Estimating, Costing, and Valuation

Estimating: Analysis of Rates, Methods, and Units of Measurement

Estimating is the process of calculating the probable cost of a work or project before it is actually executed. It is a crucial step in civil engineering for planning, budgeting, and decision-making. A good estimate helps in securing funds, comparing different alternatives, and controlling expenditure during construction. It forms the basis for tendering and contract agreements.

1. Analysis of Rates

Analysis of rates, often called 'rate analysis', is the process of determining the fair and reasonable rate for any item of work. This involves breaking down each item of work into its constituent components and calculating the cost of each component. The primary components considered are:

• Material Costs: The cost of all materials required for the item of work.
• Labour Costs: The wages of skilled and unskilled labour involved.
• Equipment/Machinery Costs: The cost of hiring or operating machinery, tools, and plants.
• Overheads and Profit: Indirect costs such as supervision, establishment charges, insurance, and the contractor's profit.

The rate of an item is typically expressed per unit of measurement (e.g., per cubic meter for concrete, per square meter for painting, per linear meter for a pipe).

Process of Rate Analysis:

To perform a rate analysis for a specific item, we follow a systematic approach:

1. Identify the Item of Work: Clearly define the item for which the rate is to be analyzed (e.g., 1:2:4 Cement Concrete in foundation).
2. Determine the Units of Measurement: Establish the standard unit for the item (e.g., cubic meter (m³)).
3. Quantify Materials: Calculate the exact quantities of all materials required for one unit of the item. This often involves using standard proportions or mix designs and considering wastage. For example, for 1 m³ of 1:2:4 concrete, we need cement, sand, and coarse aggregate. The volume of dry materials will be more than 1 m³ due to voids, so a bulking factor (usually around 1.54 for dry materials) is applied.
4. Calculate Material Costs: Multiply the quantity of each material by its current market rate. Ensure to include transportation costs to the site if not already covered.
5. Quantify Labour: Determine the types of labour (e.g., mason, carpenter, helper, water carrier) and the number of man-days required for one unit of work. This depends on the complexity, skill required, and productivity of labour.
6. Calculate Labour Costs: Multiply the number of man-days for each type of labour by their daily wage rates.
7. Quantify and Cost Equipment: If machinery is used (e.g., concrete mixer, vibrator), calculate the running hours and the hire charges or operational costs per hour.
8. Add Overheads and Profit: A percentage is added to the total direct cost (materials + labour + equipment) to account for indirect expenses and the contractor's profit. This percentage varies depending on the project type and complexity.

The sum of all these costs gives the total rate for the item of work per unit of measurement.

2. Methods of Estimating

There are several methods for preparing an estimate, each suitable for different stages of a project and types of work. The choice of method depends on the availability of data, the purpose of the estimate, and the required accuracy.

a) Preliminary Estimate (or Rough Cost Estimate):

This is an approximate estimate prepared in the early stages of a project when detailed information is not available. It is used for feasibility studies and initial budgeting.

• Methods:
• Plinth Area Method: Based on the cost per unit plinth area of similar buildings constructed previously in the same locality. The rate is derived from the PWD Rate Analysis or from data of completed projects. Plinth area = (Carpet area + Balcony area + Area of internal walls + Area of external walls) multiplied by a factor, or simply the covered area at the plinth level.
• Cubic Content Method: Similar to the plinth area method, but based on cost per cubic meter of the building's volume. Cubic content = Plinth area × Height of the building (usually measured from the foundation level to the roof level or parapet). This method is more accurate than the plinth area method as it accounts for the height of the building.
• Unit Rate Method: Based on the cost of specific units of a project, like cost per bed in a hospital, cost per student in a school, cost per tonne of storage capacity in a godown, cost per km of a road, cost per lakh population for water supply schemes.
• Approximate Quantity Method: Used for projects like roads, bridges, and water supply. It involves estimating the quantities of major items and applying a rate.
• Accuracy: Typically has an accuracy of ±10% to ±20%.

b) Detailed Estimate (or Approximate Detailed Estimate):

This is a comprehensive estimate prepared based on detailed drawings and specifications. It is used for administrative approval, administrative sanction, and for inviting tenders.

• Process:
• Taking Out Quantities: Detailed measurements of all items of work are taken from the drawings. This is done using the 'long wall-short wall' method or 'centre line' method for building dimensions.
• Calculation of Areas/Volumes: Quantities are calculated in standard units (m², m³, running meter).
• Application of Rates: The rates for each item are determined from the detailed analysis of rates.
• Calculation of Total Cost: The total cost of each item is calculated by multiplying its quantity by its rate. The total cost of the project is the sum of the costs of all individual items.
• Contingencies: A percentage (typically 5-10%) is added for unforeseen items or variations.
• Cost of Tools and Plants: Sometimes included separately.
• Work Charged Establishment: Costs for site supervision, watchmen, etc.
• Service and Water Charges: Costs for water supply and electricity used on site.
• Sub-head of Cost: The total estimate is usually divided into various sub-heads for clarity and control.
• Accuracy: Generally accurate within ±5%.

c) Supplementary or Revised Estimate:

Prepared when the original sanctioned estimate is exceeded due to unforeseen circumstances, changes in design, or increase in the cost of materials/labour. A revised estimate is prepared when the original estimate is substantially exceeded (e.g., by more than 10-25%).

d) Final Estimate:

Prepared after the completion of the work to determine the actual cost incurred. It is used for final payment to the contractor and for closing the project accounts.

3. Units of Measurement

Standard units of measurement are essential for consistency in estimating, costing, and billing. These units are specified in standard schedules of rates and tender documents. The units used depend on the nature of the work.

Common Units of Measurement in Civil Engineering:

The following are the common units used for various items of civil engineering works:

It is crucial to refer to the specific tender documents or schedule of rates for the exact units of measurement applicable to a particular project. For instance, while brickwork is typically measured in m³, sometimes it might be measured in 'number of bricks' for very small quantities or specific contractual arrangements. Similarly, excavation might be measured in m³ but could have different rates for different depths or types of soil.

Summary of Estimating Process

The process of estimating involves understanding the project scope, obtaining detailed drawings and specifications, breaking down the project into individual items of work, measuring the quantities of each item, determining the rate for each item through rate analysis, and finally, calculating the total cost by summing up the costs of all items, including contingencies and overheads. The units of measurement are the bedrock of this entire process, ensuring accuracy and uniformity.

For competitive exams, a strong grasp of rate analysis for common items like earthwork, concrete, brickwork, plastering, painting, and formwork is essential. You should be able to:

• Calculate material quantities for a given mix ratio and volume.
• Determine labour requirements based on standard productivity norms.
• Understand the components of a rate (material, labour, machinery, overheads).
• Choose the appropriate method of estimating based on project stage.
• Identify the correct units of measurement for different civil engineering works.

Practice solving problems involving rate analysis for various items. For example, calculating the cost of 100 m³ of 1:2:4 cement concrete, including materials (cement, sand, aggregate), labour, and a percentage for tools, plants, and overheads. Understanding standard data for labour output (e.g., how much brickwork a mason can lay in a day) is also vital.