ESTIMATES

Estimates are discussed in the Chapter-XIV of

mechanical code.

Detailed estimates for works to be under taken is

mandatory.

Definition

It is an art of finding the cost, which likely to be It is an art of finding the cost, which likely to be

incurred on the proposed work before it is

actually undertaken

Thus it is the calculation of a probable cost of work

before the execution starts.

All proposals for the construction of new work or purchase of new or replacement of the existing assets should be

presented along with proper justification, in the form of

Abstract Estimate supported by Rate proof, rate analysis and

Rate of Return in the case of new assets for scrutiny and

vetting by the Associate Finance.

• Preparation of Estimates, financial vetting of the same and sanction etc. shall all be done as far as possible on line on the computer system.

• 803. Detailed Estimates should be prepared in Form No. M.802 and shall be sent to the Workshop Accounts Officer for scrutiny and vetting.

Thereafter, the vetted estimate is processed for sanction of the processed for sanction of the competent authority.

• 804. Estimates for Rolling Stock additions & Workshop M&P Items for Workshops & Sheds

Types of works

1) RSP WORKS ALLOTTED BY RAILWAY BOARD

2) MANUFACTURING AND 2) MANUFACTURING AND CONVERSION WORKS

3)DEPOSIT WORKS FOR OUT SIDE PARTIES

RSP works allotted by Railway Board to all Indian Railways every year.Indian Railways every year.

Accordingly Hqtrs advises to the workshops to plan and undertake the works.

1. Railway Board vide Lr.No.2013/M(N)/60/1 pt. dt.31.01.2013 and

CME/SC office letter No.M.248/WS/RSPW/2013-14/476 dt.07.02.2013

ExampleExample

1. For the year 2013-14

2. Railway Board allotted Re building of BOXN wagons for CC+6,CC+10T loading Vide pink Book No. 819 at a cost of 5Lakhs per wagon.

� Other departments like stores , engineering RE of the

railways request the work shop to carryout manufacture of

required components and conversion of Rolling stock.

� For which they have to submit a requisition in the form of

work order.

� 1) Manufacturing of components for particular work

� 2) Conversion of Vacuum brake to Airbrake stock.

� 3) Conversion of BOXN into Sleeper Carriers.

� 4)Test wagons for EIMWB calibration

� Preparation and sanction of estimate is same lines as

RSP works

• 1)Structural repairs of BOBRN NTPC/RDM wagons.

• 2) POH repairs of BOBR(NTPC) wagons.

• 3) M/S.Andhra Sugars Ltd.• 3) M/S.Andhra Sugars Ltd.

• 4)M/S.Rajashree cements.

• 5)M/S.Vasavadatta Cements.

• Framing of deposit estimate is different from other estimates since the cost of estimated work is required to be deposited by the party prior to commencement of work.

• The following additional elements on par with RSP estimates are significant.

Important ELEMENTS

1)Required man power is reckoned in terms of Man hours.

2) List of Materials required for the work.work.

3) Hourly rates of technical staff (circulates by Accounts department)

4) Latest material cost for both steel and components (collected through latest PO ‘s or from Book average rates(BAR) or Opening balance ledger maintained by stores every quarter )

1) Man hours Required for the work multiplied by Hourly rates

1) Materials required for the work multiplied by Rates (P.O rates or BAV)

Additional costs to be added

to prime costs

1) Labour On Cost and Stores On Cost to be added to prime costs.

Labour on cost: Certain expenditure incurred

which cannot be identified on par with direct charges is termed as on cost i.e indirect expenditure or over heads in addition to expenditure on labour and materials i.e incurred on jobs and is accounted for.

2) Total Labour cost for the work=

Labour cost multiplied by % age of labour on cost

3) Total Material cost =

Material cost multiplied by % age of Stores on cost (which is calculated on labour and to cost (which is calculated on labour and to be added to material cost)

4) Total cost = Labour cost+Materialcost

Administrative approval for RSP

Since RSP works are communicated by Railway Board, no separate administrative approval is required to undertake the

work.

Local administrative decision is taken to frame the mode ofexecution of the work.execution of the work.

Sanction of detailed estimate. After local administrative decision detaialed estimates are framed and sent for Financial verification of WAO.

should be as per 2a (ii) of part A of SOP for workshop activities. The present powers are as under

JA grade (Dy.CME) is empowered to sanction detailed estimate up to the value of 2 Crores

SAG(CWM) is empowered to sanction detailed estimate up to the value of 15 Croresthe value of 15 Crores

HOD(CWE) is empowered to sanction detailed estimate up to the value of 15 Crores

PHOD(CME) is empowered to sanction detailed estimate up to the value of 50 Crores.

GM : Beyond 50 crores up to 100 crores

Administrative approval for Deposit Works

The firm should approach Head quarters with proper request to undertake the deposit works such as POH, ROH, Sick line repairs and yard certification.

After through examination by HOD including CWE, CRSE and COM the proposal will be forwarded to CME and COM for proper administrative conceptual approval.proper administrative conceptual approval.

Administrative decision from competent authority will be communicated from Hqrs.

• The deposit estimate framing is similar as RSP estimates, but the following additional charges are added.

• 1)Freight charges on material @7%

• 2)Storage and supervision charges on stores @ 10%

• 3) General charges on both labour and stores @10%

• 4)Contingency on both labour and material @3%

• 5)Profit @10%

• 6)Departmental charges on both labour and stores @10% @12.5%

• 7)Service Tax @ 12.36% on main labour and material charges.charges.

• (Ref:- for service tax Rly Bd.Lr.No.2004/TG/-IV/39/24/Service tax pt iii dt.26-06-2012)

After administrative decision, detailed

estimates are framed and sent for

Financial verification of WAO. Financial verification of WAO.

After proper observations and

clarifications obtained form the CWM

unit finance vetting will be

communicated.

THANK YOUTHANK YOUA. Rama Krishna.AWM