You are on page 1of 55

GOVERNMENT OF KARANTAKA

WATER RESOURCES DEPARTMENT

GENERAL GUIDE LINES


FOR
PREPARATION OF SCHEDULE OF RATES
( FOR WATER RESOURCE PROJECTS )

PREPARED BY SCHEDULE OF RATES COMMITTEE


JUNE, 2003

GENERAL GUIDE LINES


FOR
PREPARATION OF SCHEDULE OF RATES
( FOR WATER RESOURCE PROJECTS )
1. 0 PREAMBLE
1.1 River Valley Projects involve use of large quantities of materials, machinery, labour and
other inputs for execution of various component works of the project. Preparation of estimate
for any work requires estimation of quantities and rates for individual items of work. While the
quantities are mostly dependant on planning and design requirements, the estimated rates are
dependant on the basic rates provided in the schedule of rates and other inputs which are not
covered in the basic rates. The basic rates in the schedule of rates, in turn, depend on the
data assessed / assumed in the data rate analysis for computing the quantities and rates of
various materials, machinery, labour and other ancillary / enabling works.
1.2 The rates quoted by the contractors is another important factor that ultimately determines
the final cost of the work. The rates quoted by the contractors may be less or more compared
to the estimated rates. For the same item the quoted rates generally differ from one agency to
another agency due to each agency adopting his own system or method for computation of
rate for various items of work. Factors other than work inputs may also influence quoted rates
to some extent. A local contractor may quote less compared to a contractor who has to
mobilize his machinery and work force from a for-off place. A contractor having surplus / idle
machinery and operating crew may prefer to quote comparatively less to get the work to utilise
his otherwise idle machinery and crew. Thus the rates quoted by the contractors may or may
not be representative of probable cost and as such need not always be considered as any
guiding factors for revising the rates provided in the schedule of rates. This aspect has also
been highlighted in the report of the committee on cost control of River Valley Projects
published by Central Water Commission ( CWC ). However, consistently low or high rate
quoted by majority of the contractors for any particular item of work certainly suggests the
need for reviewing the standard data adopted for preparing the rate analysis.
1.3 CWC and Bureau of Indian Standards ( BIS ) have published standard data for working
out the hire charges of machinery and rate analysis for major items of work used in the
construction of River Valley Projects for guidance. These guide lines also include the
provisions to be considered judiciously towards the hidden costs on labour, wastage of
materials in handling, small T & P, profit and overheads of contractor etc., on percentage
basis. Appropriate percentage provisions for these shall be determined by the Schedule of
Rates Committees duly considering the local conditions, nature of work, statutory
requirements, provisions already included in the wage structure and other relevant features.
1.4 Standard data shall be formulated for each item of work included in the schedule of rates
to facilitate revision of rates each year on the basis of cost escalation or rise in the rates of
materials, machinery and labour compared to previous year. Though, no known method of
rate analysis can give exact cost under all operating conditions, a data rate prepared
judiciously duly accounting for all probable direct and in-direct work inputs is expected
to reflect the cost to a close approximation of the final cost.
1.5 Keeping in view the present trends in construction activities / practices being followed for
execution of works / wide disparity in estimated and tendered rates for many major items of
works the Government of Karnataka set up a Committee under Notification No. ID 5 PAC
2000 dated 24th March, 2000 for review of certain issues relating to Irrigation Works including
review and preparation of Data Rates on scientific basis. One of the Terms of Reference is to
formulate General Guidelines for the preparation of Schedule of Rates.
3

2.0 The following member partcipated in the deliberations of the Committee in meetings
scheduled on various dates.

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

Capt.
Sri
Sri
Sri
Sri
Sri
Dr
Sri
Sri

S. Raja Rao
Retd Secretary / GOK
: Chairman
H. V. Eshwaraiah
Retd Technical Director / KPCL
: Member
V. H. Patil
Retd Engineer-in-chief / GOK
: Member
V. G. Kajagar
Retd Chief Engineer / GOK
: Member
R. Chandrashekhar Retd Engineer-in-chief / GOK
: Member
G. A. Meti
Retd Chief Engineer,BWSSB
: Member
B. R. Srinivasa Murthy Professor IISc
: Member
C. M. Shirol
Controller of State Accounts
: Member
K. K. Malpani
Secretary Contractors Association : Member
Superintending Engineer ( M & E )
WRDO
: Member Secretary

2.1 The Committee co-opted Sri B. S. Mallapur, Retd Chief Engineer / KPCL as Special
Invitee considering his experience in preparation of mechanized data rates for major works
and in addition he was also requested to computerise all the data rates in the form of a
Computer Programme to facilitate quick revision of Schedule of Rates.
3.0 On going through the procedure adopted earlier for the preparation of data rates, the
committee observed that extensive mechanisation and thorough review of Hidden cost on
labour are necessary to set right the deficiencies in the existing procedures for the
preparation of schedule of Rates.
4.0 The Committee during its deliberations on various issues referred for review, collected
and studied procedures / formats being suggested / followed in various agencies such as
CWC / BIS/ KPCL / PWD / Other states.

4.1 The Committee also invited and consulted Experts from specialist organisations such as
NIRM / School of Mines / Prof. Sastry of KREC, Surathkal / Equipment suppliers / Cement
manufacturers / Concrete admixture manufacturers / Geo-fabric and LDPE sheet
manufacturers / Gate and Hoist manufacturers / Shri Ramakrishnaiah, Design Consultant for
Gates and Hoists / Director Mines and Geology / Officers of State Labour Department on
various issues related to points referred to the Committee.
5.0 The Committee, duly considering all the information collected on the issues referred to the
Committee and keeping in view the present trends in construction activities and procedures /
practices / formats followed / suggested by various organisations / authorities, reviewed the
Schedule of Rates for Water Resources Works thoroughly on scientific basis and formulated
these procedures / guide-lines for preparation of Schedule of Rates for Water Resources
works.

6.0 GENERAL :
6.1 The Schedule of Rates ( SR ) shall essentially consist of basic data such as general
notes on SR, material rates, wages of workers, hire charges of machinery, lead charges, lift
charges, loading and unloading charges, royalty charges and item rates with supplimentary
information for various works. The item rates with supplimentary information for various works
shall be prepared making use of the rates in the basic data to finalise the schedule of rates
for the year.
6.2 Material constants to be considered in the data rate analysis for any particular work item
can be determined by computation or by trial studies or from design drawings or on the basis
of data published in BIS / CWC / Departmental codes / Guide lines etc. However, in respect
of machinery and labour there is scope, to some extent, for choice depending on the nature
and extent of work and time within which the work is to be carried out. The data may be
extensively labour oriented or machinery oriented or combination of both. In any case the data
shall provide for optimum use of the machinery and workforce consisting of skilled, semiskilled and un-skilled categories.
6.3 The preparation of schedule of rates broadly involves following steps:
a. Fixing unit rates for various construction materials.
b. Fixing daily / hourly hire charges of machinery including Fuel ( DPOL ) / Energy
charges and operating crew charges.
c. Fixing daily wages for various categories of workers duly ensuring compliance with
minimum wages and other requirements.
d. Fixing extent of hidden costs on labour duly considering various statutory provisions.
e. Fixing extent of provision for small T & P materials, loss on stock, de-watering, desilting, site clearance etc.
f. Fixing extent of contractors profit and overheads.
g. Fixing rates for lead, lift, loading and un-loading of materials.
h. Assessing quantities of materials per unit quantity of work item including extent of
wastage in handling and requirement for incidentals such as mortar layer, finishing
etc., forming part of the item rate.
i. Assessing requirement of various construction plant and machinery in hours / days per
unit quantity of work under each item.
j. Assessing extent of skilled / semi-skilled / un-skilled work force required per unit
quantity of work under each item.
k. Assessing the extent of enabling works and making provision for these either on cost
basis or on percentage basis in the rates.
l. Assessing extent of lump-sum provisions ( for minor work inputs not quantified ) and
making suitable provisions for the same in the rate analysis in the form of sundries.
m. Preparing general / specific notes on use of rates and data based rate analysis for
various items included in the Schedule of Rates.
7.0 SCOPE :
The object of these guidelines is to streamline the procedures, provisions, formats and other
related matters for the preparation of schedule of rates pertaining to irrigation project works.
As the deployment of plant and equipments is becoming more and more common in these
days even for small works emphasis has been laid on use of plant / equipment in data rates
wherever possible. At present, no rates are available in the schedule of rates being used in
the department for gate and hoist works. Based on case studies, standard formats for rate
analysis for gate and hoist works are prepared for inclusion in the schedule of rates.

8.0 GENERAL NOTES :


The schedule of rates shall include General Notes applicable to all sections in the SR to the
extent they are relevant. These notes shall reflect the various provisions already included in
the basic rates and the additional provisions to be included to the basic rates while preparing
the work estimates. These notes shall include the following provisions in general:
1.
2.
3.

4.

These general notes are applicable to all sections of Schedule of Rates to the extent
they are relevant.
All materials to be used on work shall conform to relevant specifications of Bureau of
Indian Standards.
The basic rates, except otherwise specified, are inclusive of initial lead upto 50 m and all
lifts. Additional lead, lift, loading and unloading charges, wherever applicable, shall be
added to basic rate as per the procedure stipulated under notes in each section and
under notes to lead, lift, loading and unloading charges. The quantities of materials for
working out lead, lift, loading and unloading charges shall be as per the statement of
requirement of materials for various items of work included under relevant section.
The basic rates are inclusive of cost of all materials including wastage, machinery,
labour, small tools and plants, loss on stock, contractors profit, contractors overheads,
hidden cost on labour, cost of power supply arrangements, enabling works etc.

5.

The basic rates are inclusive of royalty charges payable on materials. The royalty
charges, wherever applicable, shall be recovered as per the statement of royalty charges
under each section.

6.

The basic rates for concrete items are inclusive of standard finishing to surfaces such as
repairing honey-comb patches, uneven surfaces etc., and do not include regular
plastering in cement mortar.

7.

The cement content indicated for concrete items in the item description is based on
theoretical mix computations. The actual cement content may vary based on trial mix
studies . A suitable clause shall be included in the tender document for the work for
regulating payment for any upward or downward variation in cement content.

8.

The quantities of materials including wastage and requirement for incidentals for working
out additional lead, loading and unloading charges shall be as per the statement of
requirement of materials under each section.

9.

The basic rates are exclusive of Sales Tax on works contract. Separate provision
shall be made in the work estimate towards sales tax on works contract at the rate
prevailing at the time of preparing estimate.

