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Build-Up Rates in Construction Cost Estimation

This document discusses the components of building cost estimates and rates. It explains that rates are comprised of the total costs of work, materials, labor, plants/equipment, and overhead/profit. Direct costs include materials, labor, and plant/equipment costs. Materials make up 40-60% of construction costs and include basic purchase costs as well as transportation, handling, storage, and wastage. Labor costs consider wages, bonuses, and overtime pay that vary by trade and experience. Plants/equipment can be owned, rented, or hire purchased. The document also provides exercises to estimate costs for specific building components and tasks.

Uploaded by

shahiransalleh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Topics covered

  • Concrete Costs,
  • Cost of Purchase,
  • Components of Cost,
  • Supplier Selection,
  • Interest on Loans,
  • Bookkeeping,
  • Maintenance Costs,
  • Overhead Costs,
  • Fuel Costs,
  • Brickwall Construction
19K views22 pages

Build-Up Rates in Construction Cost Estimation

This document discusses the components of building cost estimates and rates. It explains that rates are comprised of the total costs of work, materials, labor, plants/equipment, and overhead/profit. Direct costs include materials, labor, and plant/equipment costs. Materials make up 40-60% of construction costs and include basic purchase costs as well as transportation, handling, storage, and wastage. Labor costs consider wages, bonuses, and overtime pay that vary by trade and experience. Plants/equipment can be owned, rented, or hire purchased. The document also provides exercises to estimate costs for specific building components and tasks.

Uploaded by

shahiransalleh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Topics covered

  • Concrete Costs,
  • Cost of Purchase,
  • Components of Cost,
  • Supplier Selection,
  • Interest on Loans,
  • Bookkeeping,
  • Maintenance Costs,
  • Overhead Costs,
  • Fuel Costs,
  • Brickwall Construction
  • Cost Estimating: Introductory lecture slide on cost estimating, focusing on rates and their constituents.
  • Concept of Estimating: Recaps key concepts learned previously about client costs and purposes of estimating.
  • Components of Building Cost: Describes the various elements involved in building costs, including materials, labour, and external work.
  • Rates & Its Constituents: Explains what rates are and discusses the total costs of work including profit and overheads.
  • Direct Costs: Covers direct costs in construction such as materials, labour, and equipment expenses.
  • Costs of Materials: Details the different costs associated with construction materials, including transportation and storage.
  • Procuring Materials: Discusses key considerations in procuring materials, such as quality, quantity, and time of usage.
  • Costs of Materials - Exercise: Contains practical exercises to calculate material costs in construction scenarios.
  • Cost of Labour: Discusses various costs related to labour including wages, bonuses, and indirect costs.
  • Costs of Plants & Equipments: Covers costs related to the equipment and machinery used in construction projects.
  • Procuring Plants & Equipments: Discusses different methods of procuring construction equipment, including buying and leasing.
  • Costs of Plants & Equipments - Exercise: Provides exercises to calculate costs associated with using construction equipment.

DDQ 2242

COST ESTIMATING

LECTURE 2
BUILD-UP RATES & PRICING
Rates & Its Constituents

CONCEPT OF ESTIMATING
Let us recap what we have learned in last lecture.

1. What is clients cost?


2. What is the purpose (or purposes) of estimating?

3. How can the cost of material be calculated


accurately?
4. Which is more significant than the other to the cost
of development; infrastructure cost or building cost?

COMPONENTS OF BUILDING COST


Building cost
Costs involved in constructing a building materials,
labour, equipments, etc

Preliminaries
Finishes
Fittings &
Furnishing

Sub-structure & Superstructure


Engineering
Services

External Work

Prime cost & Provisional Sum

RATES & ITS CONSTITUENTS


Rates?
Total costs of work + profit + overhead

Cost of
materials

Cost of
labour

Costs of
plants and
equipments

Overhead &
Profit

DIRECT COSTS
Costs of Materials
- Consist of basic cost, cost for transporting,
handling & installing the materials

Not all costs will


be included in
estimating the
work rates; for
example,

Cost of Labour
- Wages, bonus, overtime pay
- Varies based on trade skill and experience

1. Excavation
work shall only
include cost of
labour and
equipment

Costs of plants & equipments


- Hand tools (e.g. Hammer, shovel, etc) are
considered as overhead cost
- Only mechanical equipments & plants are
included in estimating the work rates

2. Paint work
only require
costs of
materials and
labour

COSTS OF MATERIALS
- 40 60% of the overall costs of construction
- Consists of;
[Link] costs (costs of purchase, acquired from suppliers
quotations)
[Link] & delivery costs (if not included in the costs
of purchase)
[Link] and storage costs
[Link] of wastage; during handling and usage, or damages or
theft of materials, etc
[Link] of miscellaneous items, such as nails for roof
installation, binders for reinforcement, and other materials
which are not measured.

