ESTIMATING FOR PRELIMINARIES..............................................................136Session 1-5 Preliminary Items...............................................................................136Session 2-5 Pricing Strategy..................................................................................139
Unit 6 PRICE ANALYSIS..............................................................................................151SESSION 1-6 Pricing manipulations.......................................................................151 2-6 Bidding strategy, contract strategy and risk management................................153
2-6.1 Bidding Strategy..........................................................................................153
2-6.2 Risk Management.........................................................................................154
References........................................................................................................................159
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List of tables Page
1. Table 2.1 Computation of “all-in rates for labour 46
2. Table 2.2 Plant information for estimating 47
3. Table 2.3 Classification of construction material wastes 49
4. Table 2.4 Outputs for different methods of excavation in gravel soil 51
5. Table 2.5 Multipliers for different excavation types and depths 51
6. Table 2.6 Effect of soil type and bulkage effect on excavation output 51
7. Table 2.7 Outputs for different depths of earthwork support 52
8. Table 3.1 Comparison of company’s tenders with competitors 83
9. Table 4.1 Illustration of formwork estimating 96
10. Table 4.2 Reinforcement Requirements 99
11. Table 4.3 Information on timber mould 101
12. Table 4.4 Output per ton for fabrication and erection 104
13. Table 4.5 Output data for metalwork per gang-day 106
14. Table 4.6 Achieved outputs for corrugated sheet roofing 108
15. Table 4.7 Corrugated roofing sheet sizes in use locally 109
16. Table 4.8 Outputs for bituminous felt covering operation 109
17. Table 4.9 Popular sizes of blocks which are commonly used in Ghana 116
18. Table 4.10 Weights and volumes of cement and sand in specified nominal mixes of
mortar
117
19. Table 4.11 Achieved outputs for selected blockwork operation 117
20. Table 4.12 Average covering capacities in m2/gallon/coat 125
21. Table 4.13 Achieved labour output data on works in m2/ gang-day 126
22. Table 4.14 Achieved labour outputs for finishes 127
23. Table 4.15 Output data per gang-day for supply, preparation and fixing fittings and
appliances
129
24. Table 4.16 Showing output per gang-day for pipework inclusive of pipes, fittings and
supports in domestic buildings
130
25. Table 4.17 Estimating for electrical installations 131
26. Table 4.18 Cutting and fixing of sheet glass in m2/gang-day 134
27. Table 5.1 Pricing of site visit 140
28. Table 5.2 Calculation of contractor’s supervision cost 145
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29. Table 6.2a Cashflow without front loading 152
30. Table 6.2b Cashflow when front loading is used 152
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List of Figures Page
1. Fig 4.1 Timber formwork support to soffit of suspended slab 96
2. Fig 4.2 Timber moulds for precast concrete works 100
3. Fig 4.3 Bituminous felt roof covering materials and operations 115
4. Fig 5.1 Horse type timber scaffold at 1500mm centres 146
5. Fig 5.2 Site fence with timber frame boarding 147
6. Fig 6.1 Graph of percentage of project costs against percentage of bill items 152
7. Fig 6.2 Risk assessment framework 156
8. Fig 6.3 Risk assessment worksheet 157
Course ContentThis course broadly covers:
1. The Estimating and Bidding process
2. All-in rates determination and materials adjustments
3. Unit rate computation for construction items
4. Price analysis
5. Price and contract strategies
Main Objectives of CourseBy the end of this course, you should be able to:
Understand the step-by-step procedure adopted in practice to establish cost estimates at the tendering stage of construction projects
Acquire the data and methodology required for detailed cost estimation of construction work items
Appreciate the design and development of reports such as adjudication and tender evaluation reports
Appreciate pricing strategies used by contractors to achieve financial objectives
7
PERSONAL ACHIEVEMENT CHECKLIST
The following table could be useful in helping you to keep track of your progress as you
go through the study material. You can use the spaces provided to indicate when you
have achieved a particular objective. The way to check if you have achieved a particular
objective will be by testing yourself using the self-assessment questions.
Course ObjectiveTarget Date for Objective
Date Objective Achieved
Comment
To be able to explain the estimating and bidding process.To be able to compute all-in rates for plant and labour and to be able to compute net unit rates for construction activitiesTo be able to compute estimates for the respective work sections associated with the construction processTo be able to explain the commonly used pricing and contract strategies.To understand fully the reports associated with the estimating and bidding process
8
HOW THIS BOOK HAS BEEN STRUCTUREDThe course has been divided into six main units. Each unit has its own unit objectives.
The unit objectives represent the major achievements which you will be expected to
attain by the time you have finished studying the unit.
Each unit is divided into a number of sessions. In addition to the objectives for the units,
each session has learning outcomes to enhance your learning process and to help you to
effectively assess your learning. Following each session, there are Self-Assessment
Questions. These have a two-fold objective of helping to consolidate your learning whilst
helping you test your knowledge and understanding of the key knowledge areas of each
topic studies.
Much of the material in this book focuses on the Construction Estimating principles and
procedures. In addition to a dedicated unit which focuses on Price Analysis, aspects of
Price Analysis are included throughout the text.
STUDYING THIS COURSE
You may wish to adopt any approach that suits your learning needs and your personal
circumstances. The individual sessions have been structured to be studied as stand-
alones, however if it suits your learning style, you may wish to break down the respective
sessions into manageable bite-size chunks to enhance your learning.
To enable you to assess your progress whilst you study this course, each session is
followed by an activity. The activity consists of assessment questions which seek to
consolidate your learning by helping you assess your learning against the learning
outcomes. These questions should be done within a reasonable time. It is recommended
that you spend about fifteen minutes on the activities. The course material should serve as
9
a useful guide to help you answer correctly any of the assessment activities. Should you
find it necessary, please feel free to refer to relevant sessions.
Finally, the units have been arranged to make it easy to read and may be studied in any
order depending on your specific needs and preferences. In the same way, whilst it will
provide some consistency if the sessions are studied in the order in which they appear in
the book, the presentation of the course material lends itself to any approach that suits
your needs and style. We wish you all the very best as you study this course.
Do enjoy reading.
THE UNITS IN THIS COURSEThe course objectives are achieved through six Study Units as follows:
Unit 1: The Cost Estimating Process
Unit 2: Principles for Computation of Estimates
Unit 3: Tender Submission and Action after Submission of Tender
Unit 4: Building up Estimates
Unit 5: Estimating for Preliminaries
Unit 6: Price Analysis
REQUIRED READINGSHarris F and McCaffer R. MODERN CONSTRUCTION MANAGEMENT 4TH EDITION Professional Book Chapter 9
Hackett M, Robinson I & Statham G, (2007) AQUA GROUP GUIDE TO PROCUREMENT, TENDERING & CONTRACT ADMINISTRATION Chapters 3,4,8-15
Amoah Mensah, K., (1995), MANUAL FOR ESTIMATING
Ashworth, A. & Hogg, K., (2007) WILLIS PRACTICE AND PROCEDURE FOR THE QUANTITY SURVEYOR, Blackwell Publishing, Oxford
10
COURSE STRUCTUREUnit 1 The Cost Estimating ProcessSession 1 The Estimating and Tendering Process
Session 2 Preparations for the Estimate
Unit 2 Principles for Computation of Estimates
Session 1 “All-in Rates” and Unit Rate Computation
Session 2 PC Sums, Provisional Sums and Overheads
Unit 3 Bid Submission and Action after Tender Submission
Session 1 Completion and Submission of Bid
Session 2 The Final Review, Mark-up and Tender Submission
Session 3 Tender Submission and beyond
Unit 4 Building up Estimates
Session 1 Preparing Estimates for Excavation, Concretework, Steelwork and Metalwork
Session 2 Preparing Estimates for Roofing, Walling, Woodwork, Finishes, Painting and Decoration
Session 3 Preparing Estimates for Plumbing and Electrical Installations and Glazing
Unit 5 Estimating for Preliminaries
Session 1 Preliminary Items
Session 2 Pricing Strategy
Unit 6 Price Analysis
Session 1 Price Manipulations
Session 2 Bidding Strategy, Contract Strategy and Risk Management
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UNIT 1 THE CONSTRUCTION ESTIMATING PROCESSUnit ObjectivesBy the end of this unit, you should be able to:
i. Outline the sequence of activities which make up the Estimating and
Tendering Process for construction projects;
ii. Explain what happens at each stage of the estimating and tendering process;
iii. Explain what strategies contractors use during estimating to improve
cashflow.
Introduction to Tendering and EstimatingThe tendering and estimating phase can be seen as the interface between the design and
the construction phase of a traditionally procured contract.
Tendering is the total processes undertaken by a contractor to estimate the net prime costs
of the works involved in a project, making allowance for head office contribution to the
project and risks associated with the project. The tendering process is sometimes
described as bidding. So tender and bid are used interchangeably in some cases. There
are several different types of bids which may be chosen from for a particular project. The
type of bid process chosen may be determined by the client’s priorities or preferences or
in the case of the public procurement of projects in the Ghanaian construction industry,
by the rules governing procurement as set out by the Public Procurement Act. The first
step in the preparation of a bid by the contractor is to prepare estimates of what is
required for a project and what these will cost. The function of estimating is to establish
the net prime cost of completing the works indicated in the contract documents (exclusive
of head office overheads and profits and allowances for contractors’ risks).
Once the total estimate for a project has been obtained, it can be converted to a tender
figure by adding a charge for head office overheads, profits and allowances for
contractor’s overheads. There are several stages in the estimating process. In the next
session, we look at the different stages of the construction estimating process.
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Session 1-1 The Estimating and Tendering ProcessLearning Outcomes
By the end of this session, you will be able to explain:
i. The criteria used to select suitable contractors to bid;
ii. The factors considered by the contractor when making the decision to bid; and
iii. What actions should be taken by the contractor if a decision is made to tender
for a project.
1-1.1 Stages in the Estimating and Tendering Process
The process of estimating and tendering for a project usually follows a set of systematic
stages. The following distinct stages can be identified:
i. Development of tender list and invitation to tender;
ii. The contractor’s decision to tender;
iii. Project appreciation;
iv. Enquiries and quotations;
v. Planning and temporary works;
vi. “All-in” Rates and Unit Rate Pricing;
vii. PC and provisional sums;
viii. Project overheads;
ix. Completion, adjudication and submission of tender; and
x. Action after submitting tender.
We will now discuss the respective stages and the series of actions undertaken at each
stage.
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Stage 1: The Invitation to TenderTender List and Invitation to TenderThe contractor will be expected to formally respond to the client’s invitation to tender. If
the contractor’s response is positive, it will indicate to the client and his consultants
whether the contractor has the necessary expertise, experience, management, resources
(including financial) and knowledge of the location to adequately construct their works in
the time required. Adequate and consistent appraisal of contractors submitting
information is essential. From the written exchange of information, and any interviews
felt necessary by the client and his consultants, a shortlist of contractors will be produced.
This pre-selection procedure will produce a list of companies, any of which will be
capable of constructing the works. Consultants should advice contractors who are
selected that they would be receiving tender documents on the advised date. The
contractor can then reserve appropriate resources to process the tender when it arrives. It
is important that these dates are adhered to and that the contractor is advised of any
changes that occur. Contractors who have not been selected at the pre-selection stage
should also be advised promptly that they have not been successful.
Once a contractor has indicted his intention to submit a tender, it will only be under very
exceptional conditions that such a contractor should decide not to submit a final tender. If
a situation arises which makes a contractor’s withdrawal necessary, adequate notice of
the withdrawal should be given to the client or consultants in order for them to be able to
either invite new contractors to join or abandon the process. This will help prevent undue
delays to the contractor selection process and by extension the project.
Stage 2: Decision to TenderWhen a contractor makes it to onto a client’s tender list and is invited to tender, the
contractor now needs to make a decision whether or not to formally put in a bid for the
project. Some of the factors used to make this crucial decision whether or not to bid are
shown below:
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Factors Considered when making decision to tender
The following factors are the main points considered when contractors are making a
decision to bid / tender for a project or not. They are:
The conditions of contract for the project;
The contractor’s workload or timetable;
The type of work and resources needed for the project;
The tender information provided;
Commercial factors;
Credit standing of the client;
Source of funding for project;
Knowledge of Client;
Timescale for offer;
Knowledge of competitors also interested in the project;
Importance of the project to the client and the contractor;
Knowledge of local conditions – availability of labour, plant and materials;
Risks involved – cash flow, future business, etc.;
Terms of payment for the project;
The contractor’s overheads, mark up and profit; and
The method of evaluation and award to be used for the project.
Once the contractor has decided to put in a bid for the project, the next thing is to put
together a team for the estimating process. Let us now consider the estimating team
generally and the main parties which usually make up the team.
The Estimating TeamThis is the team put together by the contractor to handle the tendering and estimating
process once the decision to tender has been made. It is important to ensure that the
whole process is a team effort. The natural leader of the team is the estimator and all
other members of the contractor’s organisation may contribute depending on the scale
and complexity of the project in relation to the company’s workload. On a major project,
15
some or all of these functions within the contractor’s organisation may work on the
preparation of a tender. Not all of these will however work on a full time basis depending
on the specific needs and the requirements relating to a particular project.
In general, some of the members who make up the contractor’s estimating team are:
estimator, planner, buying officer, engineer, plant manager, quantity surveyor, insurance
officer and operations manger. Let’s look at the respective roles that each team member
plays and/ or their departments play in the overall estimating process.
The Estimator: The estimator is the team leader and is responsible for pricing the works
which form part of the project.
The Planner: The planner has responsibility for the pre-tender planning process. This
includes the programme of works, method statement and resource scheduling. The
planner must work closely with the estimator so that the estimate produced relates
directly to the pre-tender plan.
The Buying Officer: The buying officer is generally responsible for sending out
enquiries for all bought-in items. These include enquiries relating to materials, sub-
contractors, temporary works and consumables. This department is responsible for
presenting the estimator with a table of comparisons and their recommendations for
inclusion in the estimate.
Engineer: The engineer is responsible for design, quality control and /or quality
assurance proposals. He is also responsible for making recommendations relating to
temporary works.
Plant Management Officer: The plant management officer is responsible for advising
the estimator on the selection, availability, utilisation and cost of specialist plant and
transport required for the project.
16
Quantity Surveyor: The quantity surveyor on the estimating team is responsible for
examining contract documents to identify any areas of commercial risk or opportunity.
Insurance Officer– This is the insurance expert on the estimating team who offers
specialist advice regarding bonds and insurance to the estimating team.
Operations Management Representative: Represents the operations department in the
contractor’s organisation and serves on the estimating team; must be given the
opportunity to examine and approve the proposed contract strategy.
What happens when the tender documents are received?When the estimating department receives the tender documents, the department must
complete a Tender Information Form. Once this has been done, an acknowledgement or
receipt of the enquiry must be sent to the client or his consultant. This form provides
management with a summary of the project and the tender documentation. It must be
circulated to managers in other departments and will be very important in helping to
make the decision to tender. Where an approximate cost of the project is provided, this
must be reconciled against any advice given at the time of pre-selection. If no
approximate cost is given, an early assessment must be made by the estimator to
determine the approximate cost of the project and the scope of works.
Inspection of tender documentsThe inspection of the tender documents must be made by the estimator mainly
responsible for the production of the cost estimate. The estimator must then make a
checklist of all the documents received. In larger construction companies, these
documents may be inspected by the chief estimator as well as other members of the
contractor’s organisation. These may include the tender planner, quantity surveyor,
contracts advisor and contracts manager. Clear lines of communication should be
established to ensure that all viewpoints of all those who examine the documents are
considered. The estimator will have overall responsibility for the co-ordination of the
views of the other parties who examine the documents.
17
Objectives when inspecting tender documentsThe main objectives which should be achieved when inspecting the documents are:
Whether the documents received are those specified in the enquiry;
That the documents and information are adequate for assessing costs; and
That sufficient time is available for the production of a tender.
Information required for the preparation of an estimateIn order to prepare a tender programme, all the information contained during “Pre-
selection” will be required together with additional information. This is supplied in
various forms, including:
Drawings;
Specifications (including performance specifications where possible);
Schedules;
Technical reports;
Programme of work periods for major nominated subcontractors; and
Bills of quantity.
All forms must show the date of original issue as well as the date(s) and nature of any
amendments. The drawings issued in the bills of quantities or the drawing issue forms
will be issued with the tender documents.
Self assessment questions
i. You are part of a client consulting group tasked with selecting a contractor for
a large project. What factors will you consider when deciding which
contractors to invite to bid for the project?
ii. On receiving an invitation to tender, contractors need to make the critical
decision whether to bid for the project or not. What factors should contractors
consider when they are making the decision to bid for a project or not?
iii. What actions should be taken by a contractor after a decision has been made
to tender for a project?
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Session 2-1 Preparations for the Estimate
Learning Outcomes
By the end of this session, you should be able to:
i. Explain what Project Appreciation means;
ii. Describe the nature of enquiries which contractors may need to make whilst
putting a bid together; and
iii. Describe the type of planning which the contractor makes at this stage.
Stage 3: Project AppreciationHaving decided to tender for the project, the next stage is for the contractor is to gain an
in-depth understanding of the project’s requirements and to devise a strategy for the
timely completion of the complex, interrelated activities involved in the project.
Management of estimates
All projects in an estimating department must be entered in a tender register. Many
companies use the register to evaluate tender performance in relation to their competition.
Co-ordination meetings are needed with management and other departments within the
contractor’s organization to establish key dates, decide on actions necessary and monitor
progress during the production of the cost estimate. The chief estimator will prepare a bar
chart each week to plan the estimator’s work-load showing both present and possible
future tenders. Copies are sent to heads of other departments for their input.
Checking the tender documents
After the contractor has decided to tender for a project, the estimator must ensure that all
the tender documents have been received. A check must be made to see that all drawings
received are those which have any up-to date revisions noted and that all other documents
listed in the invitation letter are provided. Making a checklist for the tender documents
will help the estimator to assess their suitability for the estimate. A letter is then sent to
the client or consultant to acknowledge receipt of the documents and confirm that a
tender will be produced by the due date. This letter sent to the client should also record
any discrepancies in the documents received. It is important to make an accurate record
19
of tender documents received because they will become the basis of a formal offer and
eventually be checked against the contract documents in the case of a successful tender.
This can best be achieved by stamping each drawing and document to show the date
received and the words – “Tender Documents” on them.
Timetable for the production of the estimate and tender
A timetable must be established which highlights the key dates in the production of the
estimate and tender. This is the responsibility of the estimator. When prepared, the
estimating timetable will be an essential document for all those associated with the
tendering function. The following dates should be established without ambiguity:
Latest date for dispatch of enquiries for materials, plant and sub-contracted items;
Latest date for the receipt of quotations;
Bills of quantity production for design and build, drawings and specifications
contracts;
Visit to the site and the locality;
Finalization of the method statement;
Completion of pricing and measured rates;
Finalization of tender programme;
Intermediate coordination meetings within the contractor’s organization;
Review meetings;
Submission of the tender.
Examination of the tender
The conditions of contract, bills of quantity, general arrangement drawings, specifications
and any supporting documents, such as soil reports, site industrial relations policy, or
specialist information must be examined in detail by he estimator or other personnel in
the contractor’s organization, including those associated with purchasing, tender
planning, commercial management, engineering, temporary works, plant and
construction. Any discrepancies in the tender documents must be noted by the estimator
for future reference to the appropriate consultant for clarification.
20
Conditions of contract and appendix
At this stage the estimator must consider in more depth the consequences of such
conditions and note his recommendations for dealing with the situation on the
‘Estimator’s summary’. Any further particulars received during the tender period
concerning the conditions of contract and appendix details, must be noted and entered in
the ‘Estimator’s Summary’. The estimator must ensure that appropriate action is taken
regarding any cost implications of revised or additional information received. When the
conditions of contract and appendix are examined, they must reveal whether:
All forms of contract used are standard forms of contract;
Conditions of standard forms are amended;
Non-standard payments or retention provisions are included and the effects that
such alterations may cause regarding the contractor’s liability for payments to
sub-contractors;
Bid bonds, performance bonds or parent company guarantee are required;
Insurance requirements are met by the contractor’s standard policies, or can be
obtained within the current insurance market at reasonable rates;
Nomination procedures will be followed without amendment;
Liquidated damage requirements are acceptable and whether any allowance
should be made in the tender; and
Amendments to other project information have been reflected in the conditions; of
contract, i.e. items not measured in the bills of quantity in accordance with the
SMM.
Specifications, bills of quantity and drawings
The estimator must have a thorough understanding of the specification. This document
must be examined in detail and compared with the items measured in the bills of quantity
and tender drawings to identify any divergence and discrepancies. The estimator must
ensure that there is consistency and any cross references is accurate. The specification
must be clear and unambiguous and the estimator must prepare a queries list of any
unclear items for discussion with the appropriate consultant.
21
A schedule must be prepared for use in obtaining quotations for various materials and
elements to be sub-contracted. In order to prepare this, the estimator must first of all
group together relevant items from the specifications and bills of quantity into respective
trades and if necessary, individual suppliers. It may be necessary to obtain further
information from drawings, for example lengths of timber may need to be specified. The
estimator should consider any additional quotations that will be required to enable him to
have flexibility when pricing. This could include extra over rates for machine offloading
of bricks. Another example is the extra over charge made by ready mix concrete
suppliers. Such information will be of benefit when pricing the bills in detail at a later
stage. The attention of the consultants must be drawn to any problems, particularly when
an estimator is concerned that poor specifications could make his tender less competitive.
The information provided on tender drawings will be a significant factor in the decision
to tender. At this stage, the estimator will systematically analyse the data shown on the
various tender drawings and schedules and build up a picture of the project’s needs. This
analysis must highlight the cost significant items in the project and demonstrate areas of
caution or risk. Further information may be needed when the site is visited. This
information must be recorded for review purposes in the ‘Estimator’s summary’. The
estimator should look for various factors at this stage which will influence his approach
to pricing such as:
Standard and completeness of the drawn information;
Tolerances required;
Clarity of the specifications requirements and the quality required;
Buildability;
Whether load bearing and non load bearing areas can be identified;
The extent of use of standard details indicating previous construction experience;
Evidence of design coordination of services and structural needs;
The amount of information concerning ground conditions and foundations; and
Problem areas and restraints on construction in the design.
22
From his appreciation of the drawn information, the specification and measured items in
the bills of quantity, the estimator will begin to understand how the project is to be
constructed and the quantity and quality of resources needed.
Outstanding information
Having examined the tender documents thoroughly, the estimator will highlight any
concerns or queries relating to the project and the proposed method of construction. It is
important that the estimator puts together queries that are raised by other members of the
contractor’s team who have examined the documents as well. All queries concerning the
tender information should be channeled to the estimator for resolution. It is recommended
that only the estimator should deal with the consultants at this stage to avoid any
problems which may arise from different people communicating different things. Queries
raised will be resolved through meetings and discussions between the estimator and other
members of the contractor’s team and the consultants on the site visit. The estimator must
ensure that all queries raised with the consultants are made in writing and that the
urgency of the information needed is stressed. Any significant decisions communicated to
one contractor by the consultant, must be communicated to all tendering contractors.
How to ensure effective distribution of documents
The estimator has a responsibility to ensure that other members of the contractor’s
estimating team with specialist knowledge or interests are provided with copies of all
relevant information relating to the project. A tender documents’ checklist can be used to
record who in the estimating team receives documents and which documents are sent. In
very large construction organizations, specialist departments will assess the risks and
obligations as have been detailed below:
The insurance department will obtain a quotation for a specific project if it
exceeds a certain value or involves working in a hazardous location.
The legal department or the company secretary may need to comment on the
wording of warranties or performance bonds or arrange directors’ signatures for
parent company guarantees where these are required.
23
The commercial manager or quantity surveyor should be consulted for advice on
the proposed conditions of contract. In particular, his advice on the terms of
payment which are critical to the financial success of a contract should be sought.
The need to visit the site
The visit to the site must be made once the preliminary assessment of the project has been
carried out and a provisional method and sequence of construction established. The
estimator may be accompanied on such a visit by other members of the contractor’s team.
As well as visiting the site itself, the opportunity must be used to examine the general
locality and to establish the extent of construction-related activity in the area. Visits
should also be made to local labour agencies and suppliers in the area. If there are
excavations near the site, it is advisable to visit these too. The local authorities may be
able to give advice on local conditions and of any excavations which may be visibly
adjacent or near to the site.
After visiting the site, a comprehensive report of the site visit must be prepared. Site
photographs can often be a useful way of recording information from the site visit for
discussion and records purposes. Points to be noted when making a site visit would
usually include: transport links to the site, topographical details of the site, access to the
site, security issues, the location of services, local amenities as well as local regulations
etc.
Visits to consultants
The estimator may need to visit the client’s consultants, particularly when further
information is needed which has not been given to tenderers, such as further drawings
and site investigation reports. In some circumstances, these documents may be
confidential. In practice, visits will normally be made to the architect, but it helps to visit
the consulting engineer, services engineer and quantity surveyor, in order to meet the
personalities who will subsequently be involved in the project. Detailed drawings, reports
of site investigations and any other available information must be inspected and notes and
sketches made of all matters affecting either construction method temporary works or the
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likely cost of work. A critical assessment must be made of the degree of advancement
and quality of the design. The reason for this is that, generally a well-developed and well-
documented design may be indicative of a smooth running and possibly profitable
project. A design which is obviously ill-conceived and incomplete may cause delays
during construction and as a result, allowance must be made for this in the tender. If the
indications are unfavourable at this stage, the decision to submit a tender may be affected.
Although visits to consultants are invaluable, they have become less common in practice
because contractors are usually given copies of all the drawings and specifications which
are going to become part of the contract documents. The more common situation
therefore is that a visit will be seen as an opportunity to show the tenderer’s willingness
to contribute to the scheme, to work closely with the design team and to express an
interest in further work.