10. The basic rates are exclusive of site clearance, de-watering, de-silting, river diversion
arrangements etc., wherever applicable.
11. When the market rates for cement / steel fluctuate from the rates provided in the
schedule of rates, the difference in cost of these materials including contractors profit
and overheads shall be added or deducted from the basic rate for finished item at the
time of preparing work estimate.
12. The rates as provided in the schedule of rates of other departments of the region may be
adopted for the items not found in this schedule of rates.
If there are any other notes of general nature applicable to all sections the same may be
added to the above list of notes.
6

9.0 RATES OF MATERIALS:


9.1 Prevailing market rates shall be the criteria for fixing the material rates for inclusion in
schedule of rates. Prevailing material rates shall be obtained through quotations or through
local inquiries from major commercial centers near the project area. Average of the rates,
ignoring freak rates, shall be reckoned as the prevailing market rate for inclusion in the
schedule of rates for the year. For cement, steel and explosives the current price list shall be
obtained from the leading suppliers and also from bulk consumers like Karnataka Land Army
Corporation. Unless otherwise specified, all material rates shall be inclusive of all taxes,
duties, levies, royalty, transportation and handling costs upto project area. For sand / coarse
aggregate / stone the basic rates shall be at quarry and shall include royalty charges. For
earth / soil used for embankment works which is not included in the material list royalty
charges shall be added separately under material component in the data rate analysis. For
gate and hoist works, apart from structural steel, other materials such as alloy steel, bronze
alloy, cast steel etc., are required for various component parts. For these materials basic
material rate shall be worked out including cost of casting and machining charges.
9.2 The list of materials in the Schedule of Rates shall include all the materials used in the
data rate for work items.
The rates for materials shall be furnished in the following format.
STATEMENT OF RATES OF MATERIALS
Sl No
1.
2.
3.
4.
5.
6.
7.
8.

Description of material

Unit

Acetylene gas
Asphalt 80 / 100 Grade
Binding wire
Burnt stone slab 10 cm thick
Cement 43 Grade
Coarse aggregate 10 4.75 mm
Coarse aggregate 20 10 mm
Coarse aggregate 40 20 mm
........................
........................
........................

Rate in Rs

Cum
Kg
Kg
Sqm
Kg
Cum
Cum
Cum
....
....
....

The following Notes shall be added under statement of rates for materials.
1.
2.
3.
4.

The rates provided for materials are inclusive of taxes, duties and other local levies.
The rates provided for materials are inclusive of royalty charges wherever applicable.
The rates provided for materials, except those for which lead charges are admissible as per
the statement of lead charges, are for all leads.
The rates provided for useful rubble and stone chips from excavation are at the dump yard.

If there are any other notes specific to any materials the same shall added to the above list.

10.0 WAGES OF WORKERS:


Wages of workers to be included in the schedule of rates shall be the prevailing daily rates in
the project area and shall not be less than the minimum wages fixed by the Government
from time to time. Daily wages shall consist of Basic Wage and Living Allowance (
variable dearness allowance ) and shall include the wages of 4 weekly holidays in a
month. The basic wages shall be reviewed generally when the minimum wages to be paid
are revised by the Government. The living allowance shall be revised every year based on
the state average annual increase in the Consumer Price Index (CPI) for industrial workers
over and above the base index notified by the Government at the time of revising the
minimum wages. The workers shall be grouped into four categories namely ;
1. Skilled

(2) Semi-skilled (3) Un-skilled (4) Other

The wages of workers shall be furnished in the following format in the schedule of rates.
STATEMENT OF WAGES FOR WORKERS
Sl No.

Category of worker

Basic wage/ day in


Rs.
Zone-I

Zone-II

Skilled category:

I.
1.
2.

Bar bender
Operator Shovel
..........
..........
........ ..

II.
Semi-skilled category :
1.
2.

III.
1.
2.

IV.
1.
2.

Mason Class II
Helper Shovel
..........
..........
..........
Un-skilled category :
Heavy mazdoor
Light mazdoor
..........
..........
..........
Other category :
Graduate Engineer
Literate mazdoor

Living allowance /
day in Rs.
Common to
Zone I & II

Total wage / day


in Rs.
Zone-I

Zone-II

The following Notes shall be added under the statement of wages for workers :
1. The wages under Zone-I are applicable to: Bangalore city agglomeration area and
District headquarters agglomeration area.
2. The wages under Zone-II are applicable to : All areas other than those listed
under Zone-I.
3. For categories of workers for which provision has not been made in the list, the
rates prevailing in the schedule of rates of other department may be adopted.
4. The wages of workmen of various categories are subject to revision during
currency of schedule of rates for any revision in the minimum wages and living
allowances by the Government of Karnataka.

11.0. HIRE CHARGES OF MACHINERY :

The hire charge of a machinery / equipment shall comprise of Basic Hire Charge, Fuel /
energy charge and Operating Crew Charge. These components shall be worked out
separately and included in the schedule of rates.
11.1 Basic hire charge:
The basic machinery hire charge shall include depreciation, interest on average capital cost
or profit, repair charges and miscellaneous charges. The practice in preparation of schedule
of rates is to consider interest on average capital cost. The capital cost of the machinery /
equipment shall be the current market price inclusive of all taxes, duties and freight charges.
Guidelines published by CWC / BIS based on the report of committee on cost control of river
valley projects shall be the basis for working out the machinery hire charges. The rate of
interest for working out the interest on average capital cost shall be as fixed by the competent
authority. The salvage value shall be 10 percent of the capital cost. The life of machinery in
years / in hours and repair provisions shall be as per the guide lines published by CWC / BIS.
The miscellaneous charges shall be at 10 percent of the repair charges. The hire charges
shall not include accessories like air line, water line, drill rods, drill bits etc. The use rate for
these accessories shall be worked out separately and the requirement of these shall be
included under material component in the rate analysis. The hourly use rate of tyres including
tubes shall be worked out separately and added to hourly hire charges of machinery
wherever applicable. The use rate is the ratio of cost of accessory to its working life.
11.2 Fuel ( DPOL ) / Energy charge:

The hourly consumption of diesel / petrol and electric energy shall be based on the guidelines
published by CWC / BIS. The unit rates of diesel / petrol shall be the prevailing rates at the
retail fuel outlets in the project area. Energy charges shall be as per the prevailing power
supply tariff applicable to HT-2B or other relevent category. Oil and lubricant charges shall be
taken at 20 percent of energy charges for electrically operated machinery / equipment and at
25 percent of diesel / petrol charges for diesel / petrol operated machinery / equipment.

11.3 Crew charge:


Machinery / equipment operating crew charges shall be on hourly basis as per the guide-lines
of CWC. The daily wages of operators and helpers provided in schedule of rates shall be
converted to yearly wages considering 26 working days in a month and then divided by yearly
usage of machinery in hours. Yearly usage of machinery in hours is the ratio of life of
machinery in hours to life of machinery in years. The number of Operators and Helpers shall
be on the basis of type of equipment.
The hire charges of machinery and equipment shall be furnished in the schedule of
rates in the following format:
STATEMENT OF HIRE CHARGES OF MACHINERY AND EQUIPMENT

Sl
No.

Description of machinery

1
2
3
4

Agitator car
Air compressor 8.5 cmm
Batching plant 2 x 1.5 cum
Bending machine
...............
................
...............
...............

Hire charges
in Rs / Hr

DPOL /
Energy
charges in
Rs / Hr

Crew
charges
in Rs / Hr

The following notes shall be added under the statement of hire charges of machinery /
equipment:
1. Hire charge includes depreciation, interest, repair charges, miscellaneous charges,
insurance, road tax etc., wherever applicable.
2. Fuel charge includes cost of diesel / petrol / electric power as applicable and oil /
lubricants and other miscellaneous charges.
3. Crew charge includes wages of operator and helper on hourly basis.
4. Hire / Fuel / Crew charges are exclusive of provisions towards small tools and
plants, profit, overheads and hidden cost on operating crew.
Other notes if any relevant to any specific machinery may be added to the above list of notes.
An example of working out hourly crew charges may also be furnished under note-3.
12.0 LEAD, LIFT, LOADING & UNLOADING CHARGES :
12.1 The estimated cost of the work shall be inclusive of cost of conveyance of materials from
source of supply upto work site and cost of further rehandling,if any, at work site. The basic
rates for materials considered in preparation of schedule of rates may be inclusive of cost of
conveyance upto site or may be at the source of their supply depending on the prevailing
practice for their supply. It is the general practice to provide for the material rates in the
schedule of rates inclusive of cost of conveyance and handling upto work site for all materials
except for Earth / Sand / Gravel / Murum / Lime / Surki / Wood / Stones of all types /
Coarse aggregate / Stone and Concrete slabs / Cement / Steel / Pipes / AC sheets / GI
sheets / RCC poles. The material rates provided in the schedule of rates for sand / gravel /

10

murum / stones / aggregates shall be at quarry. For steel, cement, AC sheets, GI sheets,
hume pipes, wood and stone slabs the rates provided shall be the rate prevailing at the

major commercial centre near project area or the departmental stores in case if these
materials are to be supplied departmentally. In certain cases it may be necessary to transport
water also to work site. The basic item rates provided in the schedule of rates do not include
conveyance and handling charges from source of supply to work site for these materials.
Conveyance of materials can be by head load or by mechanical means. In case of
conveyance by mechanical means loading and unloading of materials also shall be
considered separately if the same is not covered by the working cycle of the machinery
deployed.
12.2 Generally conveyance by head load shall be considered for total lead upto 150 m and by
mechanical means for total lead exceeding 150 m. The basic item rates provided in the
schedule of rates include 50 m or 1 km as initial lead and no lead charges shall be allowed
where the source of material is within the initial lead specified in item rate. Additional lead
charges shall be allowed for the lead exceeding initial lead specified in the item rate.
12.3 The lead charges per unit quantity for conveyance of these materials shall be worked out
and included in the schedule of rates in increament of 50 m for head load and in increament of
1 km for mechanical mode. The rates for lead charges by head load and upto 5 km by any
mode shall be cumulative and inclusive of lead charges for preceding lead. For lead beyond 5
km the lead charges shall be worked out on per km basis.