PROCURING MATERIALS
Quantity

Factors of
consideration
Quality

Time of
usage

PROCURING MATERIALS - PROCESS

Selection
of
suppliers

Purchase
order

Delivery

Quality &
Quantity
inspection

Storage

PROCURING
MATERIALS
PURCHASE
ORDER

PROCURING MATERIALS - STORAGE


Storing

Safety &
security

Recording &
Book-keeping

Labelling

Handling &
care

COSTS OF MATERIALS - EXERCISE


A. Half brickwall in common bricks in cement lime mortar ([Link])
in Stretcher bond with brick reinforcement at every fourth
course m2
Information:
1. 1 m2 half brickwall = 63 bricks (including 5% wastage)
2. Mortar for 1 m2 half brickwall = 0.025m3 (including 33%
wastage)
3. Brick reinforcement for 1m2 brickwall = 3.60m (including 8%
wastage)
4. Cost of common bricks = RM0.24/No
5. Cost of mortar = RM112.33/m3
6. Cost of brick reinforcement = RM0.60/m
7. Overhead & profit = 15%

COSTS OF MATERIALS - EXERCISE


B. Reinforced in-situ concrete Grade 25 in roof beam m3
Information:
1. Concrete Grade 25 = concrete ratio [Link]
2. Cost of cement = RM10.50/bag (1 m3 cement = 28 bags)
3. Cost of sand = RM28.00/m3
4. Cost of aggregate = RM35.00/m3
5. Wastage = 30%
6. Overhead & profit = 15%

COST OF LABOUR
- Wages, bonus, overtime pay & costs of supervision
- Skilled, semi-skilled & unskilled labour
- Indirect costs such as insurance, EPF, PERKESO, provisions of
basic services for workers in the preliminaries
- Labour output?
- Labour productivity is influenced by:
a) Level of skill
b) Work
c) Experience
d) Environment
e) Motivation

COST OF LABOUR FINANCIAL INCENTIVE


Daily wages

Partnership

Work target
system

Bonus

Payment on
completed
work

COST OF LABOUR FOREIGN LABOUR

*PL (KS) : Pas Lawatan Kerja Sementara

COST OF LABOUR FOREIGN LABOUR

COST OF LABOUR - EXERCISE


A. Excavate pit to receive column bases starting from reduced
level maximum depth not exceeding 2.00 meter m3
Information:
1. Excavation work = 4.50 hour
2. Unskilled labour = RM65.00/day
3. Overhead & profit = 15%
B. 900mm x 1200mm wrought pressure treated timber standard
door - No
Information:
1. Door installation = 0.85 hour
2. Skilled labour = RM85.00/day
3. Overhead & profit = 15%

COSTS OF PLANTS & EQUIPMENTS


- Hand tools (e.g. Hammer, shovel, etc) are considered as
overhead cost
- Only mechanical equipments & plants are included in
estimating the work rates
- The costs can be included work rates especially for plants &
equipments which are used for specific job/trade = excavator
for excavation work, concrete mixer for concrete work, etc
- For plants & equipments which are generally used for various
jobs/trades, the costs will be included in the preliminaries =
tower crane, generator, etc.

PROCURING PLANTS & EQUIPMENTS


Ownership
(Purchase)

Has full control over plants


when needed can be
leased out when not used

Financial burden if not


optimise its usage
Method of
procurement

Rent/hire

Does not require any capital


investment to purchase the plants
No need for maintenance usually
done by the plants owners

Hire
purchase

Can be less efficient as the plants are most


likely have been used in other projects
Higher interest compared to
cash purchase

PROCURING PLANTS & EQUIPMENTS


Cost of purchase
Cost of
ownership

Depreciation
Interest on loan
Insurance

Ownership
Administration cost

Handling
cost

Cost for maintenance & repair


Fuel, lubricants & engine oil

Wages for the operators

PROCURING PLANTS & EQUIPMENTS

Renting plants & equipments - Plant rental rates

COSTS OF PLANTS & EQUIPMENTS EXERCISE


A. Using own excavator
*Assumption
1. Cost for excavation/hour = RM51.39
2. Output = 12m3/hour
3. Overhead & profit = 15%
B. Using hired excavator
*Assumption
1. Cost for excavation/hour = RM56.54
2. Output = 9m3/hour
3. Overhead & profit = 15%

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