Stage 4: Enquiries and QuotationsAfter tender checking and the project appreciation stages, the next phase is to make all
the necessary enquiries needed to sub-contractors and suppliers, obtain quotes and then to
start to plan the work. This takes the estimating process from the preliminary stages
through to its mid-stage when the detailed pricing begins. A contractor’s success in
obtaining a contract depends upon its success in obtaining good quality quotations for
materials, plant and items to be sub-contracted. These elements typically account for over
70% of the value of direct works, and so the importance of accurate and complete quotes
cannot be overstated.
Enquiry Documents
As previously stated, the contractor’s success in obtaining a contract depends upon the
quality of the quotations received for materials, plant and items to be sub-contracted. It is
therefore essential to obtain realistically competitive prices at the time of preparing the
estimate. The responsibility for carrying out this important function will vary from
company to company. In some organizations, the estimator prepares the information for
enquiry purposes, selects the organizations to receive enquiries and reconciles the
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quotations received. In others, some or all of this will be done by the buying department,
who may provide the estimator with a selection of fully reconciled quotations at the end
of the enquiry stage for his final consideration. Whoever has responsibility, standard
procedures should be established, setting out the responsibilities of the person who is to
carry out the enquiry function and any subsequent negotiations that arise.
The professional manner in which enquiries are sent to suppliers and sub-contractors can
have a considerable effect on the response and the quality of quotations submitted. Lists
of items for which quotations are required are established following the detailed
examination of the contract documents. Enquiry abstract forms should be produced which
enable the estimator or buyer to list the materials and trade packages which need
quotations. If only drawings and specifications are provided, it is necessary for the
contractor to produce additional information to assist with the enquiries. Every
opportunity should be taken to clarify the contractor’s requirements, bearing in mind the
limited time usually available for obtaining quotations. The contractor must ensure that
comprehensive records of the various elements of project information sent to suppliers
and sub-contractors are maintained. These records must list the drawings sent, the
relevant contracts and specification clauses, project preambles and the pages of the bills
of quality. The use of the standardized documentation and procedures assists at this stage
in the methodical preparation of the estimate, and allows an interchange of personnel at
any stage.
Lists and Pre-selection
Contractors must maintain comprehensive records of suppliers, and sub-contractors.
These records must include:
Details of past performance on site;
Previous performance in returning complete quotations on time;
Extent of geographical operation;
Size and type of contract on which previously used;
Information concerning contacts; and
Address, telephone and facsimile numbers.
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When operating in a new area, a contractor needs information concerning the local
suppliers and sub-contractors. In this case, performance should be verified from other
external sources and any remaining information established from the supplier and sub-
contractor concerned. A questionnaire may be used to establish the resources and abilities
of subcontractors concerning:
Area of operations;
Size and type of work;
Labour and supervision available;
Size and type of work previously carried out;
References from trade, consultant and banking sources;
Insurances carried by the sub-contractor(if relevant); and
Confirmation of holding of relevant sub-contractor’s tax exception certificate (if
relevant).
This questionnaire attempts to establish the supplier or sub-contractor‘s financial
capability to undertake the work in question and to supply the materials and the plant
required. It is necessary to establish that all resources will be available to meet the
requirements of the main contractor’s programme. Pre-selection will be necessary if
dealing with unknown suppliers and sub-contractors. Bearing in mind the particular needs
of the project, the contractor must ensure that the list of suppliers and sub-contractors
who are invited to tender is comprehensive and that bids will be received. Pre-selection
procedures must confirm that quotations will be submitted and establish that the
particular supplier and sub-contractor has the necessary resources and the desire to tender
for the project. The procedures described previously must be applied if sufficient time is
available. In any event, confirmation must be obtained from major suppliers and sub-
contractors that they will be prepared to submit a bid, before enquiry documents are sent
out.
Programme and Method of Construction
The programme of construction is a schedule which shows the activities required to be
undertaken, the required durations, their start and finish dates.
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The method of construction is a description of how the contractor proposes to carry out
the required activities.
In order to obtain their maximum support and co-operation, suppliers and sub-contractors
must be advised of the programme requirements and any aspects of the method of
construction that are relevant. Programming information must necessarily include:
The anticipated start date for the main contract;
The approximate start dates for sub-contractor, or materials deliveries;
The required completion date(s);
Key information of significance to the progress of the works; and
Phasing.
Enquiries and requests for quotations
The objective of sending out enquiries is to ensure that technically accurate quotations
are received which are compatible with the main contractor’s conditions. Enquiries must
set out clearly the terms and conditions on which quotations are being invited. It is
recommended that limited numbers of suppliers and sub-contractors are invited to quote
for each item or section of the work. This conforms to the principles of selective
tendering and avoids the wasteful use of resources in requesting an excessive number of
quotations which one may not need or may not be able to process effectively. The time
allowed for the preparation of a tender is invariably short. The contractor has only a
limited period of time to distribute enquiries, thus any enquiries made should be relevant
enquiries which will be of benefit to a reasonable number of participants.
Supplier and material enquiries
Enquiries to suppliers of materials must state:
Title and location of the work, and site address;
Specification, class and quality of the material;
Quantity of the material;
Likely delivery programme, i.e. the period during which supplies would be
needed with daily or weekly requirements if these are known;
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Means of access, highlighting any limitations or delivery restraints; - any traffic
conditions which may affect delivery times;
Special delivery requirements such as pallets or self-unloading transport;
Date by which the quotation is required;
Period for which the quotation is to remain open;
Whether fluctuating or firm prices are required;
the basis for recovery of increased cost and the base date when a formulae is used
for calculation of fluctuations;
Discounts required; and
The person in the contractor’s organisation responsible for queries.
The contractor must record details of all enquiries sent to suppliers on an enquiry register.
Plant requirements
The contractor’s plant requirements should be established in the method statement and
the programme. They will establish the basic performance requirements of plant and in
many cases will have identified specific plant items needed for the works. The duration
for which the plant is needed on site will be established from the tender programme. The
estimator must firstly compile a ‘schedule of plant requirements’, in which the type,
performance requirements and durations for the plant should be listed.
A note must be made of the schedule of any additional requirements associated with a
particular item of plant which must be provided by the contractor. Power supply for a
tower crane, for example could be a significant extra cost and temporary access roads for
erection purposes may be needed together with foundations. Further details are therefore
necessary for certain non-mechanical plant.
With regards to scaffolding, a scaffolding schedule must be drawn up by the estimating
team in order to provide scaffolding contractors with a clear list of requirements. The
contractor may consider the intended method of working and programme requirements in
the specification for plant. In the case of formwork, equipment turnaround time and
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striking time will dictate the amount of formwork, support and access equipment needed.
A balance must be drawn between the speed of operation and economy in establishing
plant needs and all must be clearly reflected in the plant enquiry. A list of plant suppliers
must be established from companies who can meet the project’s requirements. The
options available for obtaining plant include:
1. Purchasing plant for the contract;
2. Hiring existing company owned plant; and
3. Hiring from external sources.
Let’s briefly explain each of these.
Purchasing plant for the contract
The decision to purchase plant for a particular contract is usually taken by senior
management. Such a decision requires knowledge of plant engineering and would
be made in accordance with the accounting policy of the company. The following
general factors must be considered when plant is to be purchased for a project and
sold on completion:
Purchase price less expected resale value after allowing for disposal costs;
Return required on capital invested;
Cost of finance;
Cost of maintaining the plant and associated overheads;
Stock levels of spares;
The company’s policy on depreciation;
Likely working life of the plant;
Cost of insurances and taxes, e.g. Road fund tax;
Any tax or depreciation allowances that are available;
Availability and cost of plant outside the company; and
Accessibility of he site in relation to company depot and servicing centres.
Hiring existing company owned plant
When plant is already owned by the company, the estimating department will be provided
with hire rates at which plant will be charged to the site or projects. The following list
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should be regarded - for guidance only - as the items which must be considered in
building up hire rates for company owned plant:
A capital sum based upon the purchase price and expected economic life;
An assessment of the costs of finance (interest for loan taken to acquire plant or if
bought on hire purchase);
The return required on the capital invested in acquiring the plant;
Grants and financial assistance available when purchasing the plant
Administration and depot costs;
Costs of insurances and road fund licenses; and
Maintenance time and cost and also cost of stocks needed for maintenance
purposes.
Hiring from external sources
Hiring of plant becomes an option where company owned plant is not available or where
the company does not have in its fleet the equipment required. In this case, enquiries
must be sent to external suppliers (plant-hire firms) for the plant required. Enquiries for
items of plant must either be sent specifying the particular machines and equipment that
are needed or specifying the performance required from the item of plant. Enquiries must
generally state:
Title and location of the work, and address of the site;
Specification of the plant or the work to be done;
Anticipated periods of hire with start date on site and duration required;
Means of access, highlighting any restraints or limitations;
Any traffic restrictions affecting delivery times;
Anticipated working hours of the site;
Date the quotation is required;
Period the quotation is to remain open;
Whether fluctuating or firm price required. The basis for recovery of fluctuations
and the base date when formulae are used for the recovery of fluctuations should
be stated;
Discounts offered (if any); and
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The person in the contractor’s organization to be contacted regarding queries.
In addition to the basic hire charge per hour or week, the enquiry must seek to establish:
Cost of delivering and subsequently removal of plant from the site on completion
of hire;
Cost of any operator, over and above the basic hire charge if provided by the
hiring company. ( if however this is provided by the contractor, the estimator
must produce a built-up rate for the operator’s costs);
Whether the hire rates quoted include those for servicing costs;
Any minimum hire periods applicable to the plant and the extent of any
guaranteed time; and
Cost of standing time and insurance cost for cases when the plant is retained on
site and not working for any reason.
Domestic Sub-contractorsSub-contractors will require the same details and information about the sub-contract
works as the main contractor requires for his tender. Selection of sub-contractors will
take into account skill, performance, integrity, responsibility and proven competence in
health and safety matters and for work of similar size and character to the project under
consideration as well as the sub-contractor’s interest in tendering for the particular
project. The principles of selective tendering relating to the main contractor must be
reflected in the number of sub-contract enquiries. The contractor’s enquiry and
information to the sub-contractors must state:
site and location of the works;
name of employer;
names of the consultants;
relevant contract and sub-contract details;
any amendments to the main contract, appendix or sub-contract conditions;
whether a fixing or fluctuating contract stating relevant details and rules
Dayworks rates as required;
dates quotations must be returned;
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general description of the works;
particulars of access to the site, available site plant, site industrial relations
policy, storage facilities etc.;
whether further details and drawing may be inspected;
contract period, programme, phasing requirements and method statement
details, start date and duration of sub-contract works;
any discounts required;
a copy of the relevant extracts from the preliminaries and the bills of quantity;
drawings, schedules and reports where applicable; and
services or attendances to be provided by the main contractor (if any).
Subcontract enquiriesContractors use a standard format for producing subcontract enquiries comprising a letter
addressed to each sub-contractor, a list of accompanying documents and an abstract of
contract conditions adapted for the project. Opportunity must be provided for sub-
contractors to see all the relevant drawings and project details as well as any assistance
available to ensure that the quotation received is the sub-contractor’s best price and not
unduly inflated owing to inadequate project information. The contractor may seek
quotations from labour-only sub-contractors for certain elements of the work. The
decision to use labour-only sub-contractors will take into account company policy,
availability of labour in the area, any special requirements concerning site labour policy
and market conditions. In this case, all items noted under ‘domestic sub-contractors’
apply. The contractor must gain further information concerning the status of the labour
only sub-contractor and verify if:
the sub-contractor holds a current relevant sub-contractor’s tax exemption
certificate; and
the sub-contractor’s insurances are adequate.
In addition, the estimator must allow for the cost of:
any attendances to be provided by the contractor;
responsibility for unloading, storage and distribution of materials;
supervision to be provided by the contractor;
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frequency of payments required by the sub-contractor;
retention sums relating to the sub-contracted work;
any additional costs that may arise once the sub-contractor has completed the
works and left the site; and
any additional risks.
The contractor must record all enquiries to the sub-contractors on the resource abstract or
a domestic sub-contractors’ register and then await receipt of the sub-contractors
quotations.
Materials
In relation to materials, any responses from suppliers should be recorded on the resource
abstract sheet or in a materials quotations register. In some practices, rates are entered on
a Materials Comparison Form for use during the pricing stage. Any discrepancies and
divergence from the enquiry must also be recorded on the register for later evaluation,
before selection of the quotation to be used in pricing unit rates. Quotations must be
checked to ensure that:
the materials comply with the specification;
the materials will be available when required in order to meet the requirements of
the construction programme;
no special delivery conditions have been imposed by the supplier;
the method of delivery complies with the contractor’s requirements and the
intended method of unloading and handling on site;
conditions contained in quotations do not amount to an alternative offer being at
variance with terms and conditions of enquiry;
the quotation is valid for the entire duration for which it is required;
prices are given for small quantities and other items if required;
discounts conform to the requirements of the enquiry; and
requirements concerning fixed or fluctuating prices are complied with.
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Plant
Rates for plant are entered on a Plant Comparison Form for use during the pricing stage.
Any discrepancies and divergence from the enquiry must be identified and also recorded
on the register. It must be borne in mind that where a performance specification was
provide for the plant, quotations must be carefully checked to ensure that the plant
offered meets the requirements defined at the enquiry stage. Quotations must be
scheduled to ensure that:
the plant complies with the project requirements;
the plant is available to meet the needs of the construction programme;
delivery and construction charges can be identified;
where applicable, all operator costs are included and the operators will comply
with the intended working hours of the site;
Any attendance or supplies to be provided by the contractor are clearly identified;
Maintenance responsibilities and charges are identified; in particular, any wear
and tear should be carefully noted;
Maintenance liabilities are identified;
The quotation is valid for the required period;
The quotation conforms to the terms and conditions of the enquiry and does not
represent an alternative offer; and
Requirements concerning fixed or fluctuating prices are complied with.
Stage 5: Planning and Temporary WorksPlanning takes place once enquiries have been made to sub-contractors and suppliers and
quotes obtained. The planning stage outlines how and when activities proposed under the
project will be undertaken.
Principal quantities
The first part of the planning stage is to extract the principal quantities from the bill of
quantity for the main elements of work. This is done by an experienced estimator or
planning engineer who should be aware of the operations likely to form important and
critical items in a programme. The amount of formwork, for example, has more
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significance to the programme than the volume of concrete to be placed. This is because
concrete can be placed quickly when required using large gangs or using a concrete
pump, whereas formwork outputs are limited by the number of skilled carpenters
employed on the site and the need to re-use materials wherever possible.
Principal quantities are usually provided in bills of quantity for civil engineering work
but rarely for building. It is not too difficult to abstract quantities from any bills of
quantity providing ancillary items and labour items are ignored. Computers on their own
are unable to assist in this appraisal because estimating software are unable to
differentiate between significant and insignificant items. In order to overcome this hurdle,
contractors may add an activity or operation code item entered in estimate file.
Method statements
Method statements are written descriptions of how operations will be carried out and
managed during a project. Method statements should not only deal with the use of labour
and plant in terms of types, gang sizes and expected outputs, but also include the way in
which the project will be organized.
It is essential that an early meeting is held between the estimator and those responsible
for the programming and construction of the project to discuss the method of
construction. In a smaller organisation, all of these roles may be undertaken solely by the
estimator.
In preparing the method statement, a contractor will gain a competitive advantage by
finding innovative and the most cost effective systems for temporary works and materials
handling. This appraisal of the scope of works and method could involve changes to the
design which may be offered as alternative tenders.
The primary purposes of the method statement are as follows:
i. To establish the principles on which the estimate is based; and
ii. To acquaint construction personnel with the resource limits which have been
considered in preparing the estimate and to describe the method of working
envisaged at the tender stage.
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The normal practice is that Clients or their consultants will request method statements
from contractors at tender stage. This provides the client with confidence in the
contractor’s ability to overcome construction difficulties and above all to deliver the
project on time. Other reasons for seeing a contractor’s method statement include:
satisfying statutory safety requirements, bringing out interface problems which might
exist with other contractors on site, and to demonstrate compliance with client’s overall
objectives such as ensuring production is not interrupted in a factory.
In successful tenders, the method statement will outline the sequence and methods of
construction upon which the estimate is based. It should indicate how it is proposed to
deal with the major elements of work as well as highlighting areas where new or difficult
methods are necessary or intended. This should be supported with details of cost data,
gang sizes, plant requirement and supervision requirements.
A pre-tender health and safety plan drawn up by the planning supervisor will be provided
to all tenderers. This will incorporate an identification of risks arising from the nature of
the work and the design. The design team must attempt to minimize risks to health and
safety during the construction stage and when the building is used and demolished.
The tender programme
The tender programme is the programme which shows a schedule of the works involved
and when the contractor proposes to undertake them. It is a vital document for the
contractor which represents the contractor’s intentions at the time of tender upon which
pricing of the works is based. Many standard forms of contract require the contractor to
submit a copy of his programme at an early stage of the contract. The programmed
submitted at this stage may be the tender programme as it reflects the contractor’s
intentions, based upon the tender information provided.
The contractor will not always be required to submit a tender programme with his tender.
In some cases, the contractor may only be required to confirm by signing the form of
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tender that all the works will be executed in accordance with the commencement and
completion dates stated in the project information received from the consultants.
However, good estimating practice dictates that the contractor must prepare a tender
programme which amongst other things will help (the contractor) to:
Verify that the date for completion is possible;
Maximise the efficiency of resources;
Price the time-related elements, in particular staff and site accommodation,
temporary works and general plant;
Establish the method and sequence of working;
Determine cost increases for firm price tenders;
Identify work which may be affected by seasonal weather changes such as bulk
excavation, drying the internal fabric of the building and landscaping; and
Consider making an offer with shorter contract duration.
The tender programme usually develops in two stages. First, a preliminary programme is
drawn up at an early stage of the project once the information has been assimilated. This
must take into account:
Contract commencement and completion dates;
Client requirements for phasing or stage completion;
Other stated requirements or sequence of work, i.e. delivery of client’s equipment;
Work to be carried out by directly employed labour;
Work to be carried out by domestic sub-contractors;
Work to carried out by nominated sub-contractors;
Key items to be supplied by nominated suppliers; and
Timing for temporary works items such as scaffolding.
The preliminary programme will identify the parameters of the project and the main
resources needed. It will establish key dates for major portions of the work and provide
basic information which can be used when obtaining quotations for materials, plant and
work to be sub-contracted.
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The preliminary programme will provide a basis on which construction method and
sequence can be developed. This can be done following the clarification of any queries
by the consultants and the site visit. When such queries and constraints have been
resolved, the tender programme can be produced from the preliminary programme, taking
into account the agreed construction method and sequence. The method statement can
also be finalised.
If design is incomplete at the tender stage, the contractor should incorporate in the tender
programme a series of key dates when design information (or instructions regarding PC
and provisional sums) must be given. It may well be that the contractor’s estimate is
based on early ordering of materials to obtain price advantage and/or long delivery
periods of materials. It is essential that design information is made available to reflect
these intentions and secure the prices contained in the contractor’s estimate.
A project overheads programme is superimposed on the tender programme in order to
quantify the time-related resources. When a client or his consultants require the
submission of a programme with a tender, the contractor produces a simplified version of
his tender programme. The simplified version is for the reasons below:
To make a well-presented submission
To allow opportunities for changes to be made by the site team when the
construction programme is produced
To offer an overall duration which meets the client’s general requirements and in
cases where time is critical, offer early completion; either because it is feasible or
to gain competitive advantage. (With non-adversarial forms of contracting such as
partnering, where co-operation is encouraged, and price is not an overriding
criterion, a contractor can look for alternative methods, sequences and resources
in order to offer an optimum solution)
To establish dates by which design information will be required to meet the
programmed completion date.
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Temporary works and plant schedules
The temporary works element of a project is designed by the contractor and as such is an
important opportunity for improving the competitiveness of his tender. For example,
innovative solutions adopted by a contractor for supporting structures or access
equipment can make the difference between winning and losing the contract. Another
illustration is this: it may be worth considering mobile access equipment which can be
cheaper to use than fixed scaffolding. This involves a question of scale, and the
advantages will depend on the size and complexity of the scheme.
The estimating team will mark up a site layout drawing to show the position of access
routes, restrictions, areas for storage and accommodation, temporary service connections
and distribution, temporary spoil heaps, carnage, batching plant, hoardings and
scaffolding. Schedules are commonly produced for traffic control and scaffolding, for
which prices are obtained from specialist contractors. The costs for temporary works are
calculated and summarized on the project overheads schedule forms.
Mid-tender review
The estimator should report regularly to management as part of the management of the
tender process. A mid-tender review meeting provides an opportunity for the estimator to
explain his approach and others to give their ideas and expectations for large projects.
Self assessment
i. Explain what you understand by the term Project Appreciation
ii. Describe the sort of enquiries which contractors may need to make whilst
putting a bid together
iii. Distinguish between “Method Statement” and “Tender Programme”
UNIT 2 PRINCIPLES FOR COMPUTATION OF ESTIMATES Unit objectivesBy the end of this unit, you will be able to:
i. Explain “all-in rates”;
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ii. Compute “all-in rates” for labour and plant;
iii. Explain unit rates;
Session 1-2 ‘All-in Rates” and Unit Rate ComputationLearning Outcomes
By the end of this session, you will be able to:
i. Explain the term “all-in rates”;
ii. Compute “all-in rates” for labour and plant
iii. Describe the main components considered when computing “all-in rates” for
plant and labour; and
iv. Explain how unit rates are developed.
Stage 6: “All-in” Rates and Unit Rate PricingIntroduction
In the pricing of bills, estimators need a clear and coherent strategy for building up their
estimate. Estimators should be able to read and understand drawings and technical
documents, and clearly understand the provisions of construction contracts. In this
session, we consider the processes which estimators go through in the preparation of
estimates. We will start by discussing what all-in rates are and how these are computed.
1-2.1 All-in Rates
Computing all-in rates is a very key component of construction estimating. The estimator,
needs to be able to calculate all-in rates for both labour and plant. We start this session by
explaining what all-in rates are for both labour and plant.
Composition of net unit rates
The steps involved in the building-up of unit rates may classified as follows:
Step 1
The establishment of ‘all-in rates’ for the key items that will be incorporated. It includes:
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A rate per hour for the employment of labour;
An operating rate per hour (or per day, per week etc) for an item of plant; and
The cost per unit of material delivered and unloaded at the site.
The cost of labour and some plant items are established after the visits to the site and
consultants. It is also necessary to complete the tender programme and method statement
before finalising these prices. It will be necessary to await receipt of quotations in respect
of materials, some plant items and sub-contracted work. With computer-aided estimating
systems, the estimator can use pricing with ‘notional’ rates because they can be adjusted
at any stage in the preparation of an estimate.
Step 2
Use standards from the contractor’s data bank or other sources. These standards are net
unit rates which are set against the items in the bills of quantity. Alternatively, rates
received from sub-contractors may be used.
Step 3
This stage involves the incorporation of rates from specialist trade contractors, including
those offering ‘labour-only’ services into producing either the whole or part of a rate.
The calculation and addition of project overheads is a separate and subsequent
operation.
Calculation of net unit rates
Principles
In calculating unit rates for inclusion in the bills of quantities, careful consideration must
be given to every factor which may influence the cost of the work. The establishment of
realistic production standards is a major consideration. There can be no substitute for
comprehensive company data and feedback from previous work of a similar nature to the
project being priced. Unit rates for measured items in the bills of quantity (excluding
preliminaries) consist of any or all of the basic elements:
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Labour;
Plant;
Materials;
Sub-contractors;
Overheads (site and head office); and
Profit.
It is recommended that each element is analysed and estimated separately and that the
total cost of all elements is considered by management. This approach is sometimes
called ‘analytical’ estimating.
Constituents of a rate build-up
It needs to be explained that not all of the aspects described below will apply to all items
during estimation. For example, the number of times a square metre of formwork can be
re-used is obviously irrelevant to brickwork (and other) items. The important thing
however is to understand the underlying principle and to make the necessary application
whenever required.
A key point to note is that it is essential that estimators’ calculations are coherent.
Sometimes, estimates may be left for an extended period before being referred to again –
and the intervening period can make it difficult to remember exactly what was meant if
terminology or notes which are not clear are used. Again if assumptions were made
which were not properly recorded, it may be difficult to remember exactly the situation
was. For example, the output for a given piece of plant was assumed, it would be difficult
after a long while to remember the original assumed output, say. In addition, estimating
calculations are often referred to by persons other than those who originated them (e.g.
site surveyors, contract managers and so on). To remove any possible ambiguity in the
future, it is essential that rate build-ups are:
Well described/explained;
Detailed; and
Well illustrated (where applicable).
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The following are essential constituents of a rate build-up:
1. Assumptions
State all the basic facts on which your build-up is based. E.g.:
Cost of all resources (i.e. labour, plant, materials etc.);
Units that resources are costed in (e.g. hours, tonnes etc);
State what is included in these costs. For example, in the case of labour have you
used an ‘all-in’ rate? What category of labour are you using? For materials
costs, who pays for unloading? (i.e. will the supplier do this – or will the main
contractor, have to do it?);
Output/production rates on which you have based your calculations;
Wastage rates for different materials; and
Number of uses for formwork items.
It is generally advised that wherever possible sketches which explain/expand on any
assumptions that may have been made should be provided. It will probably be essential
for you to provide sketches for formwork items and temporary works.
Gang rates
Some of the calculations required to estimate the cost of a bill item may be found in
many items. For example, it’s usual for an estimator to decide on the size of gang for
brickwork when starting work on a ‘Brickwork’ bill. If a gang of two bricklayers and
one labourer is chosen, this gang will probably be used for most brickwork items.