12.4 Conveyance by head load:


12.4.1 Lead charges for conveyance of materials by head load shall be allowed upto 150 m.
The lead charges by head load per unit quantity shall be worked out and included in the
schedule of rates in increament of 50 m. The rates for lead charges by head load shall be
cumulative and inclusive of lead charges for preceding lead. The rates shall be inclusive of
provisions for contractors profit, overheads, hidden cost on labour etc.
12.4.2 For the purpose of working out lead charges by head load the materials shall be
grouped into three categories as under based on type of material, unit for measurement,
mode of handling etc.
Category I : Earth / Sand / Gravel / Murum / Lime / Surki / Stones / Aggregates.
Category II : Cement / Steel.
Category III : Stone slabs / PCC slabs / Laterite blocks / Wood

12.4.3 For earth / sand / gravel / murum / lime / surki / size stone / cut stone / rubble /
coarse aggregates the lead charges by head load shall be worked out on per cum basis for
loose volume. For cement / steel / pipes / AC sheets / GI sheets / RCC poles the lead
charges shall be worked out on per tonne basis. For shahabad slabs / PCC slabs / BS
slabs / CC blocks / Laterite blocks / Wood the lead charges shall be worked out on per
cum basis for stacked volume.

11

12.4.4 Data rates shall be prepared for each category of material and rate per unit quantity
shall be included in the schedule of rates in the following format.
CONVEYANCE CHARGES FOR MATERIALS BY HEAD LOAD

Sl
No.

Total distance
( Total lead includes initial lead )

Total lead upto 50 m

Total lead upto 100 m

Total lead upto 150 m

Earth / sand /
Gravel / Murum /
Lime / Surki /
Rubble /
Cut stone / Size
Stone / Coarse
Aggregate

Cement /
Reinforcement
Steel / Str
Steel

Shahabad/
PCC slab/
BS slab /
CC block/
Laterite
Blocks /
Wood

Rs / cum

Rs / tonne

Rs / cum

Initial lead

Initial lead

Initial lead

The following notes shall be added under the statement of conveyance charges by head load
1. For total lead upto 150 m ( including initial lead ) lead charges by head load only
shall be adopted irrespective of mode of conveyance.
2. For total lead exceeding 150 m conveyance by mechanical means only shall be
adopted irrespective of mode of conveyance.
3. Loading and unloading charges are not payable for conveyance by head load.
4. Unless otherwise specified lead charges for Earth / Sand / Gravel / Aggregates and
stones are for loose volume and not for compacted or in-situ volume.
5. The rates for lead charges by head load and upto 5 km by any mode are cumulative
and inclusive of lead charges for preceding lead.
12.5 Conveyance by any mode :
12.5.1 Lead charges for conveyance of materials by any mode shall be allowed for total lead
exceeding 150 m. The lead charges per unit quantity shall be worked out and included in the
schedule of rates in increament of 1 km. The rates for lead charges by any mode upto 5 km
shall be cumulative and inclusive of lead charges for preceding lead . The rates shall be
inclusive of provisions for contractors profit, overheads, hidden cost on crew etc.
12.5.2 For the purpose of working out lead charges by any mode the materials shall be
classified into five categories as under based on type of material, unit for measurement, mode
of handling etc.
Category I : Earth / Sand / Murum / Gravel / Lime / Surki .
Category II : Rubble / Size stones / Cut stones / Coarse aggregates.
Category III : Cement / Steel / Pipes / AC sheets / GI sheets / RCC poles.
12

Category IV : Shahabad slab / PCC slab / BS slab / CC block / Laterite block / Wood.
Category V : Water.
12.5.3 For earth / sand / gravel / murum / lime / surki / size stone / cut stone / rubble /
coarse aggregates the lead charges shall be worked out per cum on the basis of loose
volume. For cement / steel / pipes / AC sheets / GI sheets / RCC poles the lead charges
shall be worked out on per tonne basis. For shahabad slabs / PCC slabs / BS slabs / CC
blocks / Laterite blocks the lead charges shall be worked out on per cum basis for
Stacked volume. For water the lead charges shall be worked out per 1000 ltr basis. In
case of conveyance by mechanical means idle hire charges shall be considered for waiting
period ( loading and unloading time ) and full hire charges including fuel charges shall be
considered for running time. The rates shall be inclusive of provisions for contractors profit,
overheads, hidden cost on crew etc. The rates for conveyance charges and loading /
unloading shall be furnished separately. Wherever, tipper is considered for conveyance,
unloading of material can be by mechanical tipping. For water unloading can be by gravity
flow.
12.5.4 Data rates shall be prepared for each category of material and rate per unit quantity
shall be included in the schedule of rates in the following formats.
CONVEYANCE CHARGES FOR MATERIALS BY ANY MODE

Sl
No
.

1
2
3
4
5
6
7

Distance from source of supply


to work site

Earth /
Sand /
Murum/
Gravel /
Lime /
Surki

Rubble/
Size
stone /
Cut
stone /
Coarse
Aggreg
ate

Cement
/ Steel /
Pipes/
AC / GI
sheet /
Poles

Shahbad Water
/ PCC /
BS slab /
CC block
/ Laterite
Blocks /
Wood

Rs /
cum

Rs/
cum

Rs / t

Rs / cum

Rs / kl

Lead upto 1 km
Lead more than 1 km upto 2 km
Lead more than 2 km upto 3 km
Lead more than 3 km upto 4 km
Lead more than 4 km upto 5 km
Every km beyond 5 km upto 30 km
Every km beyond 30 km

The following Notes shall be added under statement for conveyance charges by any mode :
1. For total lead exceeding 150 m conveyance by mechanical means only shall be
adopted irrespective of mode of conveyance.
2. Unless otherwise specified lead charges for Earth / Sand / Gravel / Aggregates and
stones are for loose volume and not for compacted or in-situ volume.
3. The rates for lead charges upto 5 km by any mode are cumulative and inclusive of
lead charges for preceding lead.

13

LOADING AND UNLOADING CHARGES FOR MATERIALS


Sl
No
.

Distance

Loading

Unloading

Earth / Sand /
Murum/Gravel/
Lime /Surki /

Rubble/Size
stone/Cut
stone/Coarse
Aggregate

Cement/
Steel/Pipes/
AC / GI
sheet/Poles

Rs/ cum

Rs / cum

Rs / tonne

Shahbad Water
/ PCC /
BS slab /
CC block
/ Wood
Rs / cum Rs / kl

The following Notes shall be added under the statement of rates for loading and unloading:
1. Loading and unloading charges are not payable for conveyance by head load.
2. Loading charges are not payable for conveyance by mechanical means for disposal
of excavated material beyond initial lead of 50 m wherever specified.
3. Loading and unloading charges are not payable for conveyance by mechanical
means for disposal of excavated material beyond initial lead of 1 km wherever
specified.
4. The rates for unloading of materials except earth, sand, gravel, coarse aggregate,
rubble, size stone and cut stone are inclusive of stacking wherever applicable.
12.6 Lift charges :
12.6.1 Lift charges for materials shall be allowed wherever the total lift exceeds the initial lift
specified in the item descriptoin. Lift charges shall be worked out in increament of 1.5 m lift.
Where the conveyance / lifting of material is by mechanical means lift charges shall not be
considered as the cycle time of operation of the machine includes lift involved.
12.6.2 For the purpose of working out lift charges by head load the materials shall be grouped
into three categories as under based on type of material, unit for measurement, mode of
handling etc.
Category I : Earth / Sand / Gravel / Murum / Lime / Surki / Stones / Aggregates.
Category II : Cement / Steel.
Category III : Stone slabs / PCC slabs / Laterite blocks / Wood.
12.6.3 For earth / sand / gravel / murum / lime / surki / size stone / cut stone / rubble /
coarse aggregates the lift charges by head load shall be worked out on per cum basis for
loose volume. For cement / steel / pipes / AC sheets / GI sheets / RCC poles the lift
charges shall be worked out on per tonne basis. For shahabad slabs / PCC slabs / BS
slabs / CC blocks / Laterite blocks the lift charges shall be worked out on per cum basis
for stacked volume.

14

12.6.4 Data rates shall be prepared for each category of material and rate per unit quantity
shall be included in the schedule of rates in the following format.

LIFT CHARGES FOR MATERIALS


Sl
No.

Total lift
( Total lift includes initial lift )

Total lift upto 1.50 m


( covered by item rate )
Total lift upto 3.00 m

Total lift upto 4.50 m

Total lift upto 6.00 m

Total lift upto 7.50 m

Earth / sand /
Gravel / Murum /
Lime / Surki /
Rubble /
Cut stone / Size
Stone / Coarse
Aggregate

Cement /
Reinforcement
Steel / Str
Steel

Shahabad/
PCC slab/
BS slab /
CC block/
Laterite
Blocks /
Wood

Rs / cum

Rs / tonne

Rs / cum

Initial lift

Initial lift

Initial lift

The following Notes shall be added under the statement of rates for lift charges:
1. The rates for lift charges are cumulative and inclusive of rates for preceding lift.
2. Lift charges are not payable where conveyance / lifting of materials is by
mechanical means to final placing point.
12.7 Royalty charges:
Government of Karnataka has levied royalty charges on certain construction materials.
Therefore, the item rates provided in the schedule of rates shall be inclusive of royalty
charges payable to Government of Karnataka. The schedule of rates book shall include
extract of latest copy of Government notification on royalty charges for reference.
12.7.1 The following notes shall be added under the notification on royalty charges:
1. The royalty charges on materials, wherever applicable, shall be recovered as per the
following guide-lines:
a. Where the land, from where the materials are extracted by the contractor for use on
departmental work, belongs to the department / corporation the royalty charges
included in the rates for materials extracted from such land shall be recovered from the
contractor as per the statement of royalty charges included in each section of schedule

15

of rates and the amount shall be credited to the specified revenue head of account of
the department / corporation.

b. Where the land, from where the materials are extracted by the contractor for use on
work, belongs to other department and is taken on lease by the department /
corporation the royalty charges included in the rates for the materials extracted from
such land shall be recovered from the contractor as per the statement of royalty
charges included in each section of schedule of rates and the amount shall be credited
to the specified revenue head of account of the other department.
c. Where the land, from where the materials are extracted by the contractor for use on
work, is neither owned nor taken on lease by department / corporation then the payment
of royalty charges on materials, extracted from such land, shall be the responsibility of
the contractor or his sub-contractor. The contractor shall give an undertaking to the
effect that the royalty charges are being paid by him / his sub-contractor / supplier
directly to the concerned department and no deductions shall be made from his work
bills towards royalty charges.

2. Royalty charges as applicable to murum shall be made applicable to earth / soil also.
3. Royalty charges as applicable to ordinary building stones shall be made applicable to
coarse aggregate also.
4. Royalty charges as applicable to ordinary sand shall be made applicable to fine
aggregate.
5. Royalty charges as applicable to Shahabad stone slabs shall be made applicable to
similar slabs from other sources also.
13.0 RATE SCHEDULE FOR WORK ITEMS :
13.1 The rate schedule for work items in the schedule of rates shall be furnished separately
for Dam & Allied Works, Canal & Allied Works, Canal, CD works, Tunnel & Allied
Works, Gates/Hoists & Allied works and Preliminary & Maintenance works. Each section
shall include :
-

Notes on rates for the work ;


Statement of requirement of materials for unit quantity of work under each item;
Statement of royalty charges included in each item rate; and
Item rate schedule.

