L2 Build Up Rates

8/10/2019 L2 Build Up Rates

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DR SHAIFUL AMRI

FKA UTM SKUDAI

Principles of Analytical Estimating

• To analyse something is to break it down into itsconstituent parts and study each part in detail.Therefore analytical estimating involves theanalysis and costing of construction resources toproduce an estimate.

• The production of an estimate normally involvesthe calculation of unit rates i.e. the cost of asquare metre of brickwork, a cubic metre ofconcrete or a metre of skirting (as found in a Billof Quantities).



DR SHAIFUL AMRI

FKA UTM SKUDAI

• Analytical estimating is therefore the most

accurate form of estimating as each resource

and unit rate is analysed and costed

individually. This form of estimating is used for

pricing contracts with bills of quantities,

specifications and drawings or where the

contractor has measured and prepared their

own quantities of work.



DR SHAIFUL AMRI

FKA UTM SKUDAI

• Tukang

– Skilled workers; craftmen; highly paid per hour

• Kepala (Mandur)

– Leader in the subcontracted work

• General labour

• Angkatap buruh

– Rate of doing certain type of work (e.g. hour permeter3

• requires determining the number of labor

hours to do a specific task and then applying a

wage rate.

– 1 labor hour = 1 labor working 1 hour

• requires knowing the quantity of work to beplaced and the productivity rate for the

specific crew.

• The productivity rate is often expressed as a

number of labor hours per unit of work.



DR SHAIFUL AMRI

FKA UTM SKUDAI

• The productivity rates can come from a

number of sources, but the most reliable

source is historical data. The advantage of

historical data is that it reflects how a

particular company’s personnel perform the

tasks.

Productivity rate = Labor hours ÷ Quantity of work

Example of good historical data:

Type of work — 8'' × 8'' × 16'' Concrete Masonry Units

(CMUs)

Quantity of work—1,700 square feetLabor cost—RM6,987

Labor hours—170 labor hours

Productivity rate = 170 labor hours ÷ 1,700 ft2

= 0.1 labor hours per sf



DR SHAIFUL AMRI

FKA UTM SKUDAI

How to apply?

Labor hours = Quantity takeoff x Productivity rate

• The productivity rate derived from historical data is for the

average or standard conditions

• On many occasions, the project that is being bid deviates from

these standard conditions.

Adjusted labor hours = Labor hours x Productivity factor

Variables for Productivity Factor

• Availability and Productivity of Workers

– Number & skill factors

• Climatic Conditions

– Cold, hot, winds, rain, snow, etc.

• Working Conditions

• working space, storage space, high-rise etc.

• Efficiency

– averaged 30 to 50 minutes per hour



DR SHAIFUL AMRI

FKA UTM SKUDAI

• Once the average crew wage rate has been

found, it can be multiplied by the number of

labor hours to determine the labor costs

Labor cost = Adjusted labor hours x Weighted average

burdened wage rate

In addition to the actual cost of the material the

estimator must also consider:

• Transportation costs

• Unloading and Stacking costs

• Materials movement on site

• Extra Materials to compensate for:

– Wastage; Allowance in BQ; Loss in consolidation,

shrinkage etc.



DR SHAIFUL AMRI

FKA UTM SKUDAI

• “The equipment must pay for itself.”

• If the cost can be charged off to one project or

other proposed uses of the equipment, it will

pay for itself and should be purchased.

– For example, if a piece of equipment costing

$15,000 but will save $20,000 on a project, it

should be purchased

For idling plants (a few weeks):

1. What will be done with it?

2. Will it be returned to the storage/garage?

3. Is there room to store it on the project?

4. If rented, will it be returned so that the rental

charge will be saved?



DR SHAIFUL AMRI

FKA UTM SKUDAI

• Non-Mechanical Plant

– Basic items of plant including wheel-barrows,

hosepipes, spades, trestles, scaffolding, small

powered hand tools etc

– With the exception of scaffolding and one or two

other items it is virtually impossible to allocate the

cost of non-mechanical plant items to a contract,

let alone to a specific unit rate (e.g. mostly may beused on several contracts in its lifetime).


– The cost may be included in overhead charges as a

percentage, as a lump sum in the preliminaries bill

or, more accurately, on longer contracts a list of

non-mechanical plant items is prepared, costed

and included in the contract sum.



DR SHAIFUL AMRI

FKA UTM SKUDAI


– Peranca (scaffolding)

– Kain terpal (trapauline)

– Kotak pengukur (gauge boxes)

– Tangga (ladders)

– Kereta sorong (wheel barrows)

–

Perkakas (tools) – Pelentur besi (bending machine)

• Mechanical Plant

– Equipment that is required throughout the project

is included under equipment expenses, because it

cannot be charged to any particular item of work.

(e.g. material-handling JCB and forklifts.)

– Mechanical plant such as excavators, lorries,

dumpers, mixers, etc. can be very expensive.

Contractors may buy, hire or lease.

– The purchase of plant must be viewed as an

investment on which a return is required.



DR SHAIFUL AMRI

FKA UTM SKUDAI

1

• Mechanical Plants

– Lorry

– Excavator

– Bulldozer

– Concrete mixer

– Vibrators

–

Compressors – Rollers

• Possible costs

– cost of hiring or depreciation

– maintenance & repair

– fuel

– operator & labor costs



DR SHAIFUL AMRI

FKA UTM SKUDAI

• The amount of money added to the total

estimated cost of the project.

• Determined by a number of factors largely

outside the remit of an estimator. However, in

larger companies the senior or managing

estimator may be a member of the

management team. In smaller companies, theestimator may be a director. In both cases

they may make commercial decisions

regarding profit margins.



DR SHAIFUL AMRI

FKA UTM SKUDAI

1

Factors affecting profit levels are:

• Market forces of supply and demand

• Amount of competition

• Who the competitors are

• Size / Value of contract

• Risk involved in contract

• Interest rates.

A few typical approaches are listed as follows:

1. Add a percentage of profit to each item as it is

estimated, allowing varying amounts for the

different items; for example, 8 to 15% for

concrete work, but only 3 to 5% for worksubcontracted out.



DR SHAIFUL AMRI

FKA UTM SKUDAI

A few typical approaches are listed as follows:

2. Add a percentage of profit to the total price

tabulated for materials, labor, overhead, and

equipment. The percentage would vary from

small jobs to larger jobs (perhaps 20 to 25%

on a small job and 5 to 10% on a larger one),

taking into account the accuracy of the takeoffand pricing procedures used in the estimate.

• Look at the profit then discuss the risks.

• It is far better to bid high enough to cover the

risks than to neglect the risks, bid low, and

lose money. Sometimes a tendency to “need”

or “want” a job so badly that risks arecompletely ignored. If a project entails

substantial risk and profit is questionable, do

not bid.

• Remember, construction is a “business”..

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L2 Build Up Rates