Clearly it makes sense to calculate this rate once – and re-use it many times. The
estimating jargon for this “preliminary” calculation is a “gang rate”. In the context of
this example, note that estimators (and site QS’s, Contract’s Managers etc.) think of
outputs in terms of what one person can produce per day (or per hour). The gang rate
for the 2 + 1 brickwork gang would look like this:
2 bricklayers@ GH¢6.00 GH¢12.00/hr
1 labourer @ GH¢4.50 GH¢ 4.50/hr
44
Total GH¢ 16.50/hr
Divided by 2 GH¢ 8.25/hr
So – for each hour that a bricklayer works, half a labourer hour is allocated (to supply
him with materials, clear up etc). The production rates that construction professionals are
familiar with assume this assistance.
In addition, estimators need to include these associated “servicing” costs so that the rate
they arrive will allow all costs to be recovered.
Gang rates are usually calculated separately before the “main” calculations.
The main calculations
This is the main task of a rate build-up. If the previous sections have been well
documented, this may be a very short section.
1-2.2 All-in labour rates
The all-in-daily rate of any operative may be defined as the total cost to the employer for
employing an operative’s services for “one operative labour day’s” output. It must be
explained that in this case, the employer is the contractor. The all-in rate for labour is
built up from the following:
1. The basic daily wage of the operator involved.
2. Statutory additions such as employer’s contribution to the national provident
fund, workmen’s compensation insurance, rent and leave allowances.
3. Trade union requirements of tools allowances for tradesman using their own tools,
uniform or protective clothes and trade supervision.
4. Social expenses like canteen subsidy, sick pay, death benefits, medical expenses
and transport allowances.
5. Unforeseen expenses such as bad weather days, idleness and overtime
requirements for necessary work required to keep delivery schedules.
45
Illustration of how all-in daily rates are computed for labour
A typical computation of the all-in-daily rate starts with the calculation of the effective
number of working days per year. This is calculated as follows:
For a typical year, number of days per year 365
less number of days for weekends in a year, 2 x 52 days for week-ends 104
National holidays in a year 13
Annual leave 18
Bad weather days 7
Bad weather days 13 155
Hence effective working days/year 210
In computing the typical number of working days in a year, we need to explain here that whilst
the number of weekends in a year is constant, the others have been assumed. The assumptions
ensure a measure of uniformity in computations which use the number of days in a year.
Now that we have calculated the number of effective working days in a year, let’s go ahead to
compute the all-in rate of some operatives. In the example in table 2.1, we will compute the all-in
daily rate of a labourer, carpenter, painter, mason and steel bender. The all-in daily rate is
obtained by applying a set of Multiplying Factors (MFs) to the consolidated daily wage of the
respective operatives. Assume consolidated basic daily wage of each of the operatives to be 1.00.
Now let’s proceed to compute the respective all-in daily rates for each of the operatives.
46
Table 2.1 Computation of “all-in rates for labour
MULTIPLYING FACTOR (Mf)Description Labourer Carpenter Painter Mason Steel
BenderA. Basic daily wage as consolidated to
coveri. wage + rent + leave
allowanceii. canteen subsidyiii. transport
B. MF/month at 27 days pay
C. MF/year (B x 12)
D. MF/working day at 210 days/year = C/210
E. Statutory additions: MF i. social security 0.125 } ii. Workmen’s comp. 0.025 }0.15 F. Social benefits: i. medical expenses 0.200 ii. death expenses 0.294 iii. end of service award 0.533 (1.027) G. Tools allowance H. Sub total I. Direct supervision at: 1.25H = 0.21H 6
1.00
27.00
324.00
1.00
27.00
324.00
1.00
27.00
324.00
1.00
27.00
324.00
1.00
27.00
324.00
1.543
0.150
1.543
0.150
1.543
0.150
1.543
0.150
1.543
0.150
1.027 1.0271.300
1.027
1.300
1.027
1.300
1.0271.300
2.720
0.567
4.020
0.838
4.020
0.838
4.020
0.838
4.020
0.838
J. Total (working day is all-in-day labour Multiplying factor)
K. If daily basic rate (usually recommended government minimum wage) is
3.287
GH¢2.20
4.858
GH ¢2.20
4.858
GH ¢2.20
4.858
GH ¢2.20
4.858
GH¢2.20 L. All-in-daily rate M. Current all-in-daily rates
GH¢7.23GH¢7.20
GH ¢10.69GH ¢10.70
GH ¢10.69GH ¢10.70
GH ¢10.69GH ¢10.70
GH¢10.69GH¢10.70
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1-2.3 All in-rate for Plant
The all-in daily rate for an item is the cost to the employer (the contractor) of employing the
services of the item of plant for one plant day’s output. This thus represents all the costs
which the employer pays as a result of using the plant for one plant day’s work.
Computation of all in-rate for plant
In the Ghanaian construction context, it is common practice to hire items of construction
plant for projects on a daily rate basis. It is therefore important to be able to compute
accurately the all-in-daily plant rate the plant used on projects. The main components of the
all-in-daily rate for plant are as follows:
1. The daily hiring rate (this normally includes the operator’s wage) ;
2. Delivery and installation (where necessary), maintenance and removal expenses;
3. Running expenses for fuel, oil and other consumables;
4. Administrative charges for co-ordination of services relating to the plant.
Table 2 shows some information relating to different plant items which can be used during estimating.
Table 2.2 Plant information for estimating (Credit: Amoah Mensah, 1995)
(1)
Description
(2)
Achieved economic life years
(3)
Average utilization days/years
(4)
Repair and renewals 5 of
annual depreciation
(5)
Running and consumables % of annual depreciation
(6)
Overhead cost % of
annual depreciation
(7)
A.B.C.D.E.F.G.H.I.J.K.L.
Tipper trucksDumpersBulldozerWheel loaderGraderBoilerConcrete mixerCrane(Mobile)Crane(Static0CompressorWater pumpPoker vibrator
545447457533
1502001001501406015010080808060
252025303310151010203020
252530252525252517252525
101010101010101010101010
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Building up of unit ratesThe process of building up unit rates for an activity involves the extraction of the resources
content in terms of materials, labour and plant for each bill item. This is followed by a
computation of the respective costs of each of them. We will be considering in more detail
how to build-up unit rates later in this manual.
This will be done under the respective work sections complete with examples. For the
moment however, let us look at the general factors which influence the inputs which are
considered when building-up rates.
1-2.4 Composition of net unit rates
In the composition of net unit rates, the activities may be grouped into three distinct stages.
The stages are as follows:
Stage 1
The establishment of ‘all-in rates’ for the key items that make need to be considered. This
includes:
A rate per hour for the employment of labour;
An operating rate per hour (or per day, per week etc) for an item of plant; and
A cost per unit of material delivered and unloaded at the site.
The cost of labour and some plant items are established after the visits to the site and
consultants. It is also necessary to complete the tender programme and method statement
before finalising these prices. It will be necessary to await receipt of quotations in respect of
materials, some plant items and sub-contracted work. With computer-aided estimating
systems, the estimator can use pricing with ‘notional’ rates because they can be adjusted at
any stage in the preparation of an estimate.
49
Stage 2
Use standard rates from the contractor’s data bank or other sources. These standards rates
may be net unit rates which are set against the items in the bills of quantity. Alternatively,
rates received from sub-contractors are used.
Stage 3
Incorporation of rates from specialist trade contractors, including those offering ‘labour-only’
services in producing either the whole or part of a rate. (The calculation and addition of
project overheads is a separate and subsequent operation).
Principles for calculating net unit rates
In calculating unit rates for inclusion in the bills of quantities, careful consideration must be
given to every factor which may influence the cost of the work. The establishment of realistic
production standards is a major consideration. If comprehensive company data and feedback
from previous work of a similar nature to the project being priced is available, this will be
very helpful. Unit rates for measured items in the bills of quantity (excluding preliminaries)
consist of any or all of the following basic elements:
Labour;
Plant;
Materials;
Sub-contractors;
Overheads (site and head office); and
Profit
It is recommended that each element is analysed and estimated separately and that the total
cost of each of all elements is considered by management. This approach is sometimes called
‘analytical’ estimating.
So far, we have seen how to compute the all-in rates for labour and plant. Let us have a look
at some of the considerations that need to be made when computing the cost of materials
during estimating.
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Material input and waste
In determining the total material input in a bill of quantities, the net material content and
associated wastes in respect of that material should both be considered. With regard to
material waste, this may be classified into two. These are AVOIDABLE and
UNAVOIDABLE wastes. The classification of waste into these two categories is based upon
the causes of the waste and the potential to minimize its occurrence. A close examination of
each waste type gives an indication that with proper supervision and reporting procedures for
effecting corrective measures promptly, the amount of avoidable wastes can be pushed down
towards total elimination while the extent of the other wastes can be minimized. Table 2.3
shows examples of the two types of waste.
Table 2.3 Classification of construction material wastes
Avoidable waste Unavoidable wastePilfering CarelessnessPoor quality work demolished to be made goodWrong utilization or preparationMistakes in ordering, both in quality and quantityImproper storageIneffective supervision
Cutting wasteDamage in transitStock pile or residual wasteUtilization waste
From this stage, we will be looking at a few examples which will help to illustrate how to
estimate for specified construction activity. But before we start, let’s look at the tables shown
below. Table 2.4 to table 2.7 present information which will be very useful to us in our
estimating work. We will be referring to them from time to time. Please take sometime now
to look at these tables and try to appreciate the information presented in the tables.
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Table 2.4 Outputs for different methods of excavation in gravel soil Credit: Amoah Mensah (1995)
Item Method used for Excavating in Gravel Soil OutputA 250HP-D8 Bulldozer in oversite excavation 150m deep 500m. sq / plant dayB 250HP-D8 in reduced level excavation 80cubic metres / plant day
C Manual excavation to reduce levels 3 cubic metres / man day
D Load and wheel excavated material 100m away 5 cubic metres / man dayE Load excavated material only- 10 cubic metres/ man dayF Filling excavated material around foundation 5 cubic metres / man day
GSpread, level and compact excavated material in layers not
exceeding150mm thick5 cubic metres / man day
H Spread and level hardcore in layers not exceeding 150mm thick 4 cubic metres / man day
I Compressor breaking through rock or concrete6 cubic metres/plant day
per drillJ Compacting hardcore with mechanical compactor and operator 8 cubic metres / plant dayK Spreading and leveling only 10 cubic metres / man day
Table 2.5 Multipliers for different excavation types and depths. Source: Amoah Mensah (1995)
Item Description ( Manual output)Depth Category
0-1m 0-2m 0-4m 4m
1 2 3 4 5 6
A
B
C
D
Surface not exceeding 30mm deep
Basement
Trenches
Pits
1.000
0.85
0.83
0.75
-
0.75
0.70
0.60
-
0.06
0.30
0.40
-
0.05
0.40
0.30
Table 2.6 Effect of soil type and bulkage effect on excavation output
Item Type of soil Multiplying factor Bulkage factor
1 2 3 4
ABCDE
GravelCompact soil (laterite)
Soft rockHard rock
Loose soil and sand
1.001.000.700.300.60
20.0022.0035.0050.0033.33
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Table 2.7 Outputs for different depths of earthwork support
Item Description Depth
1 2 3 4
A
B
Fixing timber pooling
boards,
walling and struts
Stripping
0.8 cubic metres/ gang day
1.5 cubic metres/ gang day
0.6 cubic metres / gang day
1.00 cubic metres / gang day
CUnloading and stacking
of timber
4.00 cubic metres / man day or 150 pieces of
50x150x360mm
Methods of Pricing
There are different approaches which estimators use to arrive at the best possible price for
items.
In general, items need not be priced in the order they appear in the bills because a better
understanding of activities can be gained by pricing one trade at a time. This is becoming
increasingly popular, especially with computer estimating systems which readily sort the bill
items into trade order (similar items). Computers also allow resources to be entered either
through a resource build-up screen for each item or with the aid of a ‘spreadsheet’ type
comparison system where like trade items can be viewed in a single table. If it is known that
quotations for materials will be delayed, the estimator can price labour and plant first, and
return to part-priced items later when quotations are available. On the other hand, ‘typical’
materials prices may be used during the pricing stage. Computers allow late adjustments to
be made and all affected items will be changed. All these techniques are derived from manual
pricing methods but with computers are now faster and more accurate.
Self-assessment questions
i. What do you understand by the term “all-in rates”?
ii. Describe the main components considered when computing “all-in rates” for plant
and labour; and
iii. Explain briefly how unit rates are developed.
53
SESSION 2-2 PC Sums, Provisional Sums and OverheadsLearning Outcomes
By the end of this session, you will be able to:
i. Explain how PC Sums are taken care of during estimating
ii. How Provisional Sums are estimated
iii.Identify different types of Overheads and how they are estimated
Stage 7: PC and Provisional Sums
In order to avoid confusion in calculating and analysing an estimate, it is recommended that
prime cost and provisional sums should form a separate section at the end of the measured
work part of the document which is being priced. Since this is not always the case, estimators
must carefully check all the bill pages, including preliminaries, to ensure that the written-in
sums are incorporated in the final tender amount.
2-2.1 PC Sums
Nominated suppliersStandard methods of measurement state that the cost of materials from nominated suppliers is
to be identified in the tender documents as prime cost sums. A separate item is also given for
the contractor to add his profit. PC sums may also be written-in to an item description (such
as a rate for the supply of facing bricks) for the estimator to incorporate the cost in his rate
build-up.
The estimator will produce a list of nominated suppliers at an early stage using a ‘schedule of
PC sums and attendances’. Where details associated with a nominated supplier are unclear,
the estimator must note any concerns in his report for further consideration at the final review
meeting.
If a PC sum has been included for high value materials or large quantities, the estimator must
check the following:
That the terms of the purchase contract provides for the nominated supplier to allow the
contractor a discount (for payment in full within 30days of the end of the month during
54
which delivery is made). Where it is offered, this discount is normally deducted from the
estimate in order to include net costs in the summaries for the final review meeting. Since
this discount is not available through the terms of all main contracts the estimator must
check the relevant contract conditions and not assume a discount is available.
Delivery times and their effect on the programme
Fixing items associated with materials provided by a nominated supplier need to be
adequately described and measured in the items to be priced. Any discrepancies
concerning fixings, such as bolts, screws, brackets, adhesives and sealants, or ambiguity
over the responsibility for supply of these items must be clarified.
Additional costs for unpacking, storage, handling, hoisting and the return of re-usable
crates or other packing, since the contractor may be required to return such items to the
supplier. Due allowance must be made for the collection, storage, handling and
subsequent dispatch of such items back to the supplier.
Where bills of quantity are used, the fixing of materials supplied by nominated suppliers is
measures in the appropriate part of the bill.
Nominated sub-contractors
A nomination arises in construction contracts where the selection of a sub-contractor is to be
made by the client or his representative. When this happens, a prime cost sum is inserted in
the tender documents to cover the nominated sub-contractor’s charge.
There is a right of objection to a particular nominated sub-contractor because it would be
contrary to contract law if a party is forced into a contract unwillingly. Where prime cost
sums are included in bills of quantity, the estimator is seldom given the name of the proposed
sub-contractor and so it is impossible to discuss methods and programming issues.
Nominated sub- contractor information for BOQ
The standard method of measurement gives the items to be included in the bills of quantity
for each nominated sub-contractor, as follows:
The nature and construction of the work;
55
A statement of how and where the work is to be fixed;
Quantities which indicate the scope of the work;
Any employers’ limitations affecting the method or timing of the works;
A prime cost sum;
General attendance item;
An item for main contractor’s profit, to be shown as a percentage; and
Details of special attendance required by the sub-contractor.
Attendances
Attendance is defined as, ‘the labour, plant, materials or other facilities provided by the main
contractor for the benefit of the sub-contractor and for which the sub-contractor normally
bears no cost’. The main character is under the main contract position for the site
establishment and providing attendance. This provides clear responsibility for the support
service and equipment needed on site and duplicate resources for various resources sub-
contractors. For every large contract where a construction manager or management
contractor has overall control, trade constructions are asked to provide certain parts of the
temporary works and facilities themselves. The cost associated with attendance are built into
the main contractor’s tender and consequently become a charge against the client. However,
the associated risks of attendance are borne by the main contractor.
The item for general attendance is the indication of the facilities which are normally available
to sub-contractors where they are provided by the contractor to meet his own requirements.
In assessing any sums to be allowed for general attendance, the estimator must investigate
the facilities which will already be provided for the main contractor’s use and determine any
cost which may arise by the nominated sub-contractor’s use of any such facilities. The
facilities given in SMM7 include:
use of temporary roads, pavings and paths;
use of standing scaffolding;
use of standing power operated hoisting plant;
use of mess rooms, sanitary accommodation and welfare facilities;
providing temporary lighting and water supplies;
56
providing space for sub-contractor’s own office accommodation and for storage of his
plant and materials; and
clearing away rubbish.
Other specific attendances which do not fall under the category of ‘general attendance’ must
be specially measured in the bill of quantity as ‘special attendance’. Items to be measured
include:
special scaffold for addition to the contractor’s standing scaffolding;
the provision of temporary access roads and hardstandings in connection with
structural steelwork, pre-cast concrete components, piling , heavy items of plant and
the like;
unloading, distributing, hoisting and placing in position of items required as part of
“special attendance”, giving in the case of significant items the weight, location and
size;
the provision of covered storage and accommodation including power supply to
these;
power supply giving the maximum load; and
any other attendance not including ‘general attendance’ or listed above.
2-2.2 Provisional sums
“Provisional sum” is as a sum provided for work or for costs which cannot be entirely
foreseen, defined or detailed at the time the tendering documents are issued. Provisional
sums are included in bills of quantity for items of work which cannot be fully described or
measured in accordance with the rules of the method of measurement of the time of tender.
For work measured under the rules of SMM7, there are three types of provisional sum: These
are as follows:
i. Provisional sums for defined works;
ii. Provisional sums for undefined works; and
iii. Provisional sums for works by statutory authorities.
57
Provisional sums for defined works
This describes the situation where all the information required in support of a defined
provisional sum is given in the description of the provisional work attached to the provisional
sum. In this case, the contractor is deemed to have made due allowance in his tender for that
work in programming, planning and pricing preliminaries.
Provisional sums for undefined works
This describes the situation where all the information relating to provisional work is not
provided. In this case, the contractor is deemed not to have made allowance for the costs in
his tender. As a result, it is very important that provisional sums for undefined provisional
work include the necessary allowance to cater for the costs deemed not to have been included
by the contractor in his lump sum. A client’s contingency sum is deemed to be an undefined
provisional sum.
Provisional sums for works by statutory authorities
SMM7 makes provision for provisional sums to be included in a bill of quantities which is
neither ‘defined’ nor ‘undefined’ for work to be carried out by the local authority, suppliers,
sub-contractor or statutory undertakers including private services authorities carrying out
statutory works. Where any of these are mentioned as a result of provisional sums, the
provisional sum inserted must be sufficient to also cover the main contractor’s profit and
attendances, and where required, fixing only of any items supplied.
Incorporating provisional sums in an estimate
With the exception of provisional services provided by statutory authorities, provisional sums
are deemed to include an allowance for main contractor’s head office or overhead profit. All
provisional sums will become the subject of an Architect’s instruction during construction
and the work will be valued according to the appropriate contract rules for measurement and
valuation which include the provision for overheads and profit. Alternatively, if it is
company practice to add head office overheads and profit to the total value of measured and
un-measured work, provisional sums should be discounted before entry in the summary to
avoid duplicating the overheads and profit for this type of work.
58
Dayworks
Dayworks normally occur where variations cannot be valued by measuring using the rates or
comparable rates, nor by negotiation before an instruction is issued. The Dayworks charges
are usually calculated using the definitions for prime cost and overheads. The prime cost of
Dayworks can be defined in other ways, so care must be taken in reading the definition in the
tender documents. It is important that contractors understand the circumstances under which
varied or additional work will be valued on a Dayworks basis.
The composition of the total Dayworks charge will include the following costs:
Labour;
materials and goods;
plant;
supplementary charges (civil engineering contracts); and
incidental costs, overheads and profit (this addition will vary between labour, plant
and materials, and, in order to introduce competition at tender stage, is added to
provisional sums for the prime cost of labour in the bills of quantity by the
contractor).
An alternative method (for labour to be valued on Dayworks basis) is for the contractor to
provide all-in gross hourly rates which are applied to provisional hours. This makes the
calculation of the Dayworks simpler during the course of the project but moves the burden
for anticipating increased costs to the contractor.
Contractors may decide that some of the projects and head office overheads are covered in
the contract price and may be excluded from Dayworks rates. This is mainly true if the
Dayworks to be carried out during the currency of the contract will not result in extension to
the contract but other additional costs to project and head office overheads may still have to
be considered.
It is inappropriate to use this payment method for anything except work which is incidental
to contract work. In the event that significant changes are made to the original scope of
works the valuation rules normally allow additional overhead costs to be recovered, usually
59
when the full effects of changes are known. Decisions concerning allowances for profit and
overheads must be made by each contractor taking into account his own circumstances,
method of working and his assessment of the effects of Dayworks on a particular project. The
contractor must assess each contract on its own merits in producing Dayworks rates and
calculating the percentage addition needed. This will include an assessment of likelihood of
the prime cost being a reasonable pre-estimate of the work which will be valued on a
Dayworks basis.
The contractor’s Dayworks percentages must take into account the rates required by the sub-
contractors used in the tender. Enquiries to sub-contractors must include a request for
Dayworks percentages based on the definition incorporated in the main contract. For
mechanical and electrical installation in building contracts, the contractor is given the facility
to state different percentages for specialists in the bills of quality.
As Dayworks are calculated inclusive of an allowance for overheads and profit, they should,
like provisional sums, be added to the final summary after the application of overheads and
profit.
Self-assessment questions
i. Give examples of PC Sums and explain how these are taken care of during estimating
ii. Identify examples of “Provisional Sum” items. Describe how estimates are obtained for these
items
60
Session 3-2 Project Overheads (Stage 8)
Learning outcomes
By the end of this session, you will be able to:
i. Explain the term “project overheads”
ii. Identify the different types of “overheads” associated with construction projects
iii. Explain how different types of “project overheads” are estimated
The Code of Estimating Practice defines overheads as ‘the cost of administering a project
and providing general plant, site staff, facilities, site-based services and other items not
included in all-in rates’. The contractor’s opportunity to price for these items is in the
preliminaries section of the bill, the section containing the basic background and contractual
conditions of the contract. The pricing of preliminaries is a key factor of the estimating
process, because it is here that the contractor has the opportunity to cover the cost of
operating the site under specified conditions and in accordance with the contractor’s plan for
progress of the work, storage and movement of materials.
The standard method for measuring for civil engineering and building gives the general items
which should be described as part of overheads in bills in two main parts: the specific
requirements of the employer and the facilities which must be provided by the contractor to
carry out work. Items listed in the preliminaries/general conditions section of a bill of
quantities are not exhaustive and are provided to produce a framework for convenience of
pricing. The actual supervision, site facilities, plant and temporary work to be employed will
be decided by the contractor unless it is clearly stated that certain systems must be used.
SMM7 defines a Fixed Charge as the cost of work which is to be considered as independent
of duration, and a Time Related Charge as the cost of work which is to be considered as
dependant on duration. Items in bills of quantity for Employer’s requirements and
Contractor’s general cost items are given for both categories. The purpose is to improve the
allocation of values in valuation for interim payments and variations. Some bills of quantity
61
list value-related items for general items such as insurances, bonds and the supply of water to
the site on the bill summary page.
Programme
The tender programme is a vital tool for the calculation lf project overheads. The cost of
many items will vary in direct proportion to the contract period and the length of time that
staff, facilities, plant and temporary words will be required on the site. It is normal for costs
to be built up on a fixed-charge and a time-related basis. For example, in setting up a tower
crane, a high fixed charge is met at the start. There follows a recurring cost related to the time
the equipment is on site. There will then be a subsequent fixed cost for removing the
equipment on completion. By estimating such items in these two distinct forms, changes to
the programme can be evaluated quickly, by reference to the time-related costs. The
estimator will be able to use the tender programme for most of his calculation or develop
project overheads programme. A carefully prepared tender programme will provide a
contractor with the opportunity to reduce the contract duration leading to cost savings for
staff, temporary workers and plant. Since the prices for the measured portion of a bill will be
similar for all contractors, it is the innovative planning skill which produces a competitive
advantage over other tenders. If, on the other hand, the client wishes to retain a longer
contract period (to avoid claims for extension of time, for example) the contract can be at risk
if he allows sufficient staff for only part of the time.
Project overheads schedule
The estimator’s notes must now be brought forward for consideration and entered in the
various sections of the ‘Projects Overheads Schedule’. In addition, other items which have
not been included in unit rates must also be considered and costs established. Items may be
added to or omitted from those listed according to the preferences and policies of individual
companies. Various techniques exist to price these items and in some organisations, the
project overheads are worked back into unit rates. This is a matter for each company to
decide. The total estimate of the cost of project overheads is transferred from the schedule to
the final summary document. Contractors and firms, carrying out small repetitive works,
often apply a fixed percentage for overheads (about 10 – 15%). The pitfall with this approach
62
is the site overheads, particularly the supervision, will be proportionately higher for small
value jobs which are to be carried out to an extended programme. It is also necessary to price
temporary works such as scaffolding separately because they are rarely related to the value of
the works.
3-2.1 Classification of project overheads
Project overheads are usually classified as follows:
Direct overheads – those which relate to a particular project including management and
supervisors, site accommodation, temporary services and plant. They can be calculated on a
weekly or monthly basis and converted to a total cost for the whole project by relating these
costs to the project duration. The total cost is either included as a lump sum or a percentage
addition to the unit rates. It is also usual to include a figure for profit and attendance on sub-
contractors in the preliminaries. This is more logical since attendances are often time rather
than activity related, and often provide for the benefit of several sub-contractors, such as
scaffolding, rubbish disposal, and hoisting etc.