13.2 The item rate schedule shall include item number, brief description of item, unit and rate
per unit quantity. The rate per unit quantity shall be based on the data rate analysis for the
item. The data rate analysis for any item of work shall consist of the following three major
components.
1. Brief description of item of work.
2. Data for assessing the quantities of various in-puts.
3. Rate analysis.
13.2.1 Brief description of item of work :
The description of the item of work in the schedule of rates shall be short but cover all
important aspects of the work included in the basic rate. On reading the item description one
should be in a position to assess the various cost components involved in the work.
Typical item description in SR for concrete item:
16

Providing and laying in-situ vibrated M-20 ( 28 days cube compressive strength not
less than 20 N / sq mm ) grade cement concrete using 20 mm down size approved,
clean, hard, graded aggregates including cost of all materials including royalty
charges, machinery, labour, form-work, centering, scaffolding, cleaning, batching,
mixing, placing in position, levelling, vibrating, finishing, curing etc., complete for RCC
works of spillway bridge, block-outs for embedded parts and such other similar
locations with conjected reinforcement with initial lead upto 1 km and all lifts. (Cement
content: 330 kg / cum for use of super plasticiser )
Typical item description in SR for radial gate item:
Design,fabrication, supply, erection, testing and commissioning of radial gate
consisting of skin plate, stiffeners, horizontal girders, sector arms, trunnionassemblies,
tie beam, pulley supports, bracings, rubber seals, clamps etc., with all accessories for
spillway including cost of all materials, machinery, labour, cutting, bending, aligning,
welding, finishing, cleaning, applying one coat of zinc rich epoxy primer and three
coats of cold applied coal tar epoxy paint, seal fixing etc., complete as per
specifications and approved drawings with all leads and lifts.
13.2.2 Data for assessing quantities :
13.2.2.1 The data shall reflect the various assessments / assumptions made in arriving at the
quantities of materials, machinery, labour and other in-puts. In case of plants and equipment
the output of main plant shall be worked out and the requirement of all other in-puts shall be
assessed to match the output of the main plant. Cycle time of operations shall be the criteria
for assessing the output of equipment. Generally the equipment manufacturers furnish the
output of machinery under ideal conditions of working. Suitable job and management
efficiency factors shall be considered while working out the average output of machinery
under field conditions. In case of combination of machinery and manpower the assessment of
manpower shall match the output of machinery.
13.2.2.2 Though cycle time of operations is the criteria for hourly / daily out-put of machinery /
work-force the actual progress of work depends on several other factors such as power
interruptions, minor break-downs, time for meals and other needs of work-force, stray rains
etc. Therefore, it is the general practice to consider 50 minutes as the actual working time per
hour for workingout the hourly / daily out-put of machinery / work-force. Further, where the
work is to be carried out in more than one shift, there will be further reduction in daily
production hours due to time required for change in shift for work-force and for daily
maintenance of plant / machinery such as cleaning, oiling, greasing, minor repairs etc.
Considering all these aspects CWC / BIS guide-lines stipulate the following actual working
hours for the purpose of equipment planning and utilisation.
No. of shifts
One shift
Two shifts
Three shifts

Total available time


8.00 hours
16.00 hours
24.00 hours

Actual available time


7.00 hours
12.50 hours
16.50 hours

The daily out-put shall be computed duly considering the actual available working time.
13.2.2.3 For gate and hoist works it is the general practice to specify the quantity of work in
terms of number of sets of embedded parts / gates. In such cases, naturally, the estimated
rates shall be per set for embedded parts and per gate / hoist for gates and hoists. However,
as the rate per set or per number depends on the tonnage per set / number and varies from
17

work to work depending on the size of gate and other design considerations, it not practicable
to workout the unit rate on per set / number basis. Therefore, the basic rates for gate / hoist
works to be included in the SR shall be on per tonne basis for each item. The rate per set /
number for the purpose of estimation shall be computed based on the rate per tonne provided
in the SR and the estimated weight per set / number of the embedded part / gate / hoist. For
rate analysis the data to be considered shall be for one set of embedded parts or one number
of gate / hoist. The material requirement shall be based on either emperical rules or based on
actual fabrication details for the typical gate / hoist / embedded parts. The requirement of
machinery and work-force for cutting, bending, fabrication, erection, painting etc., shall be
assessed commensurate with the task involved.
13.2.2.4 Typical example of data for rate analysis of concrete item:
Concrete item M-20 using 20 mm down Coarse aggregate ( CA ) :
Quantity of materials for 1 cum concrete:
Cement :- 330 kg. Coarse aggregate ( CA ):- 0.80 cum. Fine aggregate ( FA ):- 0.44 cum
Blending ratio for CA :- 65 : 35.
Wastage :- 1 % for cement and 2 % for CA and FA.
Daily output of concrete mixer:
Consider 300/ 200 litre capacity ordinary concrete mixer.
Output for 1 bag ( 50 kg cement ) mix : 50 / 330 = 0.1515 cum.
Cycle time for batching / mixing one load :
Batching 20-10 mm coarse aggregate
: 3.00 minutes
Batching 10-4.75 mm coarse aggregate
: Parallel activity
Batching fine aggregate
: Parallel activity
Batching cement
: Parallel activity
Loading mixer drum / adding water / admixture etc
: 1.50 minutes
Mixing and unloading concrete
: Parallel to batching
Total cycle time per mix
: 4.50 minutes
Daily out-put considering 50 min / hour working
say
: 14 cum
( 0.15`5 x 8 x 50 / 4.50 )
Deploy 300/ 200 litre mixer for 8 hrs and consider 14 cum daily output for rate analysis.
Deploy needle vibrator for 8 hrs for compacting concrete and 5 hp pump for 1 hr for water
requirement of concrete including curing.
Requirement of work force per mixer per day considering equivalent volume batching:
Cleaning / washing / curing
: 1 light mazdoor
Batching 20-10 mm coarse aggregate
: 3 heavy mazdoors
Batching 10 4.75 mm coarse aggregate
: 3 heavy mazdoors
Batching fine aggregate
: 3 heavy mazdoors
Batching cement
: 2 heavy mazdoors
Re-mixing and loading mortar pans
: 4 heavy mazdoors
Conveying from mixer to placing point
: 14 light mazdoors
Placing and vibrating
: 1 Mason & 3 Mazdoors
Operating crew for mixer
: 8 hours
Operating crew for vibrator
: 8 hours
Operating crew for pump
: 1 hour
Formwork / shuttering
: @ 2.50 sqm / cum of concrete.
Scaffolding materials
: @ 100 % of shuttering.
Requirement of labour for conveying from mixer to placing point depends on the distance to
be covered and the lift along the ramp-way.
Alternatively, combination of plant / equipment can also be deployed for batching, conveying
and placing concrete as under:
Conveyor system for conveying materials from stock piles to batching bins;
Batching plant for weighing, batching and mixing;
18

Combination of tippers / locos and tower cranes / cable-way for conveying and placing;

13.2.2.5 Typical example of data for rate analysis of gate item:


Consider radial gate for spillway opening of size 15 m x 9 m for analysis.
Spillway radial gate consists of trunnions, sector arms, horizontal girders, Tee-supports, skin
plate, tie beam, bracings for horizontal girders and sector arms, pulley blocks, seals etc., with
all accessories.
Sector arms are connected to trunnions with zinc padding in between. Horizontal girders
generally spaced at about 3 m apart are joined to sector arms by welding and are stiffened by
vertical and diagonal stiffeners to form the main frame. Tee sections are welded to horizontal
girders to make the frame rigid and to support the skin plate. Skin plate is welded to Tee
supports generally spaced vertically at about 40 cm apart.
Weight of gate leaf in tonnes as per fabrication drawings
:57.457 tonnes
1. Requirement of materials as per fabrication drawings :
a. Structural steel conforming to IS : 2062 :
Angles / channels / beams / bars with 2.5 % wastage
Plates / flats with 2.5 % wastage
b. Alloy steel components conforming to IS : 1570 :
Stainless steel plate
Pins
c. Cast steel components conforming to IS : 1030 :
Trunnion hub / guide roller
d. Alluminium bronze alloy components conforming to IS : 305 :
Trunnion bush / guide rollor bush
e. Bolt / Nut / Washers :
GI bolt / nut / washers with 2.5 % wastage
Black bolt / nut / washers with 2.5 % wastage
f. Zinc for padding trunnion and trunnion support
g. Rubber seal conforming to IS : 11855 :
Bottom seal
Side seals
h. Welding electrodes :
For stitch welding at 10 % of total with 2.5 % wastage
For run welding ( LH ) at 90 % of total with 2.5 % wastage

:15806.00 kg
:38672.00 kg
:6.00 kg
:1098.00 kg
:1895.00 kg
:1155.00 kg
:78.00 kg
:79.00 kg
:140.00 kg
:15.50 Rm
:25.00 Rm
:2728 Nos
:24554 Nos

2. Cutting sections for fabrication :


Length of cutting as per fabrication drawings assuming cutting for 2 sides
:928 Rm
Add for additional cutting for odd shapes and final trimming etc at 10 %
: 93 Rm
Total length of cutting involved
:1021 Rm
For cutting structural steel sections to required size combination of use of manual gas cutting
torch, pug cutting machine and plate shearing machine is assumed depending on the shape,
size and thickness of sections to cut for fabrication.
Length of steel to be cut by using gas cutting torch manually
:350 Rm
Length of steel to cut using pug cutting machine
:571 Rm
Length of steel to be cut using plate shearing machine
:100 Rm
Time for gas cutting manually assuming av. Progress of 2 m / hr
:175 hours
Time for gas cutting using pug cutting machine at av. 3 m / hr
:190 hours
Time for cutting by shearing machine at av. 10 m / hr
:10 hours
19

Acetelyne gas @ 0.6 cum / hr


( 365 x 0.6 )
Oxygen gas @ 1.8 cum / hr
( 365 x 1.8 )
Use of gas cutting torch with 50 min / hr working ( 175 x 60 / 50 )
Use of pug cutting machine with 50 min / hr working ( 190 x 60 / 50 )
Use of plate shearing machine with 50 min / hr working ( 10 x 60 / 50 )

