All municipal engineers and managers involved in urban infrastructure projects,frequently face problems in terms of cost estimates, economic and financialanalysis, rate analysis, project benefit cost analysis etc. The question is how totackle these aspects to predict or assess cost, how to minimize the risk andimpact of overspends against budgets, and how to ensure that there is anappropriate balance between technical aspects and the related costs.Therefore this module has been structured to include the following components
Overview of SOR and Rate analysis
Sample infrastructure project cost estimates
Key concepts of project viability
Project financial and economic analysis
2.0 Schedule of Rate (SOR) & Rate Analysis
Estimation of the project cost is necessary for evaluation of the requiredinvestments in any project. The construction industry is an ocean of activities anddetails, too many items descriptions and tiny technical differences but even theseapparently tiny and miniscule detail differences change and affect the analysis,application of these activities.The item when is translated into a monetary value through a technical analysis of the composition of its constituent activities is termed as analysis of Rates. This isto arrive at a rate based on unit which can subsequently be multiplied with thequantity of units is called as the item-rate.A composition of the body made with all the item description, specifications andrates is commonly termed as the Schedule of Rates. Since the subject of Schedule of Rates has been raised it is important to understand that wheneverterm SOR is applied it indirectly or directly is inferred that one is talking about anactivity or a set of activities pertaining to construction.Therefore, to understand and interpret a Schedule of Rates (herein after referredto as the SOR) means working at the various aspects of the item description,specifications and Rate analysis template.The SOR forms the basis for most of the developmental works carried out by theGovernment. All Government projects use SOR either specific to a particulardepartment or developed by some other department. The SOR is taken as thedatum for estimation, selection of most competitive bidder, extra itemsettlement, cost escalations, dispute redressed, arbitration and award of work.