Indirect overheads – these are the general costs relating to the contractor’s business such as
office rent, rates of pay for general staff such as secretaries, pay-roll staff, senior
management and professional support staff (who will have to be paid regardless of the
amount of work that the contractor is winning) and the company’s finance costs. These are
usually calculated for forthcoming years on the basis of previous years’ costs, with every
project contributing towards them.
Project overheads may be divided into employer’s requirements and contractor’s general cost
items. Most contractors will usually lump together the client’s requirements with his own
(e.g. site accommodation will be considered together both for the clients huts and the
contractor’s huts). The following are the main groups of items to be considered as part of
project overheads:
(1) Employer’s requirements - This category of overheads is used for the
accommodation, equipment and services needed by the employer’s representative
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when based on site. According to SMM7, heating, lighting, cleaning and
maintenance of employer’s accommodation are deemed to be included. The term
‘employer’s requirement’ usually includes other terms such as quality standards,
safety, security, protection, limitations on method and programme, specific
temporary work and services.
(2) Supervisors - Since the management and staff are the largest part of project
overheads, the estimator must propose the smallest team with the skills needed to
produce a successful project. This will include all personnel whose costs have not
been included in unit rates or head office overheads, whatever their method of
remuneration.
(3) Accommodation – The hire-purchase of accommodation should be considered
under this section. Reference to the method statement and programme will be
necessary to determine the intended layout of the site and time period for the
various elements of accommodation.
Transportation, erection, fitting out and decoration, subsequent dismantling and
reinstatement are noted in the fixed cost section of the form.
(4) General labour - General labour can be viewed as a resource to service all trades
and sub-contractors on a site. This can include keeping the site tidy, unloading
materials, distributing materials and driving mechanical plant.
(5) Site facilities - It is sometimes difficult to distinguish between site facilities and
temporary works. Site facilities generally include installation and removal of
services and associated consumable items. Other facilities such as temporary
structures and hardstandings, which are directly associated with the nature of the
works, are entered in the temporary works sheet.
(6) Temporary works - The cost of temporary access roads, hoardings and temporary
structures are determined in this section. Recurring costs to maintain access road
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and reinstatement of the site. The method of statement and tender programme are
important in establishing the systems and durations for these items.
(7) Mechanical plant - Mechanical plant is included in the project overheads for two
reasons:
Plant which is common to more than one trade can be viewed as common
plant available to all. On a small site, for example, one mortar mixer can
service the bricklayers, drain-layers and plasterers laying screeds. In fact one
mixer may be needed for a large part of contract duration.
To reconcile the plant included in measured rates so that plant resources can
be rationalised. A backacter, for example, would not be used for a few days,
taken off site for a day and then brought back for intermittent periods. By
using the same machine for drainage and earthworks, it may be useful to
employ one machine for an extended period.
(8) Non-mechanical plant - The largest item of non-mechanical plant is scaffolding
and ancillary equipment such as debris netting and rubbish chutes. Small (hand)
tools and equipment may be included in the ‘all-in’ rate for labour since their
value must be in proportion to the amount of labour employed on the works.
(9) Contract conditions – The preliminaries section of the bills of quantity and the
actual conditions of contract must be scrutinised to ensure that all items attracting
a monetary value have been included in the cost estimate. The cost of bonds,
insurance and professional services (where applicable) should be recalculated
after the final review meeting as a percentage of the contract value.
(10) Miscellaneous - Any unusual features associated with the project which do not
fall naturally into the defined categories can be priced in this section. Safety and
quality assurance procedures will be an everyday part of a site manager’s work,
and should not bring about additional costs on small and medium-size contracts.
Pricing preliminaries accurately should involve the following steps:
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1. Evaluating the requirements of the project and site;
2. Evaluating the likely specific requirements of the client through the project brief
and through discussions with him;
3. Preparing a site layout drawing, accommodation, access, storage and all
services (temporary and permanent). Note any special provisions required (e.g.
traffic management etc.);
4. Preparing a project overheads programme and showing the requirements for staff,
plant and temporary works;
5. Breaking down the preliminary costs into fixed and time-related costs; and
6. Completing the project overhead proformas with prices derived from price books
and other costs sources.
Self assessment questions
i. Explain what you understand by the term “project overheads”
ii. List and explain the different types of “overheads” associated with construction projects
iii. Briefly describe how different types of “project overheads” are estimated
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UNIT 3 BID SUBMISSION AND ACTION AFTER SUBMISSIONUnit objectivesBy the end of this unit, you will be able to:
i. Explain how the final estimate is obtainedii. Explain the “adjudication process”iii. Describe what happens once the tender has been submitted
Session 1-3 Completing and submitting the bidLearning Outcomes
By the end of this session, you should be able:
i. Explain what actions are taken to arrive at the final estimate;
ii. Explain the term “tender adjudication” and explain what happens during the
adjudication process
iii. Describe what happens during the “final review”
iv. Explain the term “mark-up” and how contractors achieve this
Stage 9: Completion, Adjudication and Submission Having priced the bill, the remaining tasks for the tendering contractor are to complete
the estimate, adjudicate the tender amount and submit the tender to the client’s
representative. Although this stage of the project sounds simple, it can be said to be the
most vital part of the entire estimating process. This is because if an inappropriate
addition is made for instance to the estimate for overheads and profit, the lengthy (and
expensive) work of preparing the tender will have been wasted. We will now look at
some of the actions required in the run-up to the submission of the tender.
Extending bills of quantity
When the net unit rates have been competed, the bills must be extended and added up
before project overheads and other allowances are calculated. This gives the estimator an
overall picture of the elements of the work. Such extensions are made with separate sub-
totals being produced for the four basic elements of labour, plant, materials and domestic
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sub-contractors. The extension of the bill rates to totals, collections and summaries must
be carried out in a manner that eliminates clerical errors and also allows the establishment
of various sub-totals relating to elements of the work or trades as necessary.
Net cost summaries
The estimator must prepare summaries of the resources which make up an estimate so
that management can assess the source of labour, plant, materials, services, possible
discounts available and price level as well as undertake price comparisons among
suppliers. These forms can be hand-written or produced by a computer-aided estimating
system; whichever method is adopted, when the forms are complete, computer
information should not be changed. Hand-written forms are being superseded by tailor-
made computer reports but are retained by organisations which want their estimators to
thoroughly check the information from computer printouts. Adjustments must be made
on the forms or added to a final review adjustment form. A record must be kept showing
the changes made during the final review stage. The final summary brings all the parts of
an estimate, with costs apportioned between labour, plant, materials, sub-contractors, site
overheads, PC and provisional sums.
Price fluctuations
In times of relatively low and predictable inflation, contractors are expected to submit
tender prices which remain fixed for the anticipated duration of the work. The method of
calculation of fluctuations in costs is set out in the appendix to the conditions of contract.
Fluctuations in cost can be ‘full’, ‘limited’ or none at all. It should be borne in mind that
fluctuations in cost may give rise to both increases and decreases in the final cost and
thus careful consideration is needed to reconcile such changes to the contractor’s cost
estimate.
(i). Full fluctuations
Full fluctuations in cost are intended to provide an equitable means of reflecting
changes in cost throughout the duration of a contract. Although a number of full
fluctuations clauses are available in standard forms of contract, they are rarely used
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today. Where the formula method of fluctuations recovery is proposed, the estimator
needs to understand the rules and must ensure that any shortfall or non-recoverable
element is identified and also any potential for over-recovery highlighted. Due
allowances should be made on the firm price adjustment form or resource schedules
for any changes needed. Adjustments using the Formula method are limited to
national increases and do not, therefore, reflect market forces.
(ii). Limited fluctuations (Statutory items)
This is normally limited to specific changes to rates of contribution, levies and taxes
in the employment of labour and in the rates and duties and taxes on the procurement
of materials. The extent of fluctuation of such costs is limited and is effectively those
which arise under and by virtue of an Act of Parliament.
(iii). No fluctuations
This is not an option in most standard forms of contract. This is because in all
contracts, situations will arise, such as taxes or statutory levies which may not be
foreseen at the time of tender. In the case of taxes and statutory levies, it will not be
reasonable to include a contingency sum for a new tax or statutory levy which cannot
be predicted at tender stage. This said however, it needs to be pointed out that it is not
uncommon for all fluctuations clauses to be deleted and a statement added that prices
are to be treated as firm in all circumstances.
Value related items
There are a number of costs, normally projected overheads, which will be calculated as a
proportion of the total value of work. Some bills of quantity provide items for these costs
on the final summary page. They are:
Contractor’s insurances;
Performance bond;
Water for the works; and
Professional fees for design.
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Contractors each have their own method of dealing with these items, either as project
overheads or in the final summary. If the project overheads forms are used, an adjustment
may be needed when the final tender price is known.
Late quotations
Any late quotations that are received for the supply of materials, hire of plant or work of
sub-contractors, must be entered on the appropriate summary sheets and comparison made
with previously received quotations. Following the meeting, the estimator must use the
final review adjustments form after consultation with the review manager. Great care is
needed in comparing quotations due to the following reasons:
There may be qualifications which other suppliers or sub-contractors may not have
made;
The items included in the quotation must be the same as those priced by others;
The net amount of late quotations must be compared with the previous lowest tender,
including any adjustments made before or during the review meeting; and
It may be difficult to contact suppliers or sub-contractors to discuss queries about
their quotations.
Checking procedures
As a general rule, calculations must be ‘self-checking’ through the use of well-designed
forms or otherwise, someone else must repeat the calculations in order to eliminate
mistakes. With computer-aided estimating systems, the number of calculation errors tends
to be less but other problems may arise through wrongly entered data and incomplete
pricing of items. Since most items are judged on price, it is important to check that the
tender figure has been calculated correctly and is sufficient to meet specific requirements of
the client. A badly prepared tender could have the following effects:
Under-priced – may be difficult to achieve the specification for the price and there
would be a potential loss of profit;
Over-priced – the tender will not win the contract in competition; and
Badly priced – unreliable cost data is provided for construction, and it would be
difficult to achieve the desired financial outcome.
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The total unit rates must be reasonable and correct for the unit of measurement. Particular
attention must be given to the major items in each trade and to those items to in which the
materials specified are usually costly. Any inaccuracy for the rate build-up for these items
will be magnified and have very serious consequences. It is equally important to check the
sub-contractor related items to see items of work, plant and materials not included in their
quotation have been correctly assessed and incorporated in the rest of the item and the unit
rates reflect these factors. It is important to ensure that when time for project is prescribed by
the client, it is realistic in relation to estimated labour cost and number of men required to be
physically working on site. The construction programme must be reviewed critically to
ensure that no major problem has been overlooked and that the method statement represents
the best method of completing the project. The estimator may be able to compare the
estimate and final costs of previous projects of a similar nature in order to form an opinion on
the likely profitability of the project. Once checking is completed, a final summary is
prepared by the estimator.
Cash flow
Cash is a major resource in construction and its use must be anticipated and managed.
Production on construction projects must be planned and the effect upon resources and the
return on assets employed determined. Clearly, the return on capital will be influenced by
the speed at which it is earned. A simple cash flow diagram must be regarded as a useful
aid to decision making and estimator should ensure that such a diagram is produced for
consideration at the final review savage. When a contract has been secured, a fully-detailed
forecast of cash flow, budget and cost control will be essential. However, post-contract
action is outside the scope of this Code. The estimator’s build-ups will have established the
costs of the work and project overheads under the headings of, labour, plant, materials,
domestic sub-contractors, PC sums and provisional sums and Dayworks. In order to
produce a cash flow diagram this financial appraisal must be linked to the tender
programme. Cash resources must be established for each item on the programme. Once this
link between estimate and programme has been established the cash flow position can be
calculated. The following headings must be taken into account when assessing the
contractor’s financial commitments to a project and in making the cash flow forecast:
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i. The contractor’s own trading accounts;
ii. Contract conditions; and
iii. Banking conditions.
These are briefly explained below:
The contractor’s own trading accounts
This describes the anticipated cost commitments for own labour, plant, materials, sub-
contractors and overheads. This is because in most cases, these may have to be pre-
financed before the client reimburses on presenting a certificate.
Contract conditions
The conditions of contract affect the contractor’s Cashflow. Some of the constituents of the
contract conditions which impact on Cashflow are as follows:
time period before issue of the first certificate;
interval between certificates;
anticipated time of practical completion;
anticipated time for ending of defects liability period ;
delays between issuing of certificates and receipt of cash;
retention during construction;
retention after practical completion; and
period for final measurement.
Banking conditions
The conditions associated with a contractor’s banking operations impact on the Cashflow
position. Theses include:
earning rate of interest; and
paying rate of interest.
Other factors to be considered include when preparing cashflow forecasts:
timing of special payments, for example: special insurances;
bonds, including date of release;
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the allocation of firm price allowances;
the recovery of fluctuation costs;
an efficient use of experienced staff;
any special weighting that may be incurred on the contract;
provisions for liquidated ascertained damages;
the present financial commitment of the company and effect of the current tender on
that commitment;
turnover and commitment of resources;
statutory requirements, for example: VAT;
level of project overheads and means of recovery of costs;
amount of PC and provisional sums and their likelihood of being spent;
company’s prior experience of the client and his consultants; and
the addition to be made to the net cost estimate for head office overheads and the
manner in which this addition is to be made.
Cashflow calculations will indicate the financial support needed for the contract and the
financial contribution to be made to company. When a client requests a cashflow forecast at
tender stage, the contractor is asked to submit a schedule of gross valuation at the date of
each interim certificate, based on the tender programme. Such a document would have no
contractual standing but assists the client to prepare a funding schedule. The calculations
needed to produce a cashflow forecast can be complicated and takes time. The contract value
graph is based o
n income from rates contained in the priced bills of quantity. These are produced at the end
of the tender period. Computers can be used to produce the data and charts, either using a
computer-aided estimating system or spreadsheets.
2-3 The Final Review, Mark-up and tender Submission
2-3.1 Estimator’s report
The estimator’s report should include all pertinent facts which have influenced the
preparation of an estimate for final review by management. The object of this report is to
highlight to management the various matters which have been identified as having some
significance in relation to costs, especially if alterations have been made to normal
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production standards or if there are any special or unusual contract conditions or risks. The
way in which information is presented will vary according to company policy and
preference and the guidelines suggested should not be regarded as mandatory. Many of the
resources schedules, project overheads and other summaries are produced by computer-
aided estimating software, often tailored to a company’s procedures. Whichever system is
used, the estimator’s report to management should include:
a description of the site and its location;
a brief description of the project;
a description of the method of production;
a note of any actual risks which are inherent in the project;
any information regarding the client, architect, quantity surveyor, consultants or other
member of the professional team that should be brought to the attention of
management;
the conditions of contract;
employer’s conditions, such as bond and insurances;
any unresolved technical or contractual problems;
an assessment of the state of the design and the possible financial consequences
thereof;
a note of any major assumptions made in the preparation of the cost estimate;
an assessment of the profitability of the project;
any pertinent information concerning market and industrial conditions;
any need for qualification of the tender or for explanatory letter;
the terms of quotations from own sub-contractors which have been included in the
estimate;
the time for which the tender is to remain open for acceptance;
details of other tenders where known; and
future prospects arising from the scheme such as ‘follow-on’ work.
Estimate schedules and summaries
The estimator’s report will include documents which have been produced during the
preparation of the estimate and summaries relating to the cost estimate, including:
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schedule of prime cost sums and attendance;
schedule of provisional sums and Dayworks;
materials comparison form;
plant quotation register;
domestic sub-contractors’ register;
resource summaries for labour, plant, materials and domestic sub-contractors;
project overheads; and
final summary.
Supporting documents
The cost summaries should be supplemented by supporting documents which will provide
the technical background. These may include:
method statements;
tender programme;
cash flow calculations;
tender drawings;
specifications and ground investigation report;
quotations files for: domestic sub-contractors, materials and plant suppliers;
tender information form; and
site visit report.
This information will then be considered by management at the final review stage.
2-3.2 Final review
The final review of an estimate and its conversion to a tender is the responsibility of
management. This is a separate commercial function based upon the cost estimate and it’s
supporting reports and documents. The accountability of the estimator is limited to the
proper preparation of the predictable cost of a project. The estimator’s must not feel a sense
of obligation or responsibility for securing work for the company. This is the responsibility
of management. The estimator’s role is to lead the process of preparing a good estimate
with a potential to win.
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Although the final decisions are made by management, those concerned with estimating,
planning, management and buying must be encouraged to communicate the knowledge
they have acquired throughout the estimating stage to the review panel. Their contribution
at this stage can be by attending the meeting or reporting through the estimator. In larger
companies, the final review stage often consists of two meetings: the fist to review the
estimate through a detailed examination of rates and quotations; the second would be for a
director to receive a short briefing and consider commercial matters before settling on a
mark-up. The need for a formal approach to finalising tenders should be regarded as
fundamental to competent tendering. There should be an agenda for the review meetings.
On large projects, the agenda must be circulated to those required to attend, with an
indication of the time for each agenda item. An evaluation of alternatives, scope to improve
profitability and risks which may be encountered will be considered at each stage of the
estimating process and converted into costs at the final review meeting.
Factors which influence the adjudicated figure
Owing to the strong competition faced, contractors need to find opportunities to use products
and processes which will enable the contract to support sufficient overheads and profits to
maintain the company’s objectives whilst satisfying the client. The mark-up shown on the
final summary form comprises scope, risk, head office overheads and profit. Mark-up will be
applied to all costs above this point, and it is assumed that provisional sums and Dayworks
will produce their own contribution to overheads and profit.
Some of the factors considered when deciding on the mark-up to the estimate include:
The desire to win the contract (here the contractor needs to ask if winning the project
will potentially lead to repeat work, or if the contractor has got too much work
already to be able to take on more);
The amount of contract finance required;
The contractor’s knowledge of the client and consultants;
The local market conditions; an evaluation of their previous biding performance;
Intelligence information on the client’s budget and target; and
Risk (technical and contractual).
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At the end of the review meeting, there may be other decisions to be made before proceeding
to the submission stage, including:
Which documents will be submitted with the tender? Some contractors may wish to
prepare additional information such as a programme, company profile and coloured
brochures, whereas others reserve their efforts, and ideas, until they know that their
tenders are under serious consideration;
If an alternative method (or design) is to be offered, then another price may need to
be settled by the review panel;
Qualifications which vary the requirements of the tender documents are generally not
permitted by clients. On the other hand, and management must decide the form which
a qualified tender will take; and
In order to provide appositive cash flow for the duration of the project, it is important
to decide how rates are apportioned in bill of quantity to be submitted at tender stage.
Since any artificial alteration of price will bring additional risks, it is for management
to agree the strategy.
It is recommended that a record is kept of all tenders submitted. Particular care should be
taken of the final summary form, and all notes and details of the decisions taken at the
review meeting should be fully recorded for future reference.
Preparation of priced bills of quantity
At final review stage, management may alter some of the basic conceptions concerning the
project. For example, a change to the basic labour rate will affect all bill items concerning
labour. This will affect all net rates that have been compiled by the estimator. With
computer-aided estimating system, such changes can be easily accommodated at the end of
the tender period but often there is insufficient time to re-write the net rates when manual
estimating systems are used, if priced bills of quantity are to be submitted at the time of
tender (or if requested later), management must decide how the difference between the total
of the net rates in the draft bills and the agreed tender figure is to be shown. The method
chosen will depend on individual preference. Examples of possible methods are:
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All amendments being made to the respective elements of the tender. (this may mean
substantial re-pricing of the bills of quantity, and a balance inserted in the
preliminaries bill);
Units rates increased by an agreed percentage so that the whole difference is included
in the measured items;
The unit rates left net with any difference included as an adjustment on the final
summary page – providing this is considered to be acceptable to the client;
The unit rate remains net and the difference inserted in the preliminaries bill ;
Any combination of those methods;
The way in which submitted bills are priced will have a significant effect on income
generated through interim payments and the valuation of variations. Clearly a contractor
would not be able to insert highly inflated prices against early items because a client will
not accept a disproportionable distribution of rates. Contractors also put their position at
risk if under-measured items are under-priced, and over-measured items are over-priced, in
both cases where the work is re-measured a loss will be incurred.
Self-assessment questionsi. Explain what actions are taken to arrive at the final estimate;
ii. Explain the term “tender adjudication”
iii. Describe what happens during the “final review”
iv. Explain the term “mark-up” and how contractors achieve this
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Session 3-3 Tender submission and beyondLearning outcomes
By the end, you will be able to:
i. Explain the final actions required before contractor submits bid
ii. Outline and explain the actions undertaken following the bid submission
iii. Explain the actions required after a successful tender has been selected
3-3.1 Tender submission
The estimator must ensure that the procedure set out in the tender documents for the
submission of the tender is followed meticulously. The form of tender and any other
declarations must be completed as required and signed by an authorised person from the
contractor’s organisation. A letter should be attached to the forms to list the documents,
and confirm the amendments received during the tender period. Any other remarks about
the technical content or price may be reviewed as a qualification to a tender and so should
be avoided. The codes of procedure for selective tendering, whether for main contractors or
trade contractors, state that a tenderer who submits a qualified tender should be given
reasonable opportunity to withdraw his qualifications without amendment of his tender
price. Failure to do so will lead to the rejection of the whole tender if it is considered that
such qualifications give the tender an unfair advantage. Alternative proposals involving
design, specification or timing may be invited. In this case those contractors who wish to
offer alternatives must submit a separate tender indicating the effect on price and
programme together with an appraisal of any charges needed to other elements of the
scheme. The tenders should be opened as soon as possible after receipt. Submission of
priced bills of quantity may be required with the tender and it is recommended that the
lowest tenderer should be invited to submit priced bills of quantity within four working
days of the opening of the tenders.
3-3.2 Action after Submitting Tender (Stage 10)
The role of the estimating department does not end at the submission of the tender. They
have an important role to play in responding to further requests by the client team, and in
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evaluating the tender efficiency. We will now focus on these stages, and how the estimator
can advise senior management on future bidding strategy.
Assessing tenders and notifying results
Generally, received tenders should be opened promptly at the expiration of the deadline.
This is usually done in the presence of all bidders who choose to attend. After the initial
assessment for responsiveness, all present should be informed about those tenders which
are responsive and which tenders are not. Thereafter, the consultants can conduct a detailed
evaluation to select the best evaluated bid. They must be notified at once when a decision
to accept a tender has been taken. Once the contract has been let, every tenderer must be
promptly supplied with tender prices. The estimator (chief estimator) should record the
results in the tender register and, if required, in a tender performance report.
Adjustment of errors
The estimator should be prepared to respond to any request for further information or
notification that the submitted tender contains errors in computation. For errors, two
alternative courses of action are responsible:
The tender will be given details of such errors and afforded opportunity of confirming
or withdrawing the offer. The estimator will need to refer to management when the
extent of the computation errors has been determined for a decision as to whether to
confirm the original tender figure or withdraw the tender. It is legally possible to
withdraw the tender at any time before its acceptance
The second option is that the tenderer is given an opportunity of confirming his offer
or of amending it to correct genuine errors. If the contractor elects to amend his offer
and the revised tender is no longer the lowest, the second lowest tender will be
examined with more detail.
Estimators must consult with management to establish whether to amend the tender figure
or to confirm the original offer, once the extent of the computation error has been
determined. In both situations the estimator or the signatory to the original tender must be
prepared to endorse the appropriate tender document to note the acceptance or change to
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the tender. Such amendments must also be endorsed by employers in the event that a
contract is subsequently awarded. There are many ways to correct errors in a bill of
quantities. The most common is to recalculate the bill and make an adjustment on the final
summary page; either by changing the total for preliminaries or introducing an adjustment
item. Since the latter amount must be adapted to all valuations it is preferable to ask the
contractor to change one or more items in the preliminaries to bring the total to the tender
figure.
Negotiation and award
When the lowest tender received exceeds the client’s budget, changes should be negotiated
with the lowest tenderer. This process is either through recommendations from contractors
for cost savings, or design changes which reduce the scope or specification of the works. If
significant changes are proposed, two or (at most) three tenderers may be asked to re-
tender thereby retaining the lowest market prices for the amended project. If there has been
any delay in acceptance, enquiries should be made to ensure that there have been no
changes which might necessitate reconsideration of the tender. Once an acceptable offer
has been made, the award of a contract should be in clear terms stating that the offer has
been accepted.
Action with a successful tender
When a tender has been successful, the documents must be checked thoroughly to ensure
they reflect the exact content of the documents used to prepare the tender. This may be
carried out by various people within the company’s organisation but it is recommended that
it should be co-ordinated by the estimator who was responsible for the original submission.
Contract documents should be checked to establish that:
the drawings are those which were circulated with the tender documents, if they have
been revised to produce a construction issue, they cannot be used as contract
documents;
the dates, penalties and particulars given in the appendix to the condition of contract
are those stated in the tender document; and
the submission bills have been copied correctly.
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A standard form may be used to confirm that these checks have taken place. In larger
organisations, this form will accompany the documents until they are signed by the
company’s directors and retuned to the client’s representative.
It is recommended that an internal pre-contract ‘handover’ meeting be held with all persons
so that details are fully discussed and the distribution of information can take place. The
handover meeting is an opportunity for detailed reporting and a discussion on decisions made
at the time of estimating concerning methods of construction, site layout, organization,
suppliers and sub-contractors. Whilst these decisions should not be binding on those
responsible for construction, it is important that the reasons underlying such decisions and
choices should be explained fully and that decisions made at the time of tender should not be
ignored unless it can be demonstrated that a better method of operation is possible.