:219 cum
:657 cum
:210 hours
:228 hours
:12 hours

3. Bending :
Assuming 1.2 m wide plates, length of plates for bending ( 15 x 11 / 1.2 )
Length of Tee sections @ 0.4 m spacing ( 15 x 11 / 0.4 )
Length of seal base / cover flats ( 11 x 2 x 2 )
Total length of bending involved
Time for bending 594 m at av. 3 m / hr ( 594 / 3 )
With 50 min / hr working deploy bending machine for ( 198 x 60 / 50 )

:137.5 Rm
:412.5 Rm
: 44.0 Rm
:594.0 Rm
:198 hours
:238 hours

4. Welding :
Length of welding as per fabrication drawings
:2294 Rm
For radial gates where field welding is more progress is assumed at 12 electrodes / hour.
Time for stitch welding @ 2 hrs / shift ( 2728 / 12 ) x 8 / 2
:909 hrs
Time for run welding @ 6 hrs / shift ( 24554 / 12 ) x 8 / 6
:2728 hrs
Total time for welding
:3637 hrs
Deploy welding transformer for 3637 hours.
Fuel / Energy charges @ 25 % hrs for stitch welding and 75 % hrs for
Run welding ( 909 x 0.25 + 2728 x 0.75 )
:2273 hrs
5. Surface cleaning and painting :
As surface cleaning by sand blasting is hazarous, the alternative method of cleaning
to remove rust / scaling / grease etc and to form phasphate coating is assumed.
Area of painting for radial gate @ 20 sqm / tonne ( 57.61 x 20 ) say
:1150 sqm
Quantity of rust cleaner @ 8 sqm / ltr ( 1150 / 8 )
:144 ltr
Quantity of zinc rich epoxy primer 1 coat 40 micron @ 9 sqm / ltr
:128 ltr
Quantity of coal tar epoxy paint 3 coats 100 micron each @ 6 sqm / ltr
:575 ltr
6. Requirement of other machinery :
For drilling holes in skin plate, seal cover flats, trunnion supports etc., 50 hours use of drilling
machine considered.
For grinding weld joints, edges etc., 50 hours use of grinding machine considered.
For handling during fabrication and erection 150 hours use of mobile derric crane and 300
hours use of stationery derric crane considered.
For lifting and placing in position sector arms / horizontal girders etc., 10 hours use of Tower
crane considered.
7. Requirement of work-force :
Work component
Foreman

Cutting sections 403 hrs


Drilling holes
Fab / Stitch welding 909 hrs
Run welding 2728 hrs
Erection of trunnion / tie beam
Erection of H girders
Erection of sector arms
Erection of vertical stiffeners
Erection of skin plates
Erection of end sheild / hood

28
3
57
34
4
3
3
5
3
4

Marker /
Fabricator/
Erector /
56
6
114
-8
3
3
10
6
8
20

Welder/
Painter
Gas cutter Cl II
56
--341
-------

-----------

Helper

112
12
456
341
32
12
12
40
24
32

Erection of bracings
Zinc filling for trunnion support
Cleaning / primer painting
Finishing paint 3 coats
Seal fixing
Finishing / checking / cleaning

6
2
--2
1

6
2
--2
2

-------

---306
---

24
2
77
77
4
2

8. Excise duty is applicable on fabricated parts. The cost of materials is inclusive of all taxes /
duties. Therefore, for purpose of rate analysis 75 percent of the total cost excluding cost of
materials ( assuming 25 percent of Machinery and Labour components for erection ) is
considered for assessing excise duty.
9. Use rate of materials :
Cost of welding holder set @
Life of welding holder set
Use rate of welding set
Cost of gas cutting torch set @
Life of gas cutting torch set
Use rate of gas cutting torch

Rs:

/ Each

( Cost / life )
Rs:

/ Each

( Cost / life )

Rs:
: 1000 hours
Rs:
Rs:
: 600 hours
Rs:

14.0 RATE ANALYSIS :


14.1 Rate analysis shall be prepared as for as possible considering the output of main plant or
group of work force and shall consist of three major cost components namely;
A. Material B. Machinery C. Labour
14.2 The above components shall include profit, overheads, small T & P and hidden costs
on labour. In case of major works, in addition to material, machinery and labour components
there will be other ancillary components such as work shop / stores / parking sheds,
transportation / erection / dismantling of plant & machinery, electric sub-station &
distribution lines, air lines, water supply arrangements, ventilation arrangements,
portable magazine etc. For these ancillary or enabling works of common utility for execution
of several items of work provision shall be generally made in the data rate either by working
out the details or on appropriate percentage basis.
14.2.1 Material component:
Material component shall include description of material, quantity, unit rate and cost for each
material. The quantities shall be for the quantity of work considered for analysis and shall
include wastage and requirements for incidentals such as finishing, mortar layer at lift joints
etc. For minor materials, not quantified but generally required for the work, appropriate lumpsum provision shall be made in the form of sundries. The material component shall include
provisions for small T & P materials, contractors profit, overheads on percentage basis. The
profit on materials shall be excluding cost of any materials supplied departmentally. The
material component shall also include royalty charges if the same is not included in the basic
rate of materials.
14.2.2 Wastage and incidentals:
CWC guidelines provide for wastage of 5 percent for cement and 2.5 percent for
reinforcement and structural steel. The wastage of 5 percent considered for cement in the
CWC guidelines includes requirement for incidental works like finishing and other minor
associated jobs forming part of the item. As cement for incidental works is not a regular
requirement, it is proposed to make provision for wastage of cement at 1 percent for all items
21

involving use of cement. For incidentals such as finishing, mortar layer for lift joints etc.,
wherever required, specific provisions may be considered for additional cement for such items
in the rate analysis. For steel wastage at 2.5 percent as per CWC guidelines may be
considered. For other construction materials like stone, rubble, coarse and fine aggregates
etc., wastage upto 2 percent may be considered in the data rates.
14.2.3 Quantity of Materials:
14.2.3.1 The quantities of materials to be considered in the rate analysis shall be
commensurate with the quantity of finished work considered for working out rate and shall
include wastage and requirement for incidentals if any.
14.2.3.2 The material constants for concrete items shall be based on theoretical mix
computations for average conditions of placement. For structural concrete durability
requirements shall also be considered while fixing the cement content of particular grade of
concrete. Minimum cement content and maximum water to cement ratio to be considered for
the concrete mix from durability requirements are furnished in IS: 456-2000 both for plain and
reinforced concrete. The gradation of coarse aggregate for concrete shall be average of the
range furnished in IS:383. For the purpose of preparing data rate for concrete items the
following grading limits shall be adopted for working out the quantity of coarse aggregate in
different size ranges:
80 mm and down size:

80 to 40 mm size range
40 to 20 mm size range
20 to 10 mm size range
10 to 4.75 mm size range

: 40
: 30
: 20
: 10

%
%
%
%

40 mm and down size:

40 to 20 mm size range
20 to 10 mm size range
10 to 4.75 mm size range

: 50 %
: 30 %
: 20 %

20 mm and down size:

20 to 10 mm size range
10 to 4.75 mm size range

: 65 %
: 35 %

14.2.3.3 All concrete mix proportions shall be on weight basis. Equivalent volume batching
may be permitted for batching of fine and coarse aggregates. Batching of cement shall be on
weight basis only. Nominal concrete mixes on volumetric basis such as 1:2:4 / 1:1.5:3 etc.,
are not recommended for inclusion in SR as fixed cement content for these mixes results in
un-economical use of cement where maximum size of coarse aggregate is more than 20 mm.
14.2.3.4 The gradation of coarse aggregate for filter shall satisfy the filter criteria. For the
purpose of determining quantities of filter aggregates for rate analysis following gradation
limits satisfying the filter criteria shall be adopted:
80 mm down filter aggregate:
80 to 40 mm
40 to 20 mm

: 90 %
: 10 %

40 mm down filter aggregate:


40 to 20 mm
20 to 10 mm

: 85 %
: 15 %

20 mm down filter aggregate:


20 to 10 mm

: 75 %
22

Below 10 mm

: 25 %

14.2.3.5 Material constants for masonry items shall be computed based on type of masonry
and mortar content. Suitable provision shall be made for stone chips as percentage of
quantity of stone for wedging and packing. For other items material constants shall be
computed as per the requirement.
14.2.3.6 A statement showing the requirement of materials per unit quantity including
wastage and requirements for incidentals based on the data rates shall be included in the
schedule of rates for reference for computing the lead charges.
14.3 Material rates:
14.3.1 The rates for materials included in the rate analysis shall be as per the unit rate
provided under the statement of rates for materials.
Certain materials such as air hose, water hose, gas cutting torch, welding accessories,drilling
accessories, formwork / centering / scaffolding materials etc., which contribute to the cost of
work are used for several unit quantities of work till they become scrap or absolute. The rate
to be considered for such materials under the material component shall be the use rate which
is the ratio of cost to life. The life for such material may be in hours / years / Rm / number of
uses etc., depending on the type of material.
14.3.2 Royalty charges:
The item rates provided in the schedule of rates shall be inclusive of royalty charges payable
to Government of Karnataka. The schedule of rates book shall include a statement of royalty
charges included in the basic rate for various items of work under each section to facilitate
recovery of royalty charges accordingly. The recovery of royalty charges, wherever
applicable, per unit quantity of work shall be as per the provisions under this statement.
14.4 Machinery component:
14.4.1 Machinery component shall include description of machinery, hours of usage, hire
charges per hour, fuel charges per hour to work out the cost. The crew charges shall be
considered under labour component. The machinery component shall include all plant and
machinery considered in the data and the number of hours of usage shall be commensurate
with quantity of work considered for rate analysis. For any unforeseen or minor machinery
requirements suitable lump-sum provision shall be made in the form of Sundries.
14.4.2 Hours of machinery usage:
The provision for machinery in data rates shall be for actual hours of usage of machinery. The
hourly out-put of any particular machine depends on the capacity, task to be performed, cycle
time of operation, efficiency of working etc., and may vary depending on the nature of work.
Out-put of machinery shall be computed considering 50 minutes working per hour. For
working out the data rates out-put of major plant shall be taken as the task.
14.4.3 Hire charges :
The hire charges of plant and machinery to be considered in the rate analysis shall be as per
the statement of hire charges included in the schedule of rates. Basic hire charge and fuel
charge shall be furnished for each machinery separately to facilitate computation of profit only
on fuel charges.