Feedback Information
It is recommended that a fully operational cost control system be introduced on all successful
contracts. The collection and collation of data is a function involving the use of statistical
techniques. It is important that during construction, information should be obtained on the
labour and plant cost of major items or stages of work, on the quantities of material used, and
the cost of attendance for sub-contractors. This information is essential for control purposes
and guidance in future estimating. These records should be accurate and give all details
including those of the work, the position on the site of the operation, gang sizes, levels of
incentives and bonuses being paid, plant, access, and weather conditions. This information is
needed so that it may be interpreted correctly for future use. Where a substantial proportion
of work is assigned to sub-contractors, a table should be drawn up showing the estimator’s
allowances and actual prices agreed with them at the time of placing their contracts. In
particular, the estimator needs to know the accuracy of risk and firm price provisions in the
tender. A brief report should also indicate the performance of all sub-contractors and a
recommendation on whether they should be employed for future projects.
82
Action with an unsuccessful tender
When the result of a tender is known, the tender performance form should be completed
where possible with a comparison made between the estimator’s organisation and the one
with the lowest (or the accepted) tender. Tender results can be reported at regular
management meetings so that all those who contributed to the estimate can assess their
performance. Suppliers and sub-contractors who submitted quotations should be notified of
the results as promptly as possible. Tender documents should be carefully filed for possible
future reference; except drawings and bills of quantity which are of little use once the
contract has been awarded to another contractor. Quotations received from suppliers and sub-
contractors can provide a useful guide to prices for other tenders but great care is needed to
ensure that the specification and the nature of the work are the same.
Tender performance and efficiency
Estimators must monitor their performance with an analysis of results recorded over a period
of consistent estimating. If data are available from a large number of tenders, it is possible to
evaluate tender performance in relation to; types of work (new build or refurbishment),
clients (public, private), procurement routes (traditional, design and construct, trade
packages), and estimating resources for further tendering.
It is important that the contractor keeps careful track of tender submissions and results. Large
contractors can be submitting many tenders per month, and so their performance over time
must be carefully analysed to ensure that they are winning a proportionate number of
contracts in comparison to submissions (at least 1 in 6 usually). Whilst there is always a
chance that some contractors may submit a tender which undercuts all of the others by a
significant margin, the successful tenders are usually fairly close to each other.
It is important that the contractor uses the information in the notification to establish its
competitors’ profit margins in order that they can be adjusted in the future to increase their
own chances of winning work or increasing their profits. Estimators are usually charged with
monitoring tender performance with regards to the type of work that they win, together with
the size of project, clients, procurement routes etc., in order that they can establish where
their strengths and weaknesses lie.
83
The contractor will keep track of submitted tenders, number of tendering contractors, lowest
tenders submitted, their estimated cost of the project, their tender sum and the maximum
profit potential for the winning contractor. From this information, they can calculate the
approximate % profit used by their competitors and adjust theirs in the future to be more
competitive. An example is shown below.
Example 1
Building Procurement Inc. has tendered for 6 projects in June. Table 3.1 below shows the
break down of the tenders of Building Procurement Inc in comparison with competitors.
Table 3.1 Comparison of company’s tenders with competitors
Project No. Tenders Rank %Over lowest bid % Over mean bid
1 3 1 0 -2.3
2 6 5 11.0 4.9
3 6 1 0 -3.1
4 5 2 5.0 -3.8
5 7 1 0 -7.7
6 14 5 15.0 1.0
By establishing the types of projects where the company seems to be grossly over or under
priced, management can adjust their profit margin on these particular projects to enhance
their competitiveness.
Self-assessment questionsi. What actions should be taken by the contractor’s estimator after the submission of an
estimate?ii. Should errors be detected in a tender, what action should be taken to address them? iii. Explain the term “tender performance”
End-of-unit assessmenti. Outline the steps taken by the contractor’s estimator in completing the estimate before
bid submission.ii. Explain the terms “tender adjudication” and “adjudication report”.
iii. Compare the action taken with a successful tender with the action taken with an unsuccessful tender.
84
UNIT 4 BUILDING UP ESTIMATESUnit Objectives
By the end of this Unit, you will be able to:
Apply the knowledge of estimating principles to prepare complete estimates for excavation,
concretework, steelwork and metalwork
Session 1-4 Preparing Estimates for Excavation, Concretework, Steelwork and Metalwork
Learning Outcomes
By the end of this session, you will be able to:
i. Compute unit rates for different types of excavation
ii. Prepare estimates for concrete work
iii. Prepare estimates for formwork
iv. Prepare estimates for reinforcement
v. Prepare estimates for painting and decoration
1-4.1 Preparing estimates for ExcavationWorked Example
To demonstrate how we compute estimates for excavation, we will look at different types of
excavation. Let’s start with oversite excavation. Let’s assume we are excavating oversite
6000 sq. metres of material to a depth of 150mm. Let’s now consider the required resource
inputs:
Solution
We will first consider the plant which is used for excavation.
Plant
Let’s assume we use a 250HP Bulldozer with an operator and daily output of 500m2
Assume the 250HP Bulldozer with an operator; from a Plant hire firm costs GH 900.00/day
The costs associated with this plant are as follows:
Hiring cost/day GH¢ 900.00
85
Fuel: assume we need 25gallons of diesel @ GH¢4.50 GH¢ 112.50
Lubricants: Assume we use 2gallons@ GH¢ 6.00 per gallon GH¢ 12.00
Banksman @ GH¢ 8.00 GH¢ 8.00
Total daily cost for the plant GH¢ 1,032.50
No. of plant days required:
For the 6000 sq. metres of area to be excavated and given the plant has a daily output of
500m. sq,
Then the number of plant days 6000 / 500 = 12 days
At a GH¢1,032.50daily cost of using the plant, then for the 12 plant days, the total cost is
GH¢1,032.50 x 12 = GH¢12,390.50
Add transport to & from site@ GH¢ 200 GH¢ 200.00
Total cost of using the plant for excavation GH¢ 12,590.50
For the entire site (6,000 sq. m) therefore, the unit cost for using the plant is 12,590.50 / 6000
= GH¢ 2.10 / sq.m
Computing Estimates for Excavation of Pits to Receive FoundationLet’s assume we are excavating 60 No. pits to receive foundations, with a total volume of 80
cubic metres, not exceeding a maximum depth of 2metres
We will make the following additional assumptions:
Soil identification
Method identification
Method of excavation – manual (labour only)
Required resources:
From tables, the multiplying factor for gravel is 1
Multiplying factor for pits not exceeding 2m is 0.6
Multiplying factor for manual (labour) excavation is 3
Therefore, the output for the labourers is 3 x 0.6 x 1= 1.8 cubic metres per man day
86
No. of man days required for the total 80 cubic metres = 80 / 1.8 = 44.44 days
Approximate 44.44 days to 45 days, if labour costs GH¢ 5.20 , then for the 45 days, total cost
of labour is: 45 x GH¢ 5.20 = GH¢ 234.00
If GH¢ 234.00 is the total cost for the 80 cubic metres, then unit cost for this activity is
GH¢ 234.00 / 80 = GH¢ 2.90 / m3
Computing Estimates for Excavating Trenches in FoundationsTo illustrate this, let us look at the example below:
Let’s consider excavation not exceeding 1.00m to receive foundations commencing from
ground level. Assume the total volume to be excavated is 80 cubic metres.
Solution
Soil identification:
Let’s assume soft rock with multiplying factor 0.70
Method identification:
Let’s assume manual methods with multiplying factor 0.83
Required resources
Labourer only with an output of 3 x 0.7 x 0.83 = 1.743 cubic metres per man day
Labour requirementFor the 80 cubic metres to be excavated, No. of man days required
= 80 / 1.743 = 45.897 days
Approximate 45.897 days to 46 days.
If the daily charge for labour is GH¢5.20, then the total charge for 46 days is = 46 days x GH¢5.20 = GH¢239.20
If the total cost for excavation is GH¢239.20 (for 80 cubic metres), then
Unit cost = GH¢239.20 / 80 cu.metres = GH¢2.99 / m3
Computing Estimates for Excavating Trenches in Foundations with Rock DepositsEstimating for areas with some deposits of rock may be treated as an “extra-over” item
We will now illustrate with an example how this type of estimates should be produced.
87
Let’s assume the excavation will not exceed 2.0m and that the total volume of excavation is
15 cubic metres
Soil identification:
Let’s assume the excavation involves hard rock with multiplying factor 0.3
Method identification:
Let’s assume manual excavation with a multiplying factor of 0.7
Required resources
Labourers with an output of 3 x 0.3 x 0.7 = 0.63 cubic metres /man day
No. of man days required 15 / 0.63 = 23.809 days
Approximate the number of days to 24 days,
If labour costs GH¢5.20 per day, then for 24 days, total cost of labour is
24 x GH¢5.20 = GH¢124.80
If this is the cost for the entire 15 metre excavation, then
The unit cost for excavating through rock = GH¢124.80 / 15 cu.m = GH¢8.32 per metre cube
NOTE
Since we are computing the estimate for an “extra over” item on trench excavation, not
exceeding 2.00m maximum depth commencing from original ground level, we need to
deduct the unit cost of the original trench excavation from the GH¢8.32 we just obtained.
From the calculation above, the unit cost of excavation was calculated to be GH¢2.99
Therefore, the unit cost for extra-over item is = GH¢8.32- GH¢2.99
= GH¢5.33 /cubic metre
Estimating for pit excavation which involves excavating through reinforced concrete
Worked Example
Let’s assume the excavation is to a maximum depth not exceeding 2.0m and the total
excavation is 100 cubic metres
88
Solution
Soil identification
Reinforced concrete
Method identification
Assume the use of a compressor
Required resources
Plant compressor, hose and operator/driller at an output of 6m3/plant day
Assume compressor has analysis of daily cost as follows:
Ownership cost
Assume the purchase price for the compressor is GH¢1200.00 with no resale value
Average life of the compressor 80 plant days x 5 years
Depreciation is expressed mathematically as cost price / average life of plant
Depreciation = GH¢1200 / 80 x 5 = GH¢3.00
This means that the depreciation cost per day of the plant is GH¢3.00
Based on this and using the stated assumptions below, we can compute the total cost per day
If interest is 40% of ownership cost, then interest per day = GH¢1.20
If insurance is 10% of ownership cost, then insurance cost per day = GH¢0.30
Operator or driller’s wages (daily-all-in) = GH¢8.00
Then total ownership cost per day = GH¢12.50
Operating cost/day
Repairs and renewals at 25% of daily depreciation cost of GH¢3.00 = GH¢0.75
Running expenses / day
Fuel: assume 5gallons @ GH¢4.00 = GH¢20.00
Lubricants: assume 0.5gallons@ GH¢6.00 = GH¢3.00
Total running costs is therefore = GH¢23.00
Ownership, operating, running cost / day is GH¢12.50+GH¢0.75+GH¢23.00
= GH¢36.25
89
No. of plant days required 100 / 6 = 16.67 = 17 plant days
cost of 17 plant days@ GH¢36.25 per day = GH¢616.25
Add transport to and from site at GH¢120.00/return trip = GH¢120.00
Therefore total cost of plant for the excavation is GH¢736.25
If this is the cost for the entire 100 cubic metres, then the unit cost is:
Unit cost = GH¢736.25 / 100 = GH¢7.36
Estimating for Materials Arising from Excavation
In general, excavated material may be either re-used or disposed off.
Let’s consider the situation where excavated material is re-used,
In such a case, the estimate will cover the excavation, disposal and compacting.
Worked Example
Let’s assume that the compaction is done in layers of 150mm and the total volume of
excavated material is 150 cubic metres.
Solution
Soil identification
Assume the excavated material is gravel
Method identification
Assume manual spreading, leveling and compacting methods are used.
Required resources
Assume labourers used for spreading, leveling and compacting at an output of 5m3/man day
Labour requirements:
Duration required for the activity = 150 /5 = 30 mandays
If 1 manday IS GH¢5.20, FOR 30man-days, total cost is: = 30 x GH¢5.20 = GH¢156.00
If this is the cost of the entire 150 cubic metre excavation, Then the unit cost for the entire
activity is: GH¢156.00 / 150 = GH¢1.04 per cubic metre
90
1-4.2 Estimating for Concrete
Worked Example
Let’s assume we have 7m3 Plain in-situ concrete 1:3:6 (40mm aggregate) used for a 150-
300mm thick foundation .
Solution Method:Machine, transportation, placing and compacting
Materials
Assume the concrete mix requires a nominal volumetric 1m3 of cement.
If we use 1m3 of cement, then for the 1:3:6 concrete mix, we will require 3m3 of sand and
6m3 of aggregate.
Cement
As above, we are assuming a nominal 1m3 of cement.
Cement is approximately 1450 kg / m3
Since 1 m3 of cement is 50kg,
Therefore for the 1450kg contained in 1 m3 contains 1450 / 50 = 29 bags of cement.
Thus, we will need 29 bags of cement for the 1 m3 . If a bag of cement costs GH¢9.50
(ex-site), then the cost for the 29 bags is 29 x GH¢9.50 = GH¢275.50
The output for unloading and stacking of cement is 120bags / man day
Thus the 29 bags of cement will require 29/120 man days = 0.24 man days
If daily wage for unloading and stacking cement is GH¢5.20,
Then unloading and stacking of the cement will cost = 0.24 x GH¢5.20 = GH ¢1.26
From the initial assumption of a nominal volumetric 1m3 of cement,
we will need 3m3 of sand. Assume 1m3 of sand costs GH¢12.50,
Then the 3m3 of sand will cost 3 x GH¢12.50 GH¢ 37.50
From the initial assumption of a nominal volumetric
1m3 of cement, we will need 6m3 of aggregate.
Assuming 1m3 of aggregate costs GH¢22.90,
91
Then 6m3 of aggregate will cost 6 x GH¢22.90 = GH ¢137.40
Adding all together gives GH¢ 451.66
Allow 33% for shrinkage (33% of GH¢451.66) GH ¢ 149.05
GH¢ 600.71
This means the total material cost for 10m3 of concrete is GH¢ 600.71
To get the material cost/ m3, divide GH¢ 600.71 by 10
Therefore the material cost/m3 GH¢ 60.07
Estimating for Plant used for the Production of Concrete
Let’s assume we use a tilting 10/7 diesel concrete mixer with the
following corresponding data:
Output/batch mix 0.20m3
Mixing cycle 10 mins
Operating efficiency 75%
Assume an all-in daily rate of GH¢40.00/plant day
Let’s assume 8working hours a day. This will amount to 60 x 8 minutes
Number of mixing cycles in a day would be 60 x 8 / 10 = 48
Given that the efficiency of the equipment is 75%
The achieved no. of batches/day is: 48 x 75/100 = 3
Since the output per batch is 0.20 m3, then
Concrete output/day is: 36 x 0.20m3 = 7.2m3
No. of working days required for the 7m3of concrete is = 7 / 7.2 = 0.97 days
Approximate the number of days required for the plant, 0.97 days to 1 day
With the all-in daily rate of GH¢40.00/plant day,
This means the cost of using the tilting 10/7 diesel concrete mixer is:
GH¢40.00 / plant day x 1 day = GH¢40.00
Poker Vibrator:
From tables, the output of the poker vibrator is 10 m3 / plant day
Therefore 7m3 of concrete will require 7 / 10 plant days = 0.7 plant-day
Round 0.7 plant days off to 1 plant day
92
Now, Assuming the cost of 1 plant day is GH¢24.21,
The total cost for using plant for concrete mixing is: the cost of using the concrete mixer and
the poker vibrator,
Total plant cost = GH¢40.00 + GH¢24.21 = GH¢64.92
Estimates for Labour
Let’s assume a concrete gang size of 8 comprising:
1 mixer operator at a daily rate is GH¢5.20 GH¢ 5.20
2 masons working on placing and vibrating @ GH¢6.00 GH¢12.00
2 loaders @ GH¢5.20 GH¢10.40
3 transporters @ GH¢5.20 GH¢15.60
All-in-daily rate for labour GH¢43.20
Total Cost Summary:
Materials GH¢ 420.49
Plant GH¢ 64.92
Labour GH ¢ 43.20
Total estimate for concrete GH ¢ 528.61
The GH¢ 528.61 obtained above is the total cost for producing 7m3
Therefore the unit cost for concrete mixing is: GH¢ 528.61 / 7m3 = GH¢ 75.52
Estimating for ReinforcementThe main components when preparing an estimate for reinforcement are the respective costs
for materials and labour.
For material, the reinforcement bars and binding wire should be estimated for separately but
added together once both have been computed.
Let’s now go through an example of how an estimate is prepared for reinforcement.
Example 1
Let’s assume we have 0.37 tonnes of 12 mm diameter Bar reinforcement in arches and beams
Estimates for Materials
93
(i) Quantity of 12mm bars required 0.37 tonnes
Add 15% for waste 0.06 tonnes
0.43 tonnes
If 12mm bars of reinforcement cost GH¢750 per ton,
then 0.43 tonnes cost GH¢750 x 0.43 GH¢322.50
(ii) Binding wire required
Binding wire requirement is 13kg per tonne of reinforcement (for 12mm bars)
Therefore for 0.37tonnes binding wire requirement will be 13 x 0.37kg = 4.81kg
Binding wire is sold in 25kg rolls and hence
Number of rolls required = 4.81 / 25 = 0.19 rolls of binding wire
Let’s take the cost of 1 roll of binding wire to be GH ¢10.00
As just explained, binding wire is sold in 25kg rolls, therefore though we need just 0.19 rolls,
we will still have to buy 1 roll at a cost of GH ¢10.00
Total material cost is therefore GH¢322.50 + GH ¢10.00 = GH¢332.50
Labour for Reinforcement
i. Let’s take the output for unloading and stacking as 5 tonnes/man-day
Therefore for the 0.43 tonnes, the output will be: 0.43 / 5 = 0.084 man-days
The task will therefore take 1 man day (rounding off 0.084 man-days to the nearest day)
If the rate for 1 man day is GH¢6.00,
therefore the rate for unloading and stacking is: GH¢6.00 x 1 = GH¢6.00
Cutting & bending and fixing
We need to compute the estimate for cutting & bending and fixing 0.37 tonnes of
reinforcement in beams and arches.
From data, cutting and bending reinforcement rod in arches and beams has an output of
500kg/gang day, whilst fixing reinforcement in beams has an output of 320kg per gang day.
Therefore the combined output for reinforcement is: 1/500 + 1 / 320 = 0.005
Now, 0.37 tonnes converted into kilogrammes is 0.37 x 103
94
Therefore, gang-days per kg, would require 0.37 x 103 x 0.005 = 1. 85 gang-days
This approximates to 2 gang days
Let’s assume a gang of 2 steel benders and a labourer,
Cost per gang day=2(GH¢6.00) +GH¢5.20 =GH¢17.20
Cost for 2 gang-days @ GH¢17.20 per day GH¢34.40
Total cost of materials and labour GH¢372.90
Since the GH¢372.90 is the cost for 0.37 tonnes,
Therefore the unit cost will be GH¢372.90 / 0.37 = GH¢1007.84/tonne
Example 2In this example, we find the estimates for 10 mm diameter bar reinforcement using in
columns and beams
Let’s assume we have got altogether 0.03 tonnes of reinforcement.
Estimate for materials(i) Quantity of 10mm bars required 0.03 tonnes
Add 15% for waste 0.0045 tonnes
0.0345 tonnes
If a tonne of 10mm bars costs GH¢750.00, then 0.035 tonnes cost GH¢26.25
Binding wire requirements
From data, 1 ton of 10mm reinforcement rods require 13kg of binding wire
Therefore 0.03 tonnes will require 13 x 0.03kg = 0.39kg of binding wire
Binding wire is sold in 25kg rolls, hence number of rolls required = 0.39 / 25 = 0.016
Rounding 0.016 off to the nearest whole number gives 1,
This means that the minimum quantity of rolls that can be purchased is 1
If a roll of binding wire costs GH¢10.00, the total cost of binding wire is
GH¢10.00 x 1 GH¢10.00
Total material cost = cost of reinforcement bars + cost of binding wire
= GH¢26.25 + GH¢10.00 = GH¢36.25
95
Labour
(i) Unloading and stacking 0.035 tonnes at an output of 5 tonnes/man-day requires
0.035 / 5 = 0.007 man-days
Use 1 man days @ GH¢6.00 GH ¢6.00
(ii) Combined output for cutting and bending + fixing in arches and beams is:
(1 / 500 + 1 / 320 = 0.005
Number of gang-days required is 0.03x 103 x 0.005 =0.15
Rounding off to the nearest whole number gives 1 gang day
If the cost of 1 gang-day is GH¢17.20, then cost of gang GH¢17.20
Total cost of materials and labour = 36.25 + 6 + 17.20 GH¢59.45
If GH¢59.45 is the cost for 0.03 tonnes,
Then unit cost for reinforcement is GH¢59.45 / 0.03 = GH¢1981.67/ton
Estimating for FormworkWorked Example
Let’s consider formwork to the slab, staircase and horizontal soffit of a building. If we have
timber formwork with vertical props and horizontal joist to bearers at 750mm centres with
the total area of formwork as 100m2 and room height being 2.7m as shown in Figures 4.1.
Compute an estimate for the formwork used in this building.
Solution Materials:
Timber content calculations;
Assuming the dimensions of area to be supported to be 10 x 10m;
No. of joists required 10 + 1 = 14.3
0.75
Use 15
Hence no. of props required = 15 x 15 = 225
96
Fig 4.1: Timber formwork support to soffit of suspended slab
Table 4.1 Illustration of formwork estimating
Sym
bol
Siz
es(m
m)
Len
gth
(mm
)
Was
te
100%
of
(3)
Tot
al
len
gth
No.
of
3.6m
m
len
gth
Rat
e/
pie
ces
GH
¢
Cos
t in
G
H¢
Vol
. (m
3) (
2 x
5)
(1) (2) (3) (4) (5) (6) (7) (8) (9)
a
b
c
c
e
(Wawa)
25 x 300boarding
50 x 100
50 x 100prop
25 x 150 brace
25 x 100 connector
100.3 10.0 =333.33
15 x 10.00 = 150
225 x 2.70 = 607.50
2 x15 x 10.00 = 300.00
225 x 0.30 = 67.50
33.33
15.00
60.75
30.00
6.75
366.66
165.00
668.25
330.00
74.25
102
46
186
92
21
0.35
0.18
0.18
0.18
0.12
35.70
8.28
33.48
16.56
2.52
2.75
0.83
3.34
1.25
0.19
Totals 96.54 8.35
97
Flo
or to
sof
fit h
eigh
t
A
C C
C C
C
E E E
750 750 750 750
E
25 x 100 connector
B B B
DDDD
25 x 100 brace
FLOOR
25 x 300 boarding
D
2700
0mm
Total cost of Wawa timber including waste (from Table 4.1) GH¢96.54
Assuming 3 uses and nail utilization at 0.2kg/m2 first use and 0.1kg/m2 subsequent uses
Weight of nails required for 3 uses for the 100m2 = (0.2 + 2 x 0.1)kg x 100
= 40.00kg
Add 15% for waste 6.00
46.00kg
Cost of 46kg at GH¢ 0.20 GH¢ 9.20
Total cost of timber and nails for 3 uses GH¢105.74
Material cost for (timber + nails) per use 35.25
Mould oil at utilization capacity of 30m2/4.5L requires 100/ 30 (4.5L units)
= 3.33 (4.5L units)
Add 15% for waste = 0.50
3.83
Use 4 (4.5L units) at GH¢ 1.00 4.00
Total material cost/use GH¢39.25
Labour:
Unloading and stacking of 8.35m3 of timber at an output of 400m3/man-day
would require 8.35/4.00 man-days = 2.09 man-days
Use 2man-days at incentive rate of GH¢ 0.34 0.68
Mould oil application at 30m2/man-day required 100 man-days
30
i.e. 3.33 man-days but use 3 man-days @ GH¢ 0.37 1.11
Fabrication + erection + striking of 100m2
At an output of 1 + 1 + 1 = 0.16 gang-days per m2
18 15 30
would require 100 x 0.16 gang-days i.e. 16 gang-days at GH¢ 1.38 22.08
Total labour cost GH¢23.87
98
Total cost summary:
Materials 39.25
Labour 23.87
Plant - .
Total GH¢ 63.12
Unit cost GH¢ 0.63/m2
Worked example: Formwork to Walls and Associated Features Compute the cost of formwork to walls and associated features vertical surface of walls
Materials:
i. Timber:
For 100m2 at an average utilization of 0.09m3/m2 (for one use) would require
100 x 0.09m3= 9m3 including waste, cost of 9m3 of timber at GH¢ 10.00
90.00
ii. Nails:
Assuming 3 uses and utilization as previous in Item 6:5:1;
Cost of nails required (as previous in Item 6:3:3:1) 9.20
Total cost of timber and nails for 3 uses GH¢99.20
Hence cost/use 33.07
iii. Mould oil required (as previous in Item 6:3:3:1) 4.00
Total material cost GH¢37.07
Labour:
i. Unloading and stacking of 9m3 at an output
of 4.00m3 man-day would require 9/4.00 = 2.25 man-days
use 2 days at incentive rate of GH¢ 0.37 0.74
ii. Mould oil application to 100m2/Cost (as previous in Item 6:3:3:1) 1.11
iii. Fabrication + erection + striking of 100m3 at an output of
1 + 1 + 1 = 0.17 gang-days per m2
16 14 28Would require 100 x 0.17 gang-days, i.e. 17 gang-days at GH¢ 1.38 23.46
Sub-total for labour GH¢25.31
99
Total summary:
Materials 37.07
Labour 25.31
Total GH¢ 62.38
Unit cost GH¢ 0.62/m2
Estimating for Pre-cast Concrete WorksWorked Example
Compute the estimate for 100 No. precast reinforced concrete 1:2:4 (18mm aggregates)
rectangular lintel 150 x 250 x2500mm with two 13mmØ mild steel bars on top and bottom
with 10mm Ø stirrups at 150mm centres in cement and sand mortar (1:4) and left rough.
Solution
Materials:
Cost of rods from Table 4.2 GH¢ 115.64
For binding wire use 1 roll of 50kg at GH¢ 3.50 3.50
Cost of rods and binding wire 119.14
Add 15% waste 17.87
Total cost of rods and binding wire GH¢ 137.01
Table 4.2 Reinforcement Requirements
No.Bar Ø
mm
Shapes
Length (m)
No. Required
Total Length
(m)
Weight (kg)
Rate (kg)
¢
Cost ¢1000
Binding wire reqd.
kg
1
2
13
10
-
-
2.65
0.70
400
1700
1060
1190
1071
734
600
700
642.6
513.8
14
15
Total 1805 - 1156.4 29
Figures 4.2 to 4.5 show sections through the timber moulds including details as shown on table 4.3
100
Figure 4.2a Timber moulds for precast concrete works
Fig 4.2b
Fig 4.2d
Fig 4.2c
101
288m
m
288m
m28
8mm
2 5
b bbb
Frame ‘c’ 2No
Frame ‘d’
Frame ‘d’
C C
b b b b
A
A2500mm
Frame ‘d’ 2 No.
150
b b
a
326mm
Table 4.3 Information on timber mould
Sym
bol
Siz
e (m
m)
Len
gth
(m
m)
Was
te %
of
(m
)
Tot
al
len
gth
No.
of
3.6m
pcs
.
Rat
e/p
iece
(m
)
GH
¢
Cos
t(m
) in
GH
¢
Vol
. m2
(2 x
5)
1 2 3 4 5 6 6 8=6x7 9a
b + f
c
d
e
Total
38 x 326
38 x 250
50 x 50
50 x 50
50 x 50
2.60 = 2.60
2 x 2.55= 5.30
2 x 1.10= 2.20
2 x 5.6= 11.2
2 x 0.33= 0.66
0.24
0.53
0.22
1.12
0.07
2.86
5.53
2.24
12.32
0.73
1
2
1
4
-
0.6
0.6
0.1
0.1
-
0.6
1.2
0.1
0.4
-
2.30
0.033
0.063
0.0061
0.031
-
0.1351
Timber Cost/mould GH¢2.30
Nails:
Assuming 10 uses and nail utilization to be 0.02kg/m2
for first use and 0.1kg/m2 subsequent uses, weight of nails
required for 10 uses will be (0.2 + 9 + 0.1) = 1.10kg
But internal area/mould = (0.65 x 2.6 x 0.15)m2 = 1.77m2
Weight of nails for 10 uses of mould = 1.1 x 1.77kg = 1.947kg
Cost of 1.947kg of nails at GH¢ 0.20 = 0.39
Total cost of timber and nails for 10 uses GH¢2.69
Cost/use 0.27
Cost for 100 uses @ GH¢ 0.27 GH27.00
Mould oil required for (1.77 x 100) m2 surface at utilization capacity
of 30m2 / 4.5L units will be 177 (4.5L units) = 5.9 units
30
102
Add 15% for waste = 0.09
6.79 units
Use 7 (4.5L) units at GH¢ 1.00 = GH¢ 7.00
Concrete 1:2:4 (18mm aggregates) volume required = 100 x 0.15 x 0.25 x 2.50 = 9.375m3
Cost of 9.375m3 at GH¢ 6.18 (as in item 6:3:1) = GH¢ 57.94
Materials Cost Collection
Reinforcement and building wire 137.01
Timber and nails 27.00
Mould oil 7.00
Concrete 57.94
Total material cost GH¢ 228.95
Labour:
i. Unloading and stacking of (0.1351 x 10)m3 of timber at an output of
4.0m3/man-day would require 1.351 man-days @ GH¢ 0.32 GH0.11
4.0
ii. Mould oil application to 177m2 at an output of 30m2/man-day
would require 177 man-days = 5.9 man-days
30
use 6 gang-days at GH¢ 0.32 GH1.92
iii. Fabrication + erection + striking of 177m2
at an output of 1 + 1 + 1 = 0.17
16 14 28
gang-days/m2 would require 177 x 0.17 gang-days = 30.08
Use 30 gang-days at GH¢ 0.34 GH¢ 40.80
Sub-Total GH¢ 42.83
Concrete mixing, transportation, placing and vibrating of 9.37m3
at GH¢ 0.71 as in Item 6:3:1 6.65
Reinforcement cutting, bending and fixing, unloading and
stacking of 1.805 tonnes at GH¢ 9.60 (as in item 6:3:2) GH¢ 17.33
Total Labour Cost GH¢66.81
103
Total Cost Summary:
Materials 228.95
Labour 66.81
Plant - .
Total GH¢ 295.76
Add 5% for hoisting to position and
bedding in cement and sand mortar (1; 4) 14.79
310.55
Unit Cost GH¢ 3.11
104
1-4.3 Preparing Estimates for Structural Steelwork
GeneralTwo major considerations which should be made when measuring steelwork are:
i. The provision of steel including any fabrication required; andii. The erection of the steel structure on site.
Structural steelwork is normally undertaken by nominated sub-contractors since it is a specialist activity. However, minor works in this section would normally be handled by the main contractor since they may not be attractive to specialist contractors.Achieved output data in gang-days per tone for fabricating, unloading, hoisting and erection, including setting in position, have been shown in Table 4.4. The plant input cost relates to all other fabrication input outside labour and this has been converted to the equivalent gang-days units based on an average daily gang rate of GH¢ 30.00 (at 2008 rates).
Worked Example in Structural SteelworkIn view of the inter-dependence of the bill item for the provision and erection of steelwork, a set of items covering these two in respect of a building component element are presented in what we describe as items 2.1 – 2.1.9
Table 4.4 Output per ton for fabrication and erection
Component elementFabrication Erection
Labour gang-daysPlant in gang-days equivalent
Labour and plant
Beams ColumnsRoof trusses
Bolting only
34.56.0
630.33 of total input for fabrication
10 gang-days
Typical Bill ItemsProvision of fabricated steel work in built-up members in roof truss at roof level in 5 no. trusses as per location diagram (this will usually be provided)
For components, angles 75.2 x 75.2 x 11mm thick (5kg/m)ITEM 2.1.1
2.1.22.1.3
1.00m long in 10 No.1.50m ditto2.00m ditto
0.05 tonnes0.08 tonnes0.10 tonnes
For components and tees cut from universal beam 102 x 127mm x 13kg/mITEM 2.1.4
2.1.52.1.6
7.00mm long in 10 No.8.00mm dittoFittings
0.91 tonnes1.04 tonnes0.02 tonnes
105
Erection of Fabricated Steelwork:ITEM 2.1.7
2.1.8
2.1.9
Generally in roof trusses, 2.2 tonnes weightBlack bolts with nuts and washers grade designation 4.6Painting of fabricated steelwork 2 coats of red lead oxide primer to surfaces
0.16 tonnes
80m2
Estimating procedure The estimating procedure for steelwork is as follows:
For items 2.1.1 – 2.1.3Material s required 0.230 tonnesAdd 10% for waste 0.023 0.253Buy 0.26 tonnes at GH¢ 400.00 ex-fabricator’s yard GH¢ 104.00Labour and Plant: Fabrication of 0.23 tonnes at 69 gang-days/ton require15.87 gang-days; use 16 gang-days @ GH¢ 30.00 GH¢ 480.00Total cost for provision and fabrication of 0.23 tonnes GH¢ 584.00Unit cost GH¢ 2,539.13/ton
For item 2.1.4 – 2.1.6 Material required 1.97 tonnesAdd 10% for waste 0.20 2.17Buy 2.2 tonnes @ GH¢400.00 GH¢ 880.00Labour and Plant:Fabrication of 1.97 tonnes @ 69 gang-days per tonrequire 1.92 x 92 gang-days = 136.62Use 137 gang-days @ GH¢ 30.00 GH¢4,110.00Total Cost for Material, labour and Plant for 2.17 tonnes GH¢4,990.00Unit Cost GH¢ 2,299.54/ton
106
2-4.4 Estimating for Metalwork
When estimating for metalwork, the main parts covered are as follows:i. Aluminium or galvanized cast iron louvre blade carriers;
ii. Built-up metal burglar proofing and balustrades;iii. Sheet metal wire-mesh insect proofing fixed to hardwood frame with wrought hardwood
cover stripsTable 4.5 Output data for metalwork per gang-day
Collection from stores, fixing carriers and associated hardwood water stoppers for12 blades with 150m wide chips 8 blades with 150m wide chip 4 blades with 150m wide chip
Metal balustrades or burglar proofing of average weight of 10kg/m2
Unloading and fabricatingUnloading and fixing only Painting or priming Wire-mesh with wrought hardwood cover strips
Unloading and fixing with wrought hardwood battens to sheet wire-mesh insect proofing
14 pairs16 pairs24pairs
10 m2
10 m2
50 m2
30m2
Worked Example in Estimating for Metalwork
Estimate for metalwork in composite items in doors and windows with described as follows: Extruded anodized aluminium louvre blade carriers screwed to wrought hardwood frames with matching screws with clips for: 8 blades of 150mm wide with double lever control.
80 pairs
Material:Assume aluminum louvre blade carrier with clips for 8 blades of 150mm wide blades and double lever control cost GH¢ 10.00/pair ex-site, then, Cost of 80 pairs @ GH¢ 10.00 GH¢ 800.00Add 10% for losses, damage and storage, GH¢ 80.00Add 2.5% for fixing screws GH¢ 20.00Total Material Cost GH¢ 900.00Labour:Unloading and fixing of 80 pairs at an output offrom table 4.5, 16 pairs/gang-day would require 80/16 = 5 gang-daysCost of 5 gang-days @ GH¢ 30.00 GH¢ 150.00Total Cost (material + labour) for 80 pairs GH¢1,050.00Therefore Unit Cost GH¢13.13/pair
107
Self-assessment questions
i. Explain the main cost components which are considered when preparing
estimates for excavation and concrete work
ii. Why, do you think, can we not develop just a single unit rate for excavation?
iii. What are the main cost centres which should be considered when preparing
estimates for formwork and reinforcement respectively?
108
Session 2-4 Estimating for Roofing, Walling, Woodwork, Finishes, Painting and Decoration,
Learning Outcomes
By the end of this session, you should be able to:
i. Identify the key components which are considered when estimating for roofing,
walling and woodwork;
ii. Estimate unit rates for a typical wall or any activity relating to wall construction;
iii. Estimate unit rate for a typical roof and woodwork or sections thereof.
2-4.1 Estimating for Roofing
The most common roof form in West Africa is usually of corrugated sheet covering on
hardwood structure. Where felt-sheet covering is used, it has been mainly for water-proofing
purposes. Slate or Tile roofing is very rare and found, if any, on projects designed by
consultant who normally may be non-residents in the West Africa zone. Such woks have
been executed by specialist sub-contractors who normally present their own quotations to the
appointing body. Accordingly, corrugated and bituminous felt sheet roof covering and their
associated operations are considered. Tables 4.6 to 4.8 give outputs for these materials.
Table 4.6 Achieved outputs for corrugated sheet roofing
Roofing sheet covering type
OperationOutput/gang-day for slopes
<50º >50º VerticalGalvanized/aluminum Unloading and fixing
FlashingFixing ridge cupCutting ridges or hipsStraight cutting
70m2
25m55m45m40m
50m2
55m
40m35m
45m2
----
Cement Asbestos
Unloading and fixingFixing ridge cupCutting ridges or hipsStraight cutting
50m2
40m30m35m
45m2
35m30m30m
40m2
---
Table 4.7 Corrugated roofing sheet sizes in use locally
109
Type Width (mm) Length (mm)
Galvanized""
760760760
180024003000
Aluminum 7607607601200
up to 3000mm for0.4mm thickup to 6600mm for 0.5mm thickup to 9000mm for 0.7mm thick
up to 3000mm for 0.7+mm thick
Deep trough and long span are also available
Asbestos:Ordinary
Super 6 and 7
10601060
24001800
10601060106010601060
24003000180024003000
Table 4.8 Outputs for bituminous felt covering operation
Operation Output/gang-day (m2)
Operation Output gang-day
i. Nailing on boardii. Spreading pitch or
bitumeniii. Unloading and fixing
felt to bitumeniv. Spreading chippings
10mm thick
100100
140 100
v. Laying in gutters of 100mm girth
vi. Cutting
vii. Bitumen utilization
60m2
90m 0.15kg/m2
Worked out examples in roofing Example 1. Estimating for corrugated galvanized iron roofingCompute the estimate for corrugated galvanized iron roof covering fixed to hardwood purlins
and having 150 and 200mm side and end laps respectively with 75mm galvanized drive
screws and washes fixed strictly to manufacturer’s instruction if the area covered is 50m2.
110
Solution
Materials:
corrugated galvanized iron sheets: assume the use of a standard
size of 760 x 2400mm in accordance with purlin spacing. Allowing for
the required laps, covering capacity per sheet will be 0.61 x 2.2m2 = 1.34m2
No. of sheets required = 50
1.34
= 37.31
Add 10% for waste = 3.73
41.03
Use 41 sheets at GH¢ 20.00 GH¢ 820.00
75mm galvanized drive screws and washes with an
achieved utilization of 5/m2 would require 100 x 5 = 500 screws
Add 10% for waste = 50
550
But these are sold together in packets of 1,000
no. of packets required = 550 = 0.55
1000
But use 1 packet at GH¢ 25.00 GH¢ 25.00
Total Material Cost GH¢ 845.00
Labour:
Unloading and fixed of 50m2 at an output
of 70m2/gang-day would require 50 = 0.71 gang-days
70
But use 1 gang-days at GH¢ 36.00 GH¢ 36.00
Total cost (material + labour) GH¢ 881.00
Unit cost GH¢ 17.62/m2
111
Example 2: Estimating for corrugated super 7 cement asbestos roofing
Prepare an estimate for the roof of a proposed building made up of corrugated super 7 cement
asbestos roof covering fixed to hardwood purlins with 75mm galvanized drive screws and
washes and having 150 and 200mm side and end laps respectively all in accordance with
manufacturer’s instruction. Take the area covered by the roof as 200m2.
Solution
Materials:
Corrugated super asbestos sheets; in accordance
with purlin spacing given, use sheets size 1060 x 3000mm
giving net covering capacity of 0.91 x 2.80m2 = 2.55m2
No. of sheets required = 200
2.55
= 78.43
Add 15% for waste = 11.76
Total 90.19
Use 90 sheets at GH¢ 30.00 2700.00
75mm drive screws for 200m2 (as previous in Item 8:2:1) 25.00
Total Cost of Materials GH¢ 2725.00
Labour:
Unloading and fixing of 200m2 of asbestos sheet at an output
of 50m2/gang-day would required 200 = 4gang-day
50
Cost of 4 gang-days at GH¢ 36.00 144.00
Total Cost (material + labour) GH¢ 2869.00
Unit Cost GH¢ 14.35/m2
Example 3: Estimating for asbestos ridge cap Worked examplePrepare the estimate for a 2-unit asbestos ridge cap to fit supper 7 corrugated cement asbestos
fixed to hardwood with 75mm long galvanized drive screws and washes to manufacturer’s
specification. Take the length of the ridge cap to be 40m
112
Solution
Materials:
Use 2-unit corrugated asbestos ridge cup of length 1187mm per piece and 200mm end lap
Net covering capacity/piece = (1.187 – 0.200)m
= 0.987m
No. of sets required = 45
0.987
= 40.53
For waste allow 10% 4.05
Sub-Total 44.53
Use 45 sets at GH¢ 10.00 GH¢ 450.00
Drive screws and washes for 40m
at a utilization of 5/m would require
5 x 40 = 200
Add 10% for waste 20
220
Cost of 220 at GH¢ 0.60 GH¢132.00
Total Material Cost GH¢ 582.00
Labour:
Unloading and fixing + straight cutting of
10m asbestos ridge cup at an output of
1 + 1 = 0.042m/gang-days
40 2 x 30
would require 10 x 0.042 = 0.42 gang-days
Use 1 gang-day at GH¢ 36.00 GH¢ 36.00
Total Cost (material + labour) GH¢ 618.00
Unit Cost GH¢ 15.45/m2
113
Example 4: Estimating for Pre-formed Aluminium Sheet FlashingPrepare an estimate for 20m of pre-formed aluminum sheet flashing 0.8mm thick and
1000mm girth fixed to 50 x 50 x 50mm hardwood grounds in blockwall with drive screws
and washers in accordance with the manufacturer’s instructions all inclusive.
Solution
Materials:
The material required for this are: aluminum flashing with screws and washers
as per manufacturer’s quotation GH¢ 10.00/m (net) ex-factory
Cost of 20m at GH¢ 10.00 200.00
Add 15% for transportation to site and storage 30.00
GH¢ 230.00
50 x 50 x 50mm long timber grounds for 20m at a
utilization of 10 No,/m would require
0.05 x 10 x 20m = 10.00
Add 15% for waste 1.50
11.50
But hardwood is sold in 3.6m piece
No. of pieces required = 11.50
3.60
= 3.19
Use 3 pieces at GH¢ 8.00 24.00
Total Cost of Materials GH¢ 254.00
Labour:
Unloading and fixing of flashing
20m long at an output of 20m/gang-day
Would require
114
20 gang-day = 1.0 gang-day
20
Use 1 gang-day at GH¢ 36.00 GH¢ 36.00
Sub-total GH¢ 290.00
i. Fixing of 50 No. of
50 x 50 x 50mm hardwood grounds
in blockwork at an output of 50/gang-day would require
50 = 1.0 gang-day at GH¢ 36.00 GH¢ 36.00
50
Total Cost (material + labour) GH¢ 326.00
Unit cost GH¢ 16.30/m
Example 5: Estimating for bitumen felt roofing
Prepare an estimate for 2 layers of double-layer bitumen felt roof covering of 50kg/30m3 roll
laid on flat hardwood boarding (measured separately) with manufacturer’s recommended
bitumen binder and having 150 and 200mm side and head laps respectively with 9mm granite
chipping finishing layer of 10mm thick, covering a total area of 50m2.
Solution Materials:
Double layer felt required is sold in rolls of 1 x 30m2
and allowing for laps, net covering capacity/roll
will be 0.85 x 29.80m = 25.33m2
No. of rolls required = 50
25.33 = 1.97
Add 15% for cutting waste = 0.30
Sub-Total 2.27
For the 2 layers, buy 2 x 2.5 = 5 rolls @ GH¢ 2.50 GH¢ 12.50
115
Fig 4.3 Bituminous felt roof covering materials and operations (enlarged)
Binder Bitumen:
With utilization of 0.15kg/m2 layer, requirement for
50m2 will be 0.15 x 50kg = 7.5kg/layer including waste
Requirement for 3 layers will be 3 x 7.5 = 22.5kg @ GH¢ 4.00 90.00
9mm granite chippings over 50m2 in 10mm thick layers
would require 50 x 0.01m3 = 0.5m3
Add 50% for voids = 0.25
Sub-Total = 0.75m3
But buy 1m3 at GH¢ 10.00 GH¢ 10.00
Labour:
No. of gang-days required/m2 for:
i. Applying binding bitumen 3 times = 3 x 1/100
ii. Unloading and laying felt in 2 layers = 2 x 1/140
iii. Spreading chippings in 10mm layers = 1/100
116
10mm chippings
Hardcore rafter
Roof boarding
Measured separately
3 stages of bitumen binder application2 layers of double layer bituminous felt
Combined gang-day/m2 for these 3 operations will be
3 + 2 + 1 = 0.054 gang-days
100 140 100
Hence 50m2 would require 50 x 0.054 gang-days = 2.7
But use 3 gang-days at GH¢ 36.00 108.00
Total cost (material + labour) GH¢ 220.50
Unit cost GH¢ 4.41/m2
2-4.2 Estimating for Blockwork and Brickwork
Wall construction may be either sandcrete load bearing or sandcrete non-load bearing walls
and partitions. Blockwork in walls consists of 100mm, 125mm, 150mm or 225mm thick
sandcrete blocks using 1:4 cement mortar mix as binding joints. Sandcrete blocks are made
using cement and sand in the ratio of 1:8.
In Ghana, brickwork is rather uncommon. Until recently, bricks were mostly used as facing
bricks mainly for decorative purposes. In the recent past, a few projects have been
undertaken entirely using bricks or using mostly bricks in walls. In some developed countries
such as the United Kingdom and the USA, the predominant walling material is bricks. We
will now look at examples of how estimates for wall construction using both blocks and
bricks. To start with, let’s have a look at these tables 4.9 to 4.11 below which provide useful
data which will be used when we compute estimates for blockwork and brickwork. Data
from these tables are used in the examples that follow.
Table 4.9 Popular sizes of blocks which are commonly used in Ghana
Size of block (in mm) Type of block in which available
Actual size200 x 212.5 x 437.5125 x 212.5 x 437.5100 x 212.5 x 437.575 x 212.5 x 437.5
Nominal Size225 x 225 x 450150 x 225 x 450125 x 225 x 450100 x 225 x 450
HollowHollowHollowHollow
SolidSolid SolidSolid
117
Table 4.10 Weights and volumes of cement and sand in specified nominal mixes of mortar
Nominal Mix
Cement Sand
Weight in tonnes Volume (in cubic metres) Weight in tonnes Volume (in cubic metres)
1:11:21:31:4
0.970.660.500.40
0.670.460.350.28
1.071.461.671.79
0.670.911.041.12
Table 4.11 Achieved outputs for selected blockwork operations
Operation Output
Unloading and stacking of 100 x 225 x 450mm sandcrete blocksUnloading and stacking of 125 x 225 x 450mm sandcrete blocksUnloading and stacking of 150 x 225 x 450mm sandcrete blocksUnloading and stacking of 225 x 225 x 450mm sandcrete blocksManual mixing of mortarLaying of sandcrete blocks in 100mm thick walls or partitionsLaying of sandcrete blocks in 125mm thick walls or partitionsLaying of sandcrete blocks in 150mm thick walls or partitionsLaying of sandcrete blocks in 225mm thick walls or partitionsLaying of sandcrete blocks in 225mm thick in foundationLaying of sandcrete blocks in 150mm thick in foundationLaying of sandcrete blocks in 125mm thick in foundationStraight cuttingCurve cuttingAllow 1.5 blocks per metre as cutting waste
450 per man day400 per man day350 per man day250 per man day1 m3/ man-day
14 m2/ gang day13 m2/ gang day12 m2/ gang day10 m2/ gang day9 m2/ gang day10 m2/ gang day13m2/ gang day50m /gang day35m/gang day
Brickwork 0.5 B thick (113mm) partitions1 B thick (225mm) partitions
6 m2
4 m2
We will use data from these tables variously as we prepare estimates for walls using blocks
or bricks. Let’s have a look at the example below.
118
Worked Examples in Blockwork and BrickworkExample 1: Estimates for a 225mm thick hollow blockwall
Let’s consider a 225mm thick hollow sandcrete blockwall filled with plain concrete using
cement and sand mortar (1:4) in foundations. The plain concrete filling is measured
separately. Let’s assume the total area of blockwork is 100 m2
Solution Let’s start by estimating for the materials used for the wall construction.
The main materials used are cement and sand.
i. Estimate for the cement and sand mortar (1:4)
Let’s assume a 1m3 volumetric mix of cement
1m3 uses 29 bags of cement. If a bag of cement costs GH¢9, then
Cost of 29 bags of cement, 29 x GH¢9 GH¢ 261.00
If in 1 man day, 120 bags of cement can be unloaded and stacked,
then 29 bags will require 29 / 120 = 0.242,
Rounding off 0.242 man days to 1 man day.
If the cost per man day is GH¢ 6,
Then the cost of labour for the cement used is GH ¢ 6.00
ii. Estimate for sand
The ratio of cement used to sand is 1:4
Since we used a nominal 1 m3 volumetric mix of cement, then the volume of sand
require is 4 m3
If 1 m3 of sand costs GH¢ 50, then the cost for 4 m3 is GH¢ 200
Thus, the total material cost for 5 m3 GH¢ 467.00
Allow for an additional 33% for shrinkage and waste GH¢ 154.11
Therefore the total material cost for 5 m3 GH¢ 621.11
And the material cost per m3 GH¢ 124.22
119
Estimate for mixing
From the table of outputs, mixing 1 m3 will require 1 man day,
If the cost of labour per man day is GH¢ 6, then
Cost of labour for mixing mortar is 1 x GH¢ 6 GH¢ 6.00
Cost of mortar GH¢ 130.22
Estimate for blockwork
The wall is made up of sandcrete block with nominal size 225x225x450mm
The area of 1 block is 225mm x 450mm,
Converted into metres, the area of 1 block is 0.225 x 0.45 = 0.101 m2
Since the total area of blockwork is 100 m2
Then the number of blocks required = total area / area of 1 block
= 100 / 0.101
= 987.65 blocks
Add 10% for waste 98.77 blocks
Total no. of blocks required = 1086.42 blocks
If 1 block is assumed to cost GH¢ 1.20,
Then cost of 1086.42 blocks is GH¢ 1.20 x 1086.42 GH¢ 1,303.70
Estimate for mortar
Assume the volume of mortar used to be V m3
V = (nominal area of block – actual area of block) x no. of blocks x wall thickness,
= (0.225x0.45 -0.2125x0.4375) x 987.65 x 0.225 m3
= 0.0083 x 222.22 m3
= 1.84 m3
Since 1 m3 of mortar costs GH¢ 130.22,
then 1.84 m3 of mortar will cost: GH¢ 130.22 x 1.84 m3 GH¢239.20
Total cost of material = cost of blocks + cost of mortar GH¢1,542.90
120
Estimate for labour
From the table, the output for laying of 225mm sandcrete blocks is per 9 m2 /gang day,
Then the total area of blockwork, 100 m2 will require 100 / 9 = 11.1 gang days
Rounding 11.1 gang days to the nearest whole number gives 11 gang days
If the charge per gang day is assumed to be GH¢ 32.00,
Then total cost of labour is GH¢ 32.00 x 11 GH¢352.00
Therefore total cost for material and labour is GH¢1,894.90
This is the cost for the entire area 100 m2 of blockwork
And the cost per m2 is GH¢ 1,894.90 / 100 m2 = GH¢ 18.95
Blockwork Example 2Preparing estimates for solid sandcrete blockwall
In this example, we consider a 125mm thick sandcrete blockwall in cement and sand mortar
(1:4) in walls and partitions. Let’s take the total wall area to be 50 m2
Solution
Materials
(i) Blocks
For the 125mm thick walls, we use 125x225x450mm nominal size blocks
Area of 1 block in metres is: 0.225x0.45 = 0.101 m2
For the 50 m2 of blockwalls, number of blocks required is 50 / 0.101
= 495.05 blocks
Add 10% waste 49.51blocks
544.56 blocks
Rounding 544.56 blocks to the nearest whole number,
This means we will need 545 blocks.