23

14.4.4 Labour component:


Labour component shall consist of number of workers of various category and operating crew
as per data and wages per day or per hour to work out the cost. Requirement of number of
workers of various category for particular type of work shall be commensurate with the task
considered for data rate and daily / hourly output of worker / group of workers. In addition to
operating crew provision may be made for other category of skilled / semi-skilled workers such
as foreman, mechanic, welder, electrician, etc., wherever required for routine daily
maintenance of plant and machinery. Suitable provision shall be included in the data rate for
these maintenance staff apportioning the requirement to various major items of work
depending on the number of plant / machinery considered in the item.
14.4.5 Requirement of work force:
The labour constants to be considered in the data rate for any particular item of work depend
on the type of work force, site conditions, nature of work, cycle time of operations and job /
management efficiency in organizing the work-force. The requirement of work-force shall be
assessed duly considering the various work requirements and standard published data /
experience on out-put of particular type of labour. Provision may be made for Maistry / Work
Inspector, wherever required, for organising and supervising the activities of work-force. The
requirement of work-force shall be commensurate with the quantity of work considered for rate
analysis.
14.4.6 Daily / Hourly wages:
The wages to be considered in the data rate for plant / machinery operating crew shall be on
hourly basis and at the rate as provided under statement of hire charges of machinery. For
other work-force the wages to be considered shall be on daily basis and at the rate as
provided under statement of wages of workers.
15.0 USE OF ADMIXTURES AND CURING COMPOUNDS:
Concrete admixtures such as Air-Entraining Agent ( AEA ) / Water reducing agent can be
used advantageously for better quality concrete. Dosing of such chemical admixtures for
concrete shall be as recommended by the suppliers or as specified by the project Quality
Control unit on the basis of trial studies. Similarly, Curing compound can be used for curing of
canal concrete lining works where there is scarcity of water in the work area. Suitable
provision shall be made in the SR data rates under material component towards the cost of
admixtures / curing compounds. A Note on Chemical Admixtures for Concrete is given in
Annexure-I.

16. OTHER PROVISIONS :


16.1 Other provisions to be considered in the data rate analysis are :
1. Small tools and plants:
2. Contractors profit and overheads.
3. Hidden cost on labour.
4. Enabling works.
5. Excise duty on supplies ( for gate works )
6. Rehandling lead.
16.2.

Small tools and plants:

24

Small tools and plants are necessary for routine maintenance of plant / equipment and for
work force in day today work. For machinery / Equipment the repair charges as per Clause :
2.2.6 of IS: 11590 include cost of spare parts and wages for all major repairs but do not
include normal / routine maintenance. It is difficult to quantify and make provision in the rate
analysis for all small tools and plants required in the execution of work. Therefore, it is the
general practice to make provision towards small T & P materials on percentage basis in the
rate analysis. In the CWC guide lines for preparation of project estimates a provision of 1
percent of cost of works is suggested for small tools and plants. In the proforma for estimation
of unit rates published by BIS for various work items small tools and plants is included as data
rate component. Based on CWC guidelines a provision of 1 percent of basic cost of materials,
machinery and labour components is proposed in the data rates towards small T & P and loss
on stocks etc.
16.3

Contractors profit and overheads:

In the CWC guidelines 20 percent of the cost of materials, machinery and labour is proposed
towards contractors profit and overheads together. It is also indicated in the guidelines that for
large jobs a lesser percentage of profit may be adequate. Considering the above provisions in
the CWC guidelines and also the present practice being followed for preparation of schedule
of rates, it is proposed to retain the provision towards the contractors profit at 10
percent of cost of materials (excluding departmental supplies), machinery (excluding
machinery hire charges in view of inclusion of interest on average capital cost ) and labour in
the data rate. In addition to profit, overhead costs at 5 percent of the cost of material
(including departmental supplies), machinery ( including hire charges) and labour
components is proposed in the data rates under dam, canal, tunnel, gates and canal
cross drainage works. No overheads are considered necessary in the data rates for items
related to investigation and maintenance works.
16.4

Hidden cost on labour:

Labour component shall also include certain indirect expenses on labour such as provident
fund, workmen compensation, wages for leave period / paid holidays, retrenchment
compensation, gratuity, travelling expenses, providing housing / medical / canteen / dresses /
gum-boots facilities etc., to comply with the various statutory and other local requirements.
CWC guide-lines provide for hidden costs on labour as percentage of labour cost. The
provisions vary upto 80 percent for skilled category and upto 55 percent for semi-skilled and
un-skilled category and are subject to modification depending on the local conditions of
working, availability of local work-force, duration of work, geographical location of work etc.
From the break-up of various provisions listed out in the CWC guide-lines it can be observed
that the major contributing factors to hidden costs are housing, idle wages during mansoon
period and provident fund. Generally, the minimum wages fixed by the Government include
some of the amenities to be provided to the work force. Hidden cost on labour shall be for
such amenities that are not covered / included in the wages. During non-working mansoon
period most of the operating crew will be deployed for over-hauling of plant and machinery
and the wages are covered under repair charges. Further, as the hourly wages of operating
crew are worked out on the basis of annual pay and yearly working hours of machinery, there
is no need to consider hidden cost on operating crew for non-working mansoon period.
Considering all such cases where the hidden cost is already covered in the wage
structure, the provisions suggested in the CWC guide-lines are reviewed and finally it
is proposed to fix the provision for hidden cost at 15 percent of the labour cost for all
works.
16.5 Additional hidden cost on labour:

25

For dam, tunnel and gate works where certain risks / hazards such as working during night
time, working under partial reservoir condition, gas cutting and welding hazards, dusty and
humid conditions etc., are unavoidable additional hidden cost at 5 percent for Dam &
Allied Works and 10 percent for Tunnel & Allied Works and 15% for Gate/Hoists and
Allied Works on the cost of labour component may be considered.
The details of provisions to be considered towards hidden costs and additional hidden costs
are furnished in Annexure-II.
16.6 Enabling works:
16.6.1 Construction of major project works involves transportation, erection and
dismantling of plant / equipment, construction of fuel depots / stores / sheds / haul
roads / water tanks / trestle structures / minor protective works, establishing electric
sub-station / portable explosive magazines, laying water / power supply lines etc.
Suitable provision for these enabling works either by assessing the probable costs or on
percentage basis shall be included in the rate analysis of work items. Monthly demand
charges per KVA of sanctioned power is also a major cost input and needs to be considered
as part of establishing electric sub-station.
16.6.2 In the CWC guide-lines transportation / erection / commissioning cost is included
in the capital cost of equipment. In this system the cost of transportation / erection /
dismantling gets distributed to entire working life of equipment. However, in practice, use of
equipment is only for few years in a project. When the equipment is transferred to another
project the cost of transportation / erection / dismantling is again involved. Therefore,
considering this cost separately for each work is more rational.
Provisions made in the CWC rate analysis data are as under:
Construction and maintenance of haul roads
5%
Electricity
2%
Lump-sum provisions are made for electrity / work shop / track charges / compressed air /
small tools etc., for concrete items.
In the proforma for estimation of unit rate published by BIS for various work items provision for
enabling works including carriage and freight of machinery is included under field set-up and
field charges.
In case of gate and hoist works the item rates are inclusive cost of designs and drawings and
also cost of transportation of component parts from place of fabrication to work site. The basic
rates to be included in the SR shall include suitable provision for these enabling works.
16.6.3 Based on the data prepared for enabling works the following provisions may be
included in the data rates as percentage of total cost of material, machinery and labour
components.
1.Dam and allied works:
a.
b.
c.
d.

Electric sub-station & demand charges ( for concrete items )


Trestle bridge for moving tower cranes( for concrete items )
Aggregate conveyor system( for concrete items only )
General enabling works ( for all items )

2.50
4.00
3.00
2.00

%
%
%
%

2.Canal and allied works:


a. General enabling works ( for all items )
b. Shifting of batching plant ( for CC lining by paver )

26

1.00 %
2.00 %

c. Ledge cutting / paver track laying ( for lining by paver )

1.00 %

3.Canal cross drainage works:


a. General enabling works . ( for all items )

1.00 %

4.Tunnel and allied works:


a.
b.
c.
d.
e.

Electric sub-station & demand charges ( all items )


Lighting inside tunnel ( all items )
Air and water lines( all items )
Ventilation arrangements ( only for excavation items )
General enabling works ( for all items )

5.00 %
1.50 %
1.00 %
5.00 %
2.00 %

5. Gate / Hoist and allied works:


a. Designs and drawings
b.
c.
d.
e.
f.

Zigs / supports / winches / chain & pulley etc


Power supply arrangements
Insurance charges
General enabling works
Transportation upto work site

2.50 %
2.50 %
2.50 %
1.00 %
2.00 %
3.00 %

6. Preliminary and Maintenance works:


a. General enabling works
( only for drilling & embankment breached section works )

1.00 %

General enabling works include ancillary works such as stores / work shop / guarage / fuel
depot / machinery sheds / storage water tanks / air & water supply lines / haul roads /
transportation, erection & dismantling of machinery etc., which are common to all items of
work.
16.7 Excise duty on supplies

In respect of gates, hoists and allied works excise duty is applicable on the value of fabricated
components supplied to site. Suitable provision shall be made in the rate analysis towards
excise duty on the supply value of gate and hoist parts. Excise duty is not applicable on
erection charges. Further, the excise duty shall not be considered in the rate analysis on
material component as basic material rates are inclusive of excise duty. Therefore, excise
duty to be considered in the rate analysis shall be only on machinery and labour components
required for fabrication of gates and hoists at the central fabrication yard. It is difficult to
determine the machinery and labour components separately for fabrication and erection. For
the purpose of computation of excise duty to be included in the rate analysis the machinery
and labour components may aportioned at 75 % for central fabrication yard and 25 % for field
erection and commissioning. Therefore, 75 % of the machinery and labour components may
be considered for assessing the extent of excise duty to be added in the rate analysis.
16.8 Rehandling lead charges:
In case of major works requirement of cement and steel will be large and generally these
materials will be purchased in bulk quantities. Cement will be stored in site stores and steel
27

will be stored in fabrication yard. These materials will be conveyed to batching plant / work
area subsequently to the extent required at a time. Therefore, conveyance of cement and
steel from source of supply to work spot involves re-handling from site store / fabrication yard.
As site stores / fabrication yards will be generally located beyond 150 m from work spot
rehandling lead of 1 km including loading and unloading shall be considered for cement and
steel for major works. While working out addditional lead charges for cement and steel the 1
km rehandling lead shall be deducted from total lead.
In respect of gate and hoist works rehandling is involved both at fabrication site and at
erection site. At the fabrication site materials are rehandled from stores to fabrication site for
cutting, bending and fabrication of parts. At the work site the fabricated parts are rehandled
from site yard to erection spots for assembly and erection. Therefore, for gate and hoists two
rehandling charges shall be considered in the rate analysis.
17.0 FORMAT FOR RATE ANALYSIS:
17.1 The data rate analysis for items to be included in the schedule of rates shall be furnished
in suitable format duly making appropriate provisions for all the requirements as explained in
the above paragraphs. Cost of materials shall include royalty charges wherever applicable. An
abstract of cost of materials, machinery and labour components shall be prepared at the end
and other provisions such as power supply arrangements, ventilation arrangements,
transportion / erection / dismantling costs, enabling works, excise duty on supplies,
rehandling charges etc., to the extent they are relevent for perticular item shall be added to
the total cost on cost / percentage basis as the case may be to finalise the unit rate to be
included in the schedule of rates.
17.2 The final unit rate may be rounded off suitably as under :
Rate less than Rs:10
Rate more than Rs:10 upto Rs:100
Rate more than Rs:100 upto Rs:1000
Rate more than Rs:1000 upto Rs: 10000
Rate more than Rs: 10000

: to be rounded off to nearest Rs:0.05


: to be rounded off to nearest Rs:0.10
: to be rounded off to nearest Rs:0.50
: to be rounded off to nearest Rs:1.00
: to be rounded off to nearest Rs: 5.00

17.3 The rates worked out on the basis of approved standard data and rounded off to nearest
value as suggested above for inclusion in the Schedule of Rates shall not be increased or
decreased further for any reason.
17.4 Typical rate analysis format: ( For concrete item illustrated in para 9 )
RATE ANALYSIS

UNIT:14.00 Cum

A. MATERIALS:
Sl No

Particulars

1 Cement for incidentals @ 3 kg/ cum


2 Coarse aggregate 20-10 mm
Coarse aggregate 10 mm below
3 Fine aggregate
4 Super plasticiser
5 Use rate of shuttering
6 Scaffolding @ 100 % of shuttering

Unit
Kg
kg
cum
cum
cum
ltr
sqm

28

Quantity
4666.00
42.00
7.40
4.00
6.30
14.00
35.00

Rate
In Rs.

Amount
in Rs.

TOTAL Rs:
Rs:
Rs:
Rs:
Rs:
Rs:
Total cost of Materials
Rs:

Add for small Tools and Plants @


1%
Add for Contractor' Profit @
10%
Add for Contractors' Overheads @
5%
Add royalty charges on CA @ ( Included in material rates )
Add royalty charges on FA @ ( Included in material rates )

0.00
0.00

B. MACHINERY:
Sl No

Description

Unit

1 Concrete mixer 300/200 ltr ( ele )


Fuel / Energy charges
2 5 hp pump ( ele )
Fuel / Energy charges
3 Needle vibrator 40 mm dia ( ele )
Fuel / Energy charges

Hour
Hour
Hour
Hour
Hour
Hour

Quantity

Rate
In Rs.

Amount
in Rs.

8.00
8.00
1.00
1.00
8.00
8.00

TOTAL Rs:
Rs:
Rs:
Rs:
Total hire charges of Machinery Rs:

Add for small Tools and Plants @


Add for Contractor' Profit on DPOL/ Energy @
Add for Contractors' Overheads @

1%
10%
5%

C. LABOUR:
Sl No

Description

1 Crew for Concrete mixer


2 Crew for Pump
3 Crew for Needle vibrator
4 Mason Class-I
5 Heavy mazdoor
For batching materials
For loading mortar pans
For laying
6 Light mazdoor
For conveying concrete
For cleaning/ washing/ curing
7 Labour cost of shuttering
8 Labour cost of scaffolding @ 100 %

Unit

Quantity

Hour
Hour
Hour
Day

8.00
1.00
8.00
1.00

Day
Day
Day

11.00
4.00
3.00

Day
Day
Sqm

14.00
1.00
35.00

Add for small Tools and Plants @


1%
Add for Contractor' Profit @
10%
Add for hidden cost on Labour @
15%
Add for additional hidden cost on labour @
5%
Add for Contractors' Overheads @
5%
Total cost of Labour

29

Rate
In Rs.

TOTAL Rs:
Rs:
Rs:
Rs:
Rs:
Rs:
Rs:

Amount
in Rs.

ABSTRACT:
Rs:
Rs:
Rs:
Total Rs:
Rs:
Total Rs:

A. Cost of Materials including royalty charges


B. Hire charges of Machinery
C. Cost of Labour
Add for enabling works @

2%

Add for 1 km re-handling / initial lead & loading /unloading:

Cement
4708 kg @ Rs:
Coarse aggregates 11.4 cum @ Rs:
Fine aggregates 6.3 cum @ Rs:
Total cost for 14.00 Cum

Rs:
Rs:
Rs:
Rs:

/ tonne
/ cum
/ cum

Rate per Cum Rs:

17.5 Typical rate analysis format : ( For gate item illustrated in para 9 )
A. MATERIALS:
Sl
No

UNIT : 57.457 tonnes


Particulars

1 Structural steel :
Angles / beams / channels / bars
Plates / flats
2 Cast steel components :
Trunnion hubs / guide rollers
3 Alloy steel components :
Stainless steel plate
Trunnion pins
4 Bronze alloy components :
Bush for trunnion / guide rollers
5 Bolts / Nuts / Washers :
G I bolts / nuts / washers
M S bolts / nuts / washers
6 Zinc for padding
7 Rubber seals :
Bottom seals
Side seals
8 Oxygen gas
9 Acetyline gas
10 Welding electrodes ( ordinary )
11 Welding electrodes ( LH )
12 Zinc rich epoxy primer paint
13 Coal tar epoxy paint
14 Rust cleaner / inhibitor
15 Use rate of welding holder set
16 Use rate of gas cutting torch set

Unit

Quantity

Kg
Kg

15806.00
38672.00

Kg

1895.00

Kg
Kg

6.00
1098.00

Kg

1155.00

Kg
Kg
Kg

78.00
79.00
140.00

Rm
Rm
Cum
Cum
Nos
Nos
Ltr
Ltr
Ltr
Hour
Hour
30

15.50
25.00
657.00
219.00
2728.00
24554.00
128.00
575.00
144.00
3637.00
210.00

Rate

Amount

in Rs.

in Rs.

17 Wire brush
18 Sundries

Nos
LS

Add for small Tools and Plants @


Add for Contractor' Profit @
Add for Contractors' Overheads @

12.00
1000.00

1%
10%
5%

TOTAL Rs:
Rs:
Rs:
Rs:

Total cost of Materials

Rs:

B. MACHINERY:
Sl
No

Particulars

1 Welding transformer
Fuel / Energy charges
2 Plate shearing machine
Fuel / Energy charges
3 Pug cutting machine
Fuel / Energy charges
4 Bending machine
Fuel / Energy charges
5 Tower crane 5 t capacity
Fuel / Energy charges
6 Mobile derric crane
Fuel / Energy charges
7 Stationery derric crane
Fuel / Energy charges
8 Grinding machine
Fuel / Energy charges
9 Drilling machine
Fuel / Energy charges
10 Sundries

Unit

Hour
Hour
Hour
Hour
Hour
Hour
Hour
Hour
Hour
Hour
Hour
Hour
Hour
Hour
Hour
Hour
Hour
Hour
LS

Add for small Tools and Plants @


Add for Contractor' Profit on DPOL/Energy @
Add for Contractors' Overheads @
Total hire charges of machinery

Quantity

Rate

Amount

in Rs.

in Rs.

3637.00
2273.00
12.00
12.00
228.00
228.00
238.00
238.00
10.00
10.00
150.00
150.00
300.00
300.00
50.00
50.00
50.00
50.00
1000.00

1%
10%
5%

TOTAL Rs:
Rs:
Rs:
Rs:
Rs:

C. LABOUR:
Sl
No

Description

1 Crew for Mobile crane

Unit

Hour

31

Quantity

150.00

Rate

Amount

in Rs.

in Rs.

2 Crew for Tower crane


3 Crew for Bending machine
4 Crew for Drilling machine
5 Crew for Grinding machine
6 Foreman
7 Marker / Fabricator / Erector
8 Gas cutter
9 Welder ( General )
10 Welder ( X ray grade )
11 Khalasi
12 Helper fabrication / erection
13 Helper for cleaning / painting
14 Painter Class II
15 Electrician

Hour
Hour
Hour
Hour
Day
Day
Day
Day
Day
Day
Day
Day
Day
Day

10.00
238.00
50.00
50.00
155.00
226.00
56.00
307.00
34.00
250.00
1105.00
154.00
306.00
30.00

Add for small Tools and Plants @


1%
Add for Contractor' Profit @
10%
Add for hidden cost on Labour @
15%
Add for additional hidden cost on labour @
15%
Add for Contractors' Overheads @
5%
Total cost of Labour

TOTAL Rs:
Rs:
Rs:
Rs:
Rs:
Rs:
Rs:

ABSTRACT :
A. Cost of Materials
B. Hire charges of Machinery
C. Cost of Labour
Total
Add for excise duty on 75 % of total
cost excluding cost of materials
Add for insurance charges @
Add for designs and drawings @
Add for zigs/ supports/ winches @
Add for power supply arrangements @
Add for enabling works @

18%
1.0%
2.5%
2.5%
2.5%
2%

Rs:
Rs:
Rs:
Rs:
Rs:
Rs:
Rs:
Rs:
Rs:
Rs:

Total
Add for 2 rehandling leads for 1 km & loading / unloading:
Fabricated parts 2 x 57.457 t @
Rs: / tonne
Add for transportion upto site @:
3%
Total cost for
57.457 Tonnes

Rate per Tonne

Rs:

Rs:
Rs:
Rs:
Rs:

18.0 ADDITIONAL LEAD, LOADING & UNLOADING CHARGES:


18.1 The conveyance of materials from source of supply to final placement may be in single
stage or in multi stage depending on the nature of work. The conveyance of materials within
the site area is reckoned as initial lead and is generally included in the basic rate provided in
the schedule of rates. The lead upto site is reckoned as additional lead and is added to the
basic rate at the stage of preparation of estimate for the work. The quantities of materials to
be considered for the purpose of working out additional lead charges shall be computed and a
statement to this effect shall be included in the schedule of rates under each section. The
rates provided in the schedule of rates for lead, loading and un-loading costs shall be based
32

on the standard data. Lead charges upto 5 km shall be on cumulative basis in increment of 1
km and beyond 5 km the lead charges shall be for each additional km. The rate shall include
hire charges of transport equipment and crew charges on round trip cycle time basis with the
fuel charges only for the running time of transport vehicle. Un-loading shall include stacking
wherever required. The basic rates in the schedule of rates for work items shall be with initial
lead of 1 km for mechanical conveyance or 50 m for manual conveyance depending upon the
type and location of work. For work items involving use of materials not listed in the statement
of lead charges the basic rates in the schedule of rates shall be with all leads.
18.2 For certain works such as dam / canal / tunnel where it may not be possible / feasible to
stack steel and cement within 50 m distance ( initial lead by head load ) from the work area
the initial lead shall be 1 km and shall be considered as re-handling lead. In such cases the
additional lead charges for lead exceeding 1 km shall be computed by deducting the initial
lead of 1 km from the total lead.