If 1 block costs GH¢1, then the 545 blocks used will cost GH¢545.00
121
Mortar used
Assume the volume of mortar used to be V m3
V = (nominal area of block – actual area of block) x no. of blocks x wall thickness,
= (0.225x 0.45 – 0.212 x 0.4375) x 495.05 x 0.125
= 0.008 x 61.88
= 0.495 m3
From Example 1, the cost of mortar per m3 is GH¢ 130.22,
Thus for 0.495 m3 of mortar, the cost is 0.495 m3 x GH¢ 130.22 = GH¢64.47
Total material cost for the blockwall GH¢609.47
Labour
We are considering 50 m2 of blockwall at an output of 12 m2 gang man day,
The output for 50 m2 of blockwall is thus: 50/12 = 4.16 gang days
Approximate 4.16 gang days to the nearest whole number, i.e. 5 days
If the charge per gang day is assumed to be GH¢ 32.00,
Then total cost of labour is GH¢ 32.00 x 5 GH¢ 160.00
Therefore total cost for material and labour is GH¢ 769.47
This is the cost for 50 m2
Thus the cost / m2 is GH ¢ 769.47 / 50 m2 GH ¢ 15.39
Example 3 Preparing estimates for brickworkWe will illustrate the estimating process for brickwork using an example.
Let’s consider a 0.5 Brick thick (i.e. 0.113mm) single leaf burnt clay brick wall in cement
and sand mortar (1:4) in walls and partitions. Assume the area of brickwork is 10 m2
Solution
Materials
We assume burnt clay bricks are used (common bricks).
The nominal size of bricks is 113 x 75 x 225mm
The area of a1 brick is 0.075 x 0.225 = 0.0169 m2
122
For the entire area of brickwork, the number of bricks is:
10 / 0.0169 m2 = 591.72 bricks
Add 10% for waste 59.17 bricks
650.89 bricks
Rounding off to the nearest whole number gives us 651 bricks
Assuming a brick costs GH¢ 0.80, then 651 bricks will cost GH¢ 0.80x651= GH¢520.80
Mortar used
Assume the volume of mortar used to be V m3
V = (nominal area of brick – actual area of brick) x no. of bricks x wall thickness,
= (0.075x0.225 – 0.069 x 0.219) x 591.72 x 0.113
= 0.001764 x 66.86
= 0.1179 m3
From previous examples, we found the cost of mortar to be GH¢ 130.22,
Thus the cost of mortar for 0.1179 m3 is GH¢ 130.22 x 0.1179 m3 GH¢15.35
Total cost of material GH¢536.15
Labour
From tables, the output for 0.6 Brick thick walls is 6 m2
Thus 10 m2 will require 10 / 6 = 1.67 gang days
Approximate this to 2 days. If labour costs GH¢ 32 per gang day,
Then for the two days, cost of labour is GH¢ 32 x 2 GH¢ 64.00
Total cost of material and labour GH¢ 600.15
This is the cost for 10 m2
Thus the cost per m2 is GH¢ 600.15 / 10 m2 GH¢ 60.02
Therefore unit cost of brickwork is GH¢ 60.02
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2-4.3 Estimating for Woodwork
In preparing estimates for woodwork, the main input resources which should be
considered are material and labour. In the following example, we will prepare an
estimate for sawn timber 50 x 50mm surface brushed with. Creosote preservative in
pitched roof carcassing. Let’s take the total area of woodwork as 726m.
The input resources required are as follows:
Material:
i. Timber
ii. Nails
iii. Creosote
iv. Brush
Labour:
i. Creosote application
ii. Unloading, cutting, hoisting and fixing
Material
i. Timber [dimensions 50 x 050]
The number of 4.2m pieces required = 726 / 4.2 = 172.86
Add 15% for waste = 25.93
198.79
Use 199 pieces @ ¢2.50 GH
¢497.50
ii. Nails
Net timber content = 0.05 x 0.15 x 726
= 5.445m3
At a utilization of 12.0kg/m3 of timber
The weight of nails required = 5.45 x 12 =65.34kg
Cost of 65kg @ ¢1.05 GH¢68.25
iii. Creosote
If the area brushed / piece of 4.2m
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Length will be 2[0.05+0.15] x 4.2 + [2 x 0.05 x 0.15]
= 1.695m2
For the 199 pieces of wood, the total area brushed =199 x 1.695 = 337.31m2
With utilization of 30 / m2 for 4.5L, the number of units required = 337.31/ 30 = 11.24
Add 20% for waste = 2.25 13.49
Use 14 units. Assuming a unit costs GH¢2.50 GH¢35.00
iv. Estimating for Brushes
In general, brushes are allowed for in preliminaries. However if it is required to
estimate specifically
For brushes, let’s see how this can be done. We will illustrate with an example.
Let’s assume we have 150mm width nylon brush, utilization capacity of 120m2
If the average live coverage per brush is 120m2
Then the number of brushes required = 337.31 / 120
= 2.81
Add 1 for losses and misuse = 3.81
Rounding off to the nearest whole number, thus we use 4 brushes
If a brush costs GH¢2.00, then cost of brushes is 4x GH¢2.00
GH¢8.00
Total material cost
Timber GH¢497.00
Nails GH¢ 68.25
Creosote GH¢ 32.50
Brushes GH¢ 8.00
Total material cost GH¢606.25
Estimates for LabourFrom the earlier calculation, volume of timber is 5.45 m3
Unloading, cutting, hoisting and fixing 5.45m3 @ an output of 0.6 m3/gang day
requires: 5.45 = 9.08 gang days
0.6
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Use 10 gang days @ GH¢22.40 GH
¢224.00
With the calculated area of 337.31 m2 and creosote application @ 30m2/ man day,
Man days required 337.31 / 30 = 11.24 mandays
Use 12 man days @ GH¢5.20
GH¢57.20
Total labour cost GH
¢286.40
Total cost summary
Materials GH ¢ 606.25
Labour GH¢286.40
Total cost GH¢892.65
Since this cost is for 726m, therefore, Unit cost GH¢1.23/m
2-4.4 Estimating for Painting and Decoration
We start this by looking at the average covering capacities of paint on different types of surfaces for both oil and emulsion paint as shown in table 4.12.
Table 4.12 Average covering capacities in m2/gallon/coat (4.5L of paint)
Surface typeEmulsion Oil
New Old New OldRendered walls or asbestosConcrete fair faceHardboard Woodwork Metalwork
404540--
455045--
3540353545
4045404550
Glass paper utilization of 0.25 sheet/m2
Putty for stopping @ 0.025kg/m2
Brushes with life covering capacity of 180m2 for oil workBrushes with life covering capacity of 300m2 for emulsion workWood vanish spray covers 60m2/gallonThe painting gang normally comprises2 painters @ GH¢ 6.50 13.001 labourer @ GH¢ 6.00 6.00 GH¢19.00
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Table 4.13 Achieved labour output data on works including preparation in m2/ gang-day
Surface TypeEmulsion Paint Oil Paint
Rendered wallRendered soffitScreeded floorHardboard soffitFlat asbestos sheet soffitGeneral wood surfacesStopping and other putty work on paintingHardwood surfaces including glass paper work
6040-
3535---
453540303030
40
Worked-out example in painting and decorationCompute the estimate for the preparation and application of 3 coats of emulsion on rendered walls, total area 100m2
Solution Materials:Emulsion paint:At a utilization of 40m2/gallon/coat,quantity required for 3 coats of 100m2 3 x 100/ 40 = 7.50 gallonsAdd 15% for waste 1.13 8.63 gallonsBuy 9 gallons @ GH¢ 10.00 ex-site GH¢ 90.00Brushes:With life coverage of 300m2/brushNo. of brushes required 3 x 100/ 300 = 1.00For losses, add 1 1.00 2.00Buy 2 of 150mm width brushes @ GH¢ 0.90 GH¢ 1.80 GH¢ 91.80Labour:
Preparation and painting 3 coats of 100m2 at an output of
From table 4.13, 60m2/gang-day/coat would require 100 x 3/ 60 = 5 gang-days
Cost of 5 gang-days GH¢ 35.00 GH¢ 175.00
Total Cost GH¢266.80
Unit Cost GH¢ 2.67/m2
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2-4.5 Estimating for Floor, Wall and Ceiling Finishes
In estimating for finishes, let us start with in-situ finishes.The major factors affecting resources input of in-situ finishes are:
i. The irregularities of the surface which receives the finishes;ii. Compression of the in-situ materials on trowelling;
iii. Waste mainly on dropping during utilization.
Allowances have to be made for 60% addition to materials content, in respect of wall rendering, floor screeds and ceiling finishes. Let’s take a look at table 4.14.
Table 4.14 Achieved labour outputs for finishes
Manual mixing of mortar13mm thick rendering to walls13mm ditto to soffitsDitto to angles and arisesDitto to small compartments*18mm thick screed*25mm thick screed
Tiling output/gang-dayWalls (glazed) Floors (PVC) Floors (PVC) Terrazzo floor polishing average daily output for a gang of 2 operatives
Ceiling covering output per gang-day Flat asbestos sheet with hardwood battens Plywood ditto Celotex hard board tiles Covering capacity of white cement pointing of joints in glazed wall tiles Covering capacity of Tyrolean finish to rendered wall Covering capacity of PVC floor tile adhesive
1m3/man-day30m2/gang-day
20m2/ " "15m " "10m2 " "30m2 " "25m2 " "
4m2
12m2
6 m2
10m2
20m2
24m2
18m2
40m2/bag of cement/gang-day40m2/bag of cement/gang-day 10m2/4.5L unit
*Deduct output by 12.5% for:i. Each 12.5mm increase in thickness
ii. Trowelling surface to receive floor tiles.
Worked examples in wall, floor and ceiling finishesIn-situ finishes internally:Compute the estimate for 12.5mm thick cement and sand (1:4) rendering on sandcrete blockwall, steel trowelled in one coat on an area of 100m2
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Solution We will use data from table 4.14 to solve this.Material:For the (1:4) mortar, let’s adopt the rate of GH¢ 130.22 as mixed (from blockwork
example 1)
Since the thickness of the mortar from the question is 12.5mm, then the volume of mortar (1:4) required is 0.0125 x 100 = 1.25m3
Allow 60% for irregularity of surface, compressionon trowelling and utilization waste 0.75 m3
Total volume required 2.00m3
Cost of 2m3 @ GH¢ 130.22 GH¢ 260.44
Labour:100m2 wall rendering at an output of 30m2/gang-day would require100/30 = 3.33 gang-daysUse 3 gang-days @ bonus rate of GH¢ 32.00 GH¢ 96.00
Total Cost Summary:Materials GH¢ 260.44Labour GH¢ 96.00Total Cost GH¢ 356.44Unit cost GH¢ 3.56/m2
Self-assessment questions1. Identify the key components which are considered when estimating for:
a. Roofing;
b. Walling;
c. Woodwork;
d. Wall, floor and ceiling finishes respectively; and
e. Painting and decoration.
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Session 3-4 Preparing Estimates for Plumbing and Electrical installations, Glazing and PreliminariesLearning Outcomes
By the end of this session, you will be able compute estimates for:
i. Plumbing installations
ii. Electrical installations
iii. Glazing items
3-4.1 Estimating for Plumbing Installation
Generally, plumbing work is mainly undertaken by labour-only sub-contractors. Most of these are small local contractors who operate on a small-scale without the capacity to support full-time plumbing gangs. Tables 4.15 and 4.16 present some average output data used in estimating the cost of plumbing installations.
Table 4.15 Output data per gang-day for supply, preparation and fixing fittings and appliances
Traps in waste connectionsTaps (13 – 25mmØ)Shower rose and connectionsShower tray80L capacity water heater2000L (500 gals) overhead storage tank and overflow fittingsLow level water closet complete with cisternWash hand basinCast iron enamel bath tubChina clay kitchen sinkStainless steel kitchen sink with double drainerBuilder’s work (floor area)Excavating trench and backfilling Jointing compound utilization @ 0.025kg/m of PVC pipes
12 No.15 "20 " 4 " 4 " 4 " 4 " 6 " 1 " 6 " 4 "30m2
10m/man-day
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Table 4.16 Showing output per gang-day for pipework inclusive of pipes, fittings and supports in domestic buildings
Diameter (mm)Type of Pipe
Asbestos P.V.C Galvanized Copper
1301005038251513
6m4m
12m15m15m20m20m15m15m
15m15m10m
14m12m
Worked Example in Plumbing Installation:
Compute the estimate for laying 10m of 100mmØ pvc pipes as specified in trenches.
Solution Materials:P.V.C pipes 100mmØ are sold in 3.0m lengths locallyNo. of lengths required will be 10/3 = 3.33Add 15% for waste 0.50 3.83Approximate to 4 lengths,Buy 4 lengths @ GH¢ 10.50 GH¢ 42.00Jointing compound for 10m @ a utilization of0.025kg/m would require:
10 x 0.025kg = 0.250Add 10% for waste 0.025 0.275kg
But this is sold in 0.25kg minimum containers.Therefore, buying 2 containers @ GH¢ 6.60 GH¢ 13.20Total Material cost GH¢ 55.20Labour:Trench excavation and backfilling of 10m @ an output of10m/man-day would require 10/10 = 1 man-dayUse 1 man-day @ GH¢ 6.50 GH¢ 6.50Pipework in trenches for 10m @ an output of 15m/gang-day would require 10/15 = 0.67 gang-dayLets use 1 gang-day @ GH¢ 30.00 GH¢30.00Total Labour Cost GH¢ 36.50
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Total Cost Collection:Materials 55.20Labour 36.50Total cost GH¢91.70Unit cost GH¢ 9.17/m
3-4.2 Estimating for electrical installations
Electrical installation work is mainly undertaken by specialist sub-contractors.
Estimating is done by preparing a comprehensive list of all electrical items required,
documenting and sending for quotes from prospective specialist sub-contractors. The
list of electrical items is prepared from the contract documents.
However, main contractors also prepare their estimates from comparable detailed
itemized list by adjusting the unit cost of the materials component. Usually, most
local contractors use a combination of the rate of work for the average floor area
covered per gang-day in new building types as follows:
Floor area (m2) per gang day
For mass housing of low income units 15
Medium income house 12
High income house 9
Office 18
Builder’s work 45
Open space like factories, etc. 38
The other types include:
1-3 switches and switch socket outlets per gang day
70.0m cable wire length/gang-day
Worked example in electrical installations
Consider electrical installations in a new medium income house of floor 120m2 floor
area with 20 switches and switch socket outlets all as detailed in Table 4.17
Table 4.17 Estimating for electrical installationsItem Description Quantity Rate (GH₵) Cost (GH₵)
DISTRIBUTION BOARDSA Supply, erect and connect a 6 way mix
capacity MCB consumer unit1 60.00 60.00
MCB FOR ABOVE
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B 5A SP MCB 2 30.00 60.00C 20A SP MCB 2 35.00 70.00D 30A SP MCB 2 40.00 80.00
SUB FEEDER CABLESSupply, erect and connect the following from the worm piece insulator to meter board and onto the distribution board
A 25mm dia. PVC pipe as conduit 20m 2.00 40.00B 1x16mm2 PVC insulated copper cable
drawn into the conduit40m 3.00 120.00
GENERAL POWER OUTLETS AND LIGHTING POINTSSupply, erect and connect the following for general power and lighting points
C 20mm conduit concealed in chases, block work, concrete floor, etc.
200m 2.50 500.00
D 75mmx75mmx 35/50mm square boxes at switch and power points
20m 2.50 50.00
E -Do- but complete with covers as draw points.
3 Nos 2.00 6.00
F 20mm circular boxes of various ways of lighting points
15 Nos 2.50 37.50
WIRING CABLESSupply and draw the following in existing conduits
G 1.5mm2 PVC insulated cable but coloured green as earth continuity cable to serve fluorescent tubes
300m 1.00 300.00
H 1.5mm2 PVC insulated cable for lights 20m 1.00 20.00J 2.5mm2 PVC insulated cable for 13 A
switch sockets100m 2.00 200.00
K -Do- but coloured yellow/green as earth continuity cable
40m 2.00 80.00
L 6.0mm2 PVC cable (Cu) for cooker control unit
10m 2.00 20.00
M 4.0mm2 PVC cable coloured green/yellow as earth wire
10m 2.00 20.00
SWITCHES AND SWITCH SOCKETSSupply, erect and connect the following:
N 13A 240V SP 1 gang switch socket 2 Nos 1.50 3.00P 15A 240V SP switch socket 11 No 1.50 16.50Q 45A DP cooker control unit Nil -R 5A SP 1way 1 gang switch 3 Nos 2.00 6.00S 5A SP 2 way 2 gang switch 2 Nos 2.00 4.00T 5A SP 1 way 2 gang switch 2 Nos 2.50 5.00A Meter Board 1 No 20.00 20.00
LIGHTING FITTINGSSupply erect and connect the following :-
B 1x 40W 1.2m fluorescent fitting C/W tube
2 Nos 10.00 20.00
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C 1x 40W batten lamp holder 10 Nos 10.00 100.00
EARTHINGSupply, erect and connect the following:-
D 1.2m long 13mm copper earth rod 2 No. 15.00 30.00E 6.0mm2 bare copper as earth lead
bounded to the DB at one end and to the earth rod at other end buried 2m below ground
20m 2.00 40.00
MATERIAL COST 1,908.00Add 10% for transportAdd 5% for storage 286.20TOTAL MATERIALS COST 2,194.20
Labour:20nr of switches and switched outlets at an output of 2/gang-day would require20/2 =10 gang-daysUse 10 gang-days @ GH₵ 25.00 GH₵ 250.00On the other hand, using an output of 12m2 of floor area/gang-day for 100m2 would require 120/12 = 10 gang-daysHence using 10 gang-daysTotal Cost SummaryMaterials GH₵ 2,194.20Labour GH₵ 250.00Plant -Total Cost (Labour and materials) GH₵ 2,444.20
Hence installed total cost as a factor of material input cost is 2,444.20 2,194.00 = 1.114
Rates of each of the items of materials must be multiplied by the factor 1.114 to obtain the unit rate in each case.For builder’s work in connection to this, gang-days required will be 100/45 = 2.22 gang-daysBut use 3 gang-days @ GH₵ 25.00 GH₵ 75.00
3-4.3 Estimating for Glazing
There are different glass types generally used for building projects in Ghana. The popular ones are:
i. Sheet louvre glass fixed in metal louvre carrier clips. ii. Clear or rough cast sheet glass fixed to metal, wood or plastic in opening. In this
type, some of the common sizes normally available in respective thicknesses are:
5.0mm thick5.5mm thick6.0mm thick
2.7 x 1.67m2.7 x 3.33m2.7 x 3.33m
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Labour output for glazing works:
Figure 4.18 shows the outputs for cutting and fixing sheet glass to timber, metal and plastic respectively.
Table 4.18 Cutting and fixing of sheet glass in m2/gang-day
Area range (m2)
Cutting and fixing to:Timber Metal Plastic
Up to 0.10.1 – 0.50.5 – 1.01.0+
3.503.002.502.00
4.54.03.52.5
5.55.04.53.5
Putty utilization @ 0.70kg/m2 all-in. For cuttings only use 2.00 times output.
Worked-out example for glazingCompute the estimate for 1000No. 150 x 750 x 5mm ordinary quantity obscure glass louvre blades with smooth cut edges and with ends fixed in metal louvre carrier clips.
Solution Materials:150 x 750 x 5mm glass louvers:Net number required 1000Add 10% for waste and damage 100Total no. required 1100Cost of 1100 @ GH¢ 0.80 GH¢ 800.00
Labour:Louvre glass fixing for 1000 @ an output of150 no./gang-day would require 1000/150 = 6.67 gang-daysAdd 10% for minor cuttings 0.67 7.34Use 8 gang-days @ GH¢ 35.00 GH¢ 280.00Total Cost (material + labour) GH¢1,080.00Unit Cost GH¢1.08
Self-Assessment Questions
List the key constituents which make up estimates for:
i. Plumbing installations
ii. Electrical installations
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Fixing of 150 x 750mm louversFixing of 150 x 900mm louversFixing of 225 x 900mm louvers
150 No./gang-day120 No./gang-day90 No./gang-day
iii. Glazing
(Clue: this refers to the key headings which are covered in preparing estimates for
these worksections)
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Unit 5 ESTIMATING FOR PRELIMINARIESUnit Objectives
By the end of this unit, you will be able to:
i. Explain what the term “preliminaries” refer to and how these can be estimated
ii. Identify the relevant preliminary items for a project
iii. Prepare a complete estimate for Preliminaries for a project
Introduction
In general, the preliminaries section of a bill of quantities for a specified project relate
to expenses incurred during construction which will not easily fit into any of the other
trade sections when building up unit rates. They relate to works required for the entire
project but nor necessarily associated with any particular work section or any
particular aspect of a project.
Session 1-5 Preliminary ItemsLearning outcomes
By the end of this session, you will be able to:
i. Identify the different items and activities which make up “preliminaries”
v. Understand how preliminary items are handled during estimating
In the Ghanaian construction industry, some of the common items which constitute
“preliminaries” are as follows:
1. Description of the works and particulars of the work.
2. Visit to the site
3. Access roads to the site.
4. Setting out of the works
5. Competent surveyor and any surveying equipment required.
6. Temporary buildings
7. Programme of works
8. Handing over of the completed works
9. Antique items
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10. Photographs showing the progress of works
11. Office for consultants and the clerk of works
12. Connection of temporary water to the site
13. Connection of temporary telephone facilities for the site office
14. Temporary lighting for the works
15. Contractor’s supervision
16. Resources, labour, materials and plant for the works
17. Provision of general transport for the works
18. Small tools and equipment required
19. Scaffolding
20. Provision of samples of materials required for the works
21. Ordering of materials
22. Testing of materials
23. Checking of schedules and drawings
24. Record keeping
25. Protection of the works
26. Shoring and strutting of the works
27. Protection of persons and property
28. Insurance against injury to persons on site
29. Insurance of the works
30. Watching and lighting of the site
31. Overtime costs
32. Prevention of nuisance
33. Prevention of fly tipping and spoil dumping
34. Health, safety and welfare of workmen
35. First aid box
36. Sanitary accommodation / restroom
37. Making good damage to roads and streets
38. Employer’s signboard.
39. Cleaning up of site
40. Disposal of water away from the works
41. Prime cost and provisional sums
42. Nominated suppliers
43. Nominated sub-contractors
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44. Attendances required for the works
45. Builders’ work
46. Contingencies
47. Preamble clauses
48. Bid securities and bid bonds required
This list of preliminary items is by no means exhaustive. Other items may be added
where necessary. It must also be pointed out that whilst most of these will be required
for most projects, not all these items listed above will necessarily be present on all
projects. Therefore the estimator’s discretion should be used whenever necessary.
There is a tendency for some contractors to simply put in a lump sum for
preliminaries. However, there is a danger that a lump sum may be an inaccurate
representation of all the works which make up the preliminary items. Where the lump
sum put in for preliminaries exceeds what is required, it may render the resulting
estimate non-competitive. This may eventually affect the contractor’s chances of
winning the project adversely. It is therefore advisable that wherever items which
form part of preliminaries can be calculated or where a close estimate can be
obtained, this should be used.
It must be pointed out too that not all the items listed above will be required in all
projects. In some cases, some of the listed items in the list above may not apply and
will therefore not be priced. There are also some items in the preliminaries section can
be estimated without the need for any complex computation. However, it should be
stressed that some of the items which form part of the preliminaries section are very
important and should be considered in nearly all estimates. Examples of the more
common ones include water for the works, electricity for the works, bonds and
securities, insurance for the works etc. these are a common feature of most bills.
In the next session, we will take you through how to prepare estimates for some of the
sections which can be easily computed.
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Session 2-5 Pricing StrategyLearning outcomesBy the end of this session, you will be able to:
i. Identify the main components which make up the total cost of preliminary itemsii. Prepare a complete estimate for Preliminaries for a project
In general, preliminary items are considered on the basis whether they are time-
related or otherwise. The main components which make up the total cost of
preliminary items are usually as follows:
i. Cost of bringing and installation to site and / or erection as a fixed cost, X;
ii. Utilization and maintenance cost as a time-dependent variable cost, Y; and
iii. A fixed cost, Z, for removal and making perfect.
We will illustrate these with a few worked examples of preliminary items. By their
very nature, preliminary items tend to vary depending on the nature and
characteristics of the project under consideration. We can therefore not present a set
of comprehensive worked examples representing all possible preliminary items. These
worked examples are meant to simply illustrate the principles used when estimating
for preliminary items. We will focus on some of the more commonly occurring
preliminary items.
Worked out Examples for PreliminariesItem 1: Estimating for Description of the works
“Description of the works” gives general information on a project with regards to the
type of structure(s), the volumetric content, area on plan, roof form, finishes, project
location and expected mode of completion on projects involved until completion.
Generally this should not involve any expense to the contractor and hence this item is
not normally priced.
Note: Description of works is quite distinct from the signboard which also describes
the project but involves some expenses.
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Item 2: Site Visit
Generally, the time spent by the estimator and contractor’s manager is allowed for in
the general overhead cost. However other expenses relating the site visit are priced as
show in table 5.1 below.
Table 5.1 Pricing of site visit
Fixed Cost X
GH¢
Variable Cost
Y GH¢
Fixed Cost Z
GH¢
i. Vehicle for trip. Say 2 days
@ GH¢100.00200.00 - -
ii. Hotel and other incidentals
@ GH¢ 15.00 a day per
person for 3 persons for 3
days
135.00 - -
iii. Stationary 20.00 - -
Total 355.00 - -
Overall Total GH¢ 355.00
Item 3: Access Roads
These are highly dependent on the site conditions and the available infrastructure. But if it
becomes very necessary to construct temporary roads, then the total expenses to be computed
should cover the following:
i. Fixed cost ‘X’ for initial construction
ii. Variable cost ‘Y’ for maintenance
iii. Fixed cost ‘Z’ for removal and leaving perfect/cleaning up.
Item 4: Setting Out
The following items which constitute general supervisory labour: Site Agent, General
Foreman, etc, engaged on this are covered under the project overheads. The remaining cost is
estimated as follows:
Use a profile girth of 2(L + B + 2)m where L and B are dimensions of the least
rectangular enclosure of the building. Hence for a building of 20 x 25m on plan, the
required profile girth = 2(20 + 25 + 2)m = 94m
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Material:
i. Using 50 x 50 x 100mm sawn redwood pegs at 1.0m centres would require
94/1 + 1 = 95pegs
Add 10 for waste = 10
A. Total no. of pegs = 105
B. Cost of 105 pegs @ GH¢ 1.00 GH¢ 105.00
ii. Using 25 x 150mm Wawa as profile board
Length required = 94.0m
Add 10% for waste = 9.4
C. Total length = 103.4m
D. No. of 3.6m length, 103.4/3.6 = 28.7
use 29 length @ GH¢ 15.00 GH¢ 435.00
c/fwd GH¢ 540.00
iii. 75mm long wire nails used at 5/m girth
Work up to 0.033kg/m
Weight required will be 94 x 0.033kg
= 3.1kg
Add 10% for waste = 0.3
Total weight 3.4kg
But buy 4kg @ GH¢1.00 GH¢ 4.00
Sub-total for materials GH¢ 544.00
Material cost/m girth GH¢ 5.79/m
Using a carpentry gang of 2 carpenters and 2 labourers with a daily gang output of
100m at a rate of 2(8 + 6) = GH¢ 28.00
Labour cost/m GH¢28/100 = GH¢ 0.28
Total erection cost/m girth for materials and
labour will be (5.79 + 0.28) = GH¢ 6.07
(this becomes the fixed cost ‘X’ for erection)
The maintenance cost/m is time dependent and allowing
GH¢ 0.01/month for the first 3 months of the 12 months
contract gives GH¢ 3.36
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(Such setting out boards are removed after substructure works)
This becomes variable cost ‘X’
For the cost of profile removal, disposal and making good the
site, allow 1.5 times erection labour cost as fixed sum ‘Z’ i.e. 1.5 x 0.28 GH¢ 0.42
Total cost/m girth GH¢ 9.85
Expenses on the surveyor’s team and their equipment will be covered under item 5.
Item 5: Competent Surveyor and Equipment
For general building works, such expenses are allowed for in the overheads. But
where specialist surveying services are required, the duration of the surveying team’s
involvement must be estimated. This is a time-related item and from the computation
of the all-in-rate for the surveyor and his team members on the projected duration of
the works, the cost can be estimated.
For example, a month’s total duration for 3 man team earning 3 x GH¢10.00 all-in
monthly requires
3 x GH¢ 150.00 = GH¢ 450.00
For example, add GH¢ 20.00/month for 1 month = GH¢ 20.00
Total cost for item = GH¢ 470.00
Item 6: Temporary Site Building
The site layout shown in the site visit report and the firm’s policy on such temporary
buildings would help identify the type and space allocation required. With this, cost of
erection and furnishing can be built up from historical records as in the following example for
a large project:
i. Office, conference and drawing rooms – 60m2 floor
area of timber on raised platform at GH¢ 40.00 = GH¢ 2400.00
ii. Construction of stores 20m2 at GH¢ 120.00 GH¢ 240.00
iii. Canteen: 30m2 at GH¢ 30 GH¢ 90.00
iv. Workshops and toilet 28m2 at GH¢ 20 GH¢ 560.00
v. Sheds: 40m2 at GH¢ 30.00 GH¢ 120.00
= GH¢3,410.00
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vi. Furnishing:
Furniture GH¢ 500.00
Stationary GH¢ 500.00
Office Equipment GH¢ 2000.00
Fridge GH¢ 500.00
Air Conditioner GH¢ 2,500.00 = GH¢ 6,000.00
Total erection and furnishing GH¢ 9,410.00
Utilization and maintenance for 12 months
at GH¢50.00/month GH¢ 600.00
Removal and leaving perfect at 33% of erection
cost 1/3 x 3,410 GH
¢1,136.67
Total expenses = GH¢11,146.67
Item 7-9: Programme of works, Handing over of the completed works and Antique items.
These are normally not priced but deemed to be covered in overheads.
Item 10: Progress Photograph
This may be a lump sum based on, say a set of 5 snaps every 2 months for the contract period
of any 12 months.
Hence no. of snaps required will be = 5 x 12/2 = 30
Cost of 30 snaps @ GH¢ 2.00 = GH¢ 60.00
Item 11: Office for consultants and clerk of works
This item has already allowed for in the computation of item 6(temporary buildings).
Item 12-14: Temporary Water or Telephone or Electricity for the Works.
The cost constituents for water are:
1. Bringing and storing the water comprising:
i. Pipe works including excavation at
GH¢ 2.00/m for, say 100m distance = GH¢ 200.00
ii. Fittings at an average of 50% of (i) GH¢ 100.00
iii. Block storage tank 4m3 at GH¢ 6.00 GH¢ 24.00
iv. Labour using 2 plumber gang days @ GH¢ 10.00 GH¢ 20.00
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v. Connection to mains + recording meter statutory
charges by GWSC currently (March 2008) rate GH¢ 100.00
Total fixed cost ‘X’ GH¢ 444.00
2. Utilization and maintenance allowance of GH¢ 5.00/month
for contract period of 12 months GH¢ 60.00
3. Removal and leaving perfect allowance of 50% installation
labour 50% of GH¢ 20.00 GH¢ 10.00
Total cost GH¢ 514.00
Item 15: Contractor’s Supervision
This is a good example of time related items. It covers the expenses on general site
staff that have not been allowed for elsewhere in the preliminaries unit. It starts from
the preparation of the outline works programme to determine the projected contract
period and then setting out the site organization structure. The latter is extracted from
the project’s general staff and the duration of their services during the projected
contract period. The data so collected should then be tabulated as shown in table 5.2,
to calculate the contractor’s cost.
Table 5.2 Calculation of contractor’s supervision cost
Designation No.Time on Project
(months)
All-in-rate (months)
GH¢Total Cost
Site AgentGeneral ForemanGeneral ArtisanSite Records ClerkStorekeeper Time-KeeperTypist Watchman
11211113
1212101212121213
18.0012.0011.008.007.006.006.005.00
216.00144.00220.0096.0084.0072.0072.00195.00
Total Cost GH¢ 1099.00
Item 16: Resources, labour, material and plant for the works
This item is not priced.
Item 17: Provision of general transport for the works
This is expected to be in the form of, say a Pick-up vehicle and allowance is made as
follows
i. Fixed cost for provision of vehicle comprising:
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Daily all-in-rate of vehicle, say 0.0035 of purchase
price of GH¢ 25,000.00 GH¢ 87.50
Daily all-in-rate of driver, say GH¢ 15.00
Total fixed cost GH¢ 102.50
Hence fixed cost/month GH¢ 102.50 x 27 GH¢ 2767.50
For contract period of 12 months x 12
GH¢ 33,210.00
It should be noted however that the item has no allowance for removal and making
perfect after completion.
Item 18: Small Tools and Equipment Provision
Ideally, a comprehensive list of small tools and equipment envisaged for the project
could be prepared and priced accordingly at rates that allow for expected price
increases. This might include such major items as cranes and dumpers and minor ones
like shovels and pick-axes. However analysis of local historical site cost data
indicates that where no heavy equipment like cranes, central batching plant and their
likes are needed, an allowance of 0.8% of cost of works has been found reasonable.
Heavy equipment should be estimated for in terms of the costs of:
i. Bringing to the works and installation including its operator’s wages
ii. Utilization and maintenance
iii. Removal and making good
Item 19: Scaffolding
In general, ordinary buildings up to 3.0m high do not require any special scaffolding.
From historical data, 0.1% of cost of works appears to be a reasonable figure. Thus,
an allowance of 0.1% should be made for scaffolding for such buildings. Buildings
above the 3.0m high up to about 12m high, require these and timber scaffold of the
horse type shown in Figure 4.1 is normally provided
Solution
Analysis of local site data indicate the following resources input per meter perimeter
of building requiring scaffolding for external surface work at elevations up to 3.5m
high. This is for erection only and subject to 12 repetitive uses.
i. Material utilization of 0.12m3 sawn hardwood and 0.25kg of 75mm wire nails
146
ii. Labour input of 0.20 carpenter gang days
Removal and making good cost is in the region of 1.5 times labour cost for erection.
These estimates increase by 40% for subsequent 1.5m increase in height up to 12m
where specialist attention would be required. In the latter case, tabular scaffolding
would be required and enquiries for quotations for purchasing, erection and removal
would be necessary for first users to facilitate further pricing using historical data as
basis for subsequent uses. This is resorted to because all such tubular scaffolds where
required would have to be imported in the first instance.
Figure 5.1 Horse type timber scaffold at 1500mm centres
Item 26: Shoring and Structuring required
The two types commonly found at local sites are 50 x 100mm sawn hardwood frame
structure with either 25 x 300mm hardwood vertical boarding of corrugated metal
sheet cladding along the site boundary as shown in Figure 4.2.
Figure 4.2a Site fence with timber frame and corrugated metal sheet cladding.
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5 011 50
11 505 0
5 0
57 557 5
3600
mm
A
C
C
1000 mm
3 No. of 50 x 100 x 1100 beams
3 No. of 50 x 100 x 3600 boarding
2 No. of 50 x 100 x 3600 posts
2 No. of 50 x 100 x 3600mm brace
A
Figure5. 2a Site fence with timber frame boarding
Figure 5.2b
Details from analyses local site data on timber shoring of this type show the following
as cost per metre girth of shoring.
i. Materials:
Timber input utilizing 0.025m3 for frame work
Timber input utilizing 0.040m3 for cladding.
Nails input utilizing 0.08kg of 75mm long for frame work.
Nails input utilizing 0.06kg of 50mm long for cladding.
Creosote preservation utilization at 0.10 gallon.
ii. Labour:
Framework at 0.05 carpenter gang day.
Cladding at 0.40
Preservative brushing at 0.01 labourer day
iii. Maintenance cost achieved at local sites per month is of the order of 1.5% of total
erection cost of shoring:
iv. Removal and making good cost is in the region 1.5 times total erection labour cost.
Item 25: Protection of Works
This is allowed for in the trade units of the bill. If specific requirements are necessary,
this can be priced accordingly on the cost of provision maintenance and removal.
148
50 5050
150150 150 150
15001500
2 No. 50 x 100 horizontal beamsat 1000mm centres 50 x 100mm post at 1500 centres
Corrugated metal sheet cladding
50 x 100 horizontal beam
25 x 150mm boarding 50 x 100 post
Item 27 and 28: Protection of persons and property / Insurance against injury to persons
on site.
These are usually not priced as part of the preliminaries since they would have been allowed
for in the workmen’s compensation insurance in building up the all-in-labour rates.
Item 29: Insurance of the work
This is value-related and hence depends on the contract sum with the premium paid in
the order of 0.2% of contract sum. The premium paid is usually re-imbursed in full
without mark-up for overhead expenses which must be allowed for elsewhere. Details
must be cleared from reliable insurance firms concerned.
Item 30: Watching and lighting have been allowed for in computing expenses for items
12-15.
Item 31: Overtime and Completion
Local climate conditions and project resources supply situations are such that the need
for overtime work to keep to works schedule cannot be ignored. Reasonable
allowance for this is in the region of 1.5 days per month operative for a minimum of
10% contract period.
Hence for a 12 month contract with anticipated labour force of 60 operatives, due
overtime should be:
1.5 x 12 x 0.10 x 60 = 100man-days
At 1.35 times normal time = 135 man-days (normal)
Use 135 man-days at GH¢ 6.00 = GH¢ 810.00
Item 32 and 33: Prevention of nuisance / prevention of fly tipping and spoil dumping.
$These are not normally priced except where very specific precautions are required. An
example is an area where there is a high incidence or potential for their occurrence. In such
cases, detailed estimates can be prepared after thorough examination of the situation.
Item 34: Health, Safety and welfare of workmen
This item is allowed for in computing all-in-labour rates.
149
Item 35: First-Aid Box.
This is generally of 13mm thick plywood of 300 x 300 x 600mm size with door,
hinges and lock. It is stuffed with pain-killing and other first-aid drugs. Pricing is
pursued as follows:
i. Provision of box at fixed cost;
ii. Utilization of drugs and replenishing stock; and
iii. Removal expenses.
Item 36: Sanitary Accommodation / Restroom
This is allowed for in item 6 (temporary buildings)
Item 37: Making Good Damage to Roads and Streets
Whilst in principle this item needs to be included, in practice, it is hardly enforced and thus
most contractors do not price this.
Item 38: Employer’s Sign Board
This is allowed for in terms of:
i. Cost per month for provision and erection;
ii. Cost per month for maintenance; and
iii. Removal expenses
Item 39-47
These cover details of project information and are normally not priced. In the case of
items 41 and 46, specific amounts to be directed by architect and their inclusion in the
sub-total must be noted.
Item 48: Bid Securities and Bonds
The premium charged for bid securities and bonds is usually at the rate of 0.5% of
contract sum. The associated on-cost is also about 0.5%. Thus the total allowance for
bid securities and bonds is usually of 1% of the contract sum.
Self-assessment questions
i. Identify 10 items which comprise preliminaries when preparing an estimate.
ii. Which of the items listed in (1) will incur an expense to the contractor and
which of them will not?
150
End of Unit Assessment
i. Explain the terms “all-in rate for labour” and “all-in rate for plant”
ii. In computing the “all-in rate” for labour and plant respectively, what are
the respective sets of constituents which are considered?
iii. Explain the pricing strategy which is followed when pricing preliminary
items.
iv. Make a list of as many preliminary items as you can. Briefly describe how
the cost for each of these is computed.
151
Unit 6 PRICE ANALYSISUnit objectivesBy the end of this unit, you will be able:
i. Explain the different pricing strategies used by contractors when pricing their estimates
ii. Explain the term “bidding strategy”iii. Explain how “risks” are managed through the contract
SESSION 1-6 Pricing manipulationsLearning outcomesBy the end of this session, you will be able to:
i. Identify different pricing strategies which may be employed by contractors to achieve their financial objectives
ii. Explain the terms: “front-end loading” and “unbalancing of tenders”.
The s-curve suggests that a typical building project does not become self financing
until it is near completion and in addition, requires the contractor to provide
considerable amounts of capital in both working capital and long-term capital. As cost
is associated with the provision of capital, contractors often seek ways of improving
their cash flow at the initial stages of project.
The two common methods which are often used by contractors to improve their
cashflow during the early stages of a project are:
i. Front-end loading; and
ii. Unbalancing of Tenders.
Front-end loading
It is generally expected that project costs rise as the percentage of bill items covered
increases (fig.6.1). Front-end loading occurs when items of work which the contractor
expects to be executed early in the project have prices which contain
disproportionately large content of overheads and profits and items of work to be
executed in the later stages of the project have their prices reduced accordingly. This
situation is of further benefit to the contractor due to the time value of money. The
client’s quantity surveyor should generally be able to detect if front-end loading has
been used by a contractor through rigorous checking. Table 3.3a and fig.3.3b illustrate
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the cashflow for a project without front loading and one that uses front loading
respectively.
80% of the value of work will be 20% of Bill items
Fig 6.1 Graph showing percentage of project costs against percentage of bill items
Table 6.2a Cashflow without front loading
Item Quantity Unit Mark-up Bill RatePrice in
GH¢
Excavation
Concrete
Block
Proof
1000
100
500
200
5
50
50
25
10
10
10
10
5.5
55
55
27.50
5500
5500
27500
5500
44000
Total Cost = GH¢40,000
Total mark-up = GH¢ 4,000
Total GH¢ 44,000
Table 6.2b Cashflow when front loading is used
Item Quantity Price in GH¢
ExcavationConcrete
BlockProofTotal
1000100500200
75007500230002000
40,000
Unbalancing of TendersThis normally occurs where the contractor expects variations in the contract. In this
case the contractors will price low those items they expect to be increased. Again
153
100
100 % of Bill Items20
systematic checking by the consultants Quantity Surveyor acts as a restriction upon
such manipulations.
Contract StrategiesThe development of an appropriate contract strategy requires consideration of:
i. Effective organizational structure to control design and construction and their
influences;
ii. Selection of the contract, extent and sequences of work packages;
iii. Choice of type of contract;
iv. Method of contractor selection; and
v. Selection of method of preparation of Tender documents.
Adopting the most appropriate contract strategy can help save project costs. Research
suggests up to 5% of project cost savings by using the most appropriate type of
contract.
2-6 Bidding strategy, contract strategy and risk managementLearning outcomesBy the end of this session, you will be able:
i. Explain the term “bidding strategy” and identify some useful strategies used in the
bidding process
ii. Explain the main considerations involved in contract strategies
iii. Explain how risks associated with a construction project can be handled using the
appropriate contract strategies
2-6.1 Bidding Strategy
Bidding strategy constitutes a set of arrangements which bidders put in place in order
to enhance their chances of winning more projects which are tendered for. To enhance
the chances of success, a contractor, or specialist trade contractor, will formulate aims
and a framework to win contracts at prices which will produce profitable work. An
evaluation of tendering performance itself is not enough to meet this aim, because
although a contract may be won with a reasonable anticipated profit, it may be found
that the particular type of work seldom achieves or improves margins when the final
results are known. A bidding strategy must recognise the need to decline invitations to
154
tender for work or procurement arrangements which fail to meet the organization’s
objectives. When contractors set tender margins, they consider all the points discussed
in the Final Tender Review meeting. In addition, they may be influenced by tenders
submitted by their competitors and budgets set by clients. It is clear that neither of
these criteria will help achieve optimum margins in a highly competitive market. It is
difficult to avoid low margins where competition is strong but, if prices fall below
economic levels, it is time to look for other markets where the company can employ
its strengths more effectively.
Developing a Successful Bidding Strategy
The first step is the development of a probability of winning if the company bids at a
certain mark-up. E.g. if you bid at 15% you have 40% chance of winning. The second
step is the setting up of optimum mark-up which in the long term will produce the
maximum profit. It is assumed that the contractor first estimates his costs and then
adds a mark-up to cover profits and company overheads. It must be noted that there
exists a relationship between the tender sum and the probability or chance of winning
the contract.
2-6.2 Risk Management
Risk management involves identifying what the risks are, taking appropriate efforts to
control them and taking the necessary actions to effectively mitigate the likely effects
of the identified risks. The extent of risk and uncertainty associated with construction
projects are the important things to consider when it comes to estimating, establishing
pricing policies and contract strategies. In dealing with risks, a systematic process
needs to be followed.
Factors to be considered in managing risks include:
1. The extent of risk; and
2. Uncertainties associated with the cost of projects
The risk involved will form the basis of making pricing policies and contract
strategies.
Risks can also be categorized into two: recognized risks and assumed risks.
155
156
Risks associated with construction
We can identify at least 6 types of risks in construction. These are:
1. Risk associated with Construction
- These include inclement weather, accidents and acts of God
2. Physical Risks
- These include those risks due to surface conditions
3. Performance Risks
- These cover the risks associated with workmanship and materials
4. Legal and Construction Risks
- These are dictated by the form of contract and the legal system of the
nation
5. Economic Risks
- Examples of these include strikes, tax rate changes, inflation
6. Political and Public Risks
- These are the risks that come as a result of political and social pressure e.g. public
disorder, war, labour union related problems, religious or racial factors
Sources of Risk
Some of the common sources of risk in construction are:
1) Technical factors;
2) Environmental factors;
3) Economic factors – inflation;
4) Contractual;
5) Productivity of labour and subcontractors etc; and
6) Establishing accuracy.
Systematic risk management
Systematic risk management involves taking measures to mitigate the impact of
identified risks on a project. This can be achieved through the following stages:
Identification of risk sources;
Assessment of their effects (risk analysis);
Development of management response to risk; and
Providing the residual risk in the project estimate.
157
Fig 6.2 Risk assessment framework
No
No
158
Step 1Know the Contract
Step 2Risk Identifiction
Step 3Impact Assessment
Step 4Risk Assessment
Is Maximum Possible Loss Service?
Yes
Analyze Factors Affecting possible Losses Prepare your Tender
Estimate using the Firm’s Normal mark up percentage
Can some of the Losses be Transferred or Controlled?
Yes Increase your mark up to cover the Losses
Does Risk Pose a Problem?
Eliminate
Source of
Losses
Transfer
Risk to Sub-
contractors
Insurance Set a site
Control
Process In
Motion
159
No Yes TenderDo Not Tender
Table 6.3 Risk assessment worksheet
Risk Assessment Worksheet No:
Project: Date:
Possible RiskTarget
Quality or Amount (A) Expose (S)
Assessment of Impact
Percent of Impact (B)
Prob. Of Risk Occ. (C)
Expect. Value (D) of Risk
Substructure
Superstructure 1.
2.
3.
Other Risk Not Associated with any work Section.1.
2.
3.
4.
HighMediumLow
HighMediumLow
HighMediumLow
High MediumLow
HighMediumLowHighMediumLowHighMediumLowHighMediumLow
Total Expected Value of Risk = GH¢ (A*B*C) = GH¢ (D)
160
In some cases, the extent of risk associated with a project will lead to questions as to whether the estimating process should proceed unto bid submission or not if an appropriate risk management strategy cannot be found. Fig 6.2 and fig 6.3 shows a risk assessment worksheet which can be used to assess the extent of risk and the action required to be undertaken.
Factors to consider in choosing risk transfer policy through contract strategy:Some suggested factors to consider when choosing an appropriate policy for risk
transfer using contract strategies are as follows:
i. Which party can best control events that may lead to the risk occurring;
ii. Which party can best control risk if it occurs;
iii. Whether or not it is preferable for the client to retain an involvement in the control of
risk;
iv. Which party should carry the risk if it cannot be controlled;
v. Premium to be charged for the risk; and
vi. Whether risk if transferred may lead to the possibility of risk of a different nature
being transferred to client control.
Self assessment questions
i. What happens usually within the contractor’s organisation after the final
estimate has been agreed?
ii. Once a winning bid has been selected, what follows?
iii. Explain the term “bidding strategy”
iv. Explain what adjudication is.
v. Explain what considerations are made in arriving at the adjudicated figure
vi. Explain how price fluctuations are catered when preparing an estimate
vii. Give some examples of construction risks
END OF UNIT ASSESSMENT
i. List the various stages which make up the estimating and bidding process.
ii. Explain the terms risks and risk management in relation to construction
projects. Identify the different types of construction risks
iii. Describe how pricing policies can be utilized to offset project risk
iv. Describe the types of price manipulations usually used by contractors
when estimating for projects.
161
References and Bibliography 1. Valence, G de and Huon, N. (1999) Procurement strategies in Best, R. and
Valence, G de (Eds) Building in value: pre-design issues. Arnold Publishers, London.
2. McGeorge, D. and Palmer, A. (1997) Construction Management New Directions, Blackwell Science, Oxford
3. Turner, A. 2nd Edition 1997: Building Procurement, Macmillan Press Ltd., London
4. James Franks 3rd Edition 1998: Building Procurement Systems – A Client Guide, The Chartered Institute of Building, Ascot.
5. The Aqua Group and Bagnall, B. (1999) Tenders and Contracts for Building, Blackwell Publishing, Oxford
6. Chartered Institute of Building 1992: Code of Practice for Project Management for Construction and Development, CIOB, Ascot
7. John F. Woodward 1997: Construction Project Management – Getting it right first time.
8. Harris, F and McCaffer, R. (2001), Modern Construction Management 5TH EDITION Blackwell Publishing, Oxford
9. Hackett M, Robinson I & Statham G, (2007) Aqua Group Guide to Procurement, Tendering and Contract Administration Chapters 3,4,8-15, Blackwell Publishing, Oxford
10. Amoah Mensah, K., (1995), Manual for Estimating, Parcom Ghana Ltd, Kumasi
11. Ashworth, A. & Hogg, K., (2007) Willis Practice and Procedure for the Quantity Surveyor, Blackwell Publishing, Oxford
162
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