Example:
Total lead for cement
100 km.
Initial lead considered in basic rate
1 km.
Additional lead involved
99 km.
Additional lead charges : Lead charges for 99 km + loading and unloading.
18.3 Additional lead charges shall be computed for 99 km including loading and un-loading as
it involves transportation and re-handling of cement from store yard to work area.
For sand, coarse aggregate and stone required for concrete / masonry works the materials to
the extent of daily requirement can be stacked near the work place and as such re-handling
lead can be avoided. Additional lead charges for these materials shall be computed as
deference of total lead charges and initial 1 km lead charges included in basic rate. No loading
and unloading charges shall be allowed.
Example:
Total lead for sand
Initial lead considered in basic rate

25 km
1 km

18.4
Additional lead charges : Lead charges for 25 km Lead charges for initial 1 km.
For earth / rock-fill works of dam and canal generally borrow areas will not be permitted close
to embankment. Therefore, the initial lead for embankment items shall be 1 km. For these
works where the actual lead exceeds initial lead of 1 km additional lead charges shall be
computed as deference of total lead charges and 1 km initial lead charges included in basic
rate. No loading and un-loading charges shall be added to the basic rate as soil / rock is
conveyed directly from borrow area / quarry to embankment area without re-handling in
between.
Example:
Total lead for soil----------------------------------- 3 km.
Initial lead considered in basic rate------------ 1 km.
Additional lead involved--------------------------- 2 km.
Additional lead charges : Lead charges for 3 km : Lead charges for initial 1 km.
18.5 Where the basic rates (other than excavation items) provided in the schedule of rates
include initial lead of 50 m the additional lead charges for mechanical conveyance shall be
computed for the total lead involved and both loading and un-loading charges shall be added.
33

18.6 For excavation items, where the basic rates provided in the schedule of rates include
initial lead of 50 m, the additional lead charges by mechanical conveyance shall be for the
total lead and only un-loading charges shall be added.
18.7 The quantity for the purpose of lead by mechanical means, loading and un-loading
charges shall be the bulk volume without deduction for voids. The allowance for bulkage to
account for voids / increase in voids in the excavated materials shall be as under:
All kinds of soil
All kinds of soft rock
Hard rock

20 percent.
30 percent.
40 percent.

18.8 The quantities of materials required for each item for working out the additional lead
charges shall be computed and a statement to this effect shall be included in each section of
schedule of rates.
18.9 Additional lift charges:
Lifting of materials to point of final placement can be by deploying manual labour or by
mechanical means. In case of use of machinery the cycle time for round trip operation
includes lifting of the materials vertically or along the specified gradient in case of haulage. In
case of manual labour also generally material storage and handling is managed by creating
working platforms at convenient elevations along the valley slopes to minimise the lifting
efforts. Such arrangement also ensures better progress of work. The cycle time considered in
working out the daily output of labour includes conveying materials along such ramp ways.
Therefore the basic rates to be included in the schedule of rates for dam / canal / tunnel and
allied works shall be for all lifts.
19.0 DEWATERING & DESILTING:
19.1 De-watering and de-silting are need based requirements and as such the rates provided
in the schedule of rates for individual items shall be exclusive de-watering and de-silting.
Provision for de-watering may be made under separate item in the estimate / contract or by
including the cost of de-watering in various items of work on percentage basis while preparing
estimates / tenders. Though provision of separate item for de-watering is more rational as it
allows payment for actual quantity of water pumped out, the monitoring is difficult particularly
for dams / canals and allied works in view of de-watering at various places and use of diesel
pumps also. There are also some other lacunae in this system leading to possible disproportionate increase in de-watering costs for dams / canal works. However, for tunnel
works, where diesel operated pumps are not allowed, better monitoring is possible by
arranging separate power supply line with metering arrangement for de-watering and as such
provision may be made for separate item of de-watering. In the CWC guide-lines an out-lay of
3 to 5 percent is proposed for de-watering. For properly constructed / maintained diversion
arrangements and considering the local conditions of rainfall / seepage a 2 percent provision
is considered reasonable for de-watering and de-silting.
19.2 For dam and allied works 2 percent provision may be made on the basic rates
provided in the schedule of rates for all items towards de-watering and de-silting. A
note to this effect shall be added in the schedule of rates.
For canal works including CD works 2 percent provision may be made on the basic
rates provided in the schedule of rates for all items towards de-watering and de-silting
only for the reaches where de-watering and de-silting are anticipated. A note to this
effect shall be added in the schedule of rates.

34

For tunnel works separate item rate with Kwhr as the unit of measurement shall be
included in the schedule of rates.
19.3 A binding clause limiting the cost of de-watering to 5 percent of the cost of work
shall be included in the contract to keep control over payment and to avoid
disproportionate extra cost of de-watering. A note to this effect shall be included in the
schedule of rates.
20.0 SALES TAX ON WORKS CONTRACT:
Government of Karnataka has levied sales tax on works contracts which is to be deducted
from the work bills at the rate prevailing at the time execution of work. The rates provided in
the schedule of rates are exclusive of sales tax on works contracts since certain provisions
such as de-watering / de-silting, additional lead / lift charges etc., forming part of cost of work
are to be added at the time of preparation of estimate. Therefore, provision shall be made
towards sales tax on works contracts at the time of preparation of estimate.

21.0 AREA WEIGHTAGE :


The Schedule of Rates are generally prepared duly considering the average market rates
collected from major commercial centers nearer to project area for materials and the wages of
workers prevailing in the project area at the time of preparation of schedule of rates. The
machinery hire charges mainly depend on the capital cost and not on the area where the work
to be carried out is located. The rates are also prepared separately for each type of work such
as dam, canal, CD work, tunnel etc., considering the nature of work and average conditions of
working duly making appropriate provisions for cycle time of woking, re-handling of materials,
hidden costs on labour, enabling works etc. Therefore, the rates provided in the schedule of
rates prepared on scientific basis with provisions for additionalities such as additional lead / lift
/ loading and unloading charges, dewatering and desilting charges etc., are to be considered
reasonable and representative for all works irrespective of their geographical location within
the project area. However, certain works such as investigation works in interior locations not
connected by road, emergent repair works requiring mobolization of men and machinery in
very short period for short duration of work etc., may cost little extra compared to similar works
under normal situation. It is considered more rational to identify major items for such works
and include suitable rates for the same in the schedule of rates rather than making provisions
of area weightage. In view of the above, no area weightage shall be allowed in the
schedule of rates.

22.0 PRICE ESCALATION :


Generally, the rates provided in the schedule of rates are valid for one year and are the basis
for preparation of estimates and tender schedules. In respect execution of works on contract
system payments are regulated on the basis of rates quoted by the contractor at the time of
tendering. The quoted rates are valid throughout the contract period. However, prices of
material, hire charges of machinery and wages of workers fluctuate periodically due to
increase / decrease in production costs, market conditions, seasonal variations, increase /
decrease in taxes / duties / royalties etc. As a result of this, the construction costs also vary
depending on the variations in prices of various work inputs. The rates for various work items
provided in schedule of rates are reviewed / revised every year based on current market rates
for materials, machinery, labour and other inputs to reflect the increase / decrease in current
construction costs on annual basis. However, in the contracts there will be no provision for
revision of quoted rates till the completion of contract period. As the fluctuation in market
prices is beyond the control of both the Employer and the Contractor, contracts either provide
35

for some mechanism for periodical price adjustment or allow the contractors to assess the
probable cost escalations during the contract period and include the same in the quoted rates.
As such, the quoted rates also include probable cost escalations during the contract period
fully or partly depending upon the conditions of contract. Generally, where the contract period
is more the contracts provide for price escalation clause applicable to value of work beyond
the specified no escalation payment period. The trend in the fluctuation of market rates is
the general guiding factor for assessing the future cost escalations. The cost escalation in the
long duration contracts is generally regulated on formulae basis. Each formula includes extent
of escalating component and source of cost indices. The extent of escalating component
depends on the nature of work, extent of machanisation and labour components, value of
work carried out during no escalation period etc. The revised policy of Central Government,
permitting the oil companies to regulate Fuel Prices based on the Global fluatuations of the
Crude Prices has resulted in the frequent revision of Fuel Prices. In view of extensive
mechanisation of data rates and change in the policy of regulating prices of Fuel by
Government of India / Oil Companies the escalating components being adopted so for based
on extensively labour oriented data rates may also require review. This can be done by
analyzing the cost of major items included in the contract.
The various aspets involved in cost escalation and use of cost escalation formulae are
furnished in Annexure III.

23.0 PREPARATION & ISSUE OF SCHEDULE OF RATES BY CENTRAL AGENCY:


23.1 Schedule of rates shall be prepared and issued each year. Wages of workers shall be
revised with effect from the date notified by the state labour department. Generally, the
material rates, plant / equipment costs and fuel rates change after Central / State budgets.
Schedule of rates shall be revised duly considering the prevailing rates for materials,
machinery and labour after the Central / State budgets and shall be issued for adoption with
effect from 1st of July every year. All the data / Rate analysis shall be in standard format.
Standard data adopted in preparation of rate analysis for various items included in the
schedule of rates shall not be modified without the approval of competent authority. Any
changes / modifications considered necessary shall be referred to the Competent Authority /
Schedule of Rates review committee.
23.2 The system of each circle preparing and issuing Schedule of Rates is likely to result in
non-uniform item rates for similar work items inspite of adoption of common standard data and
formats for preparation of SR if the material rates / capital cost of machinery and other related
basic data differ from circle to circle due to each cirle collecting the basic data independently.
In view of extensive mechanization and standardization of data, for preparing data rates for
work item, rates to be included in the Schedule of Rates can be common to all circles in the
Department / Corporation. Therefore, the preparation and issue of Schedule of Rates shall be
centralised under each Department / Corporation to ensure uniformity in rates for similar
works in all circles under the Department / Corporation.
24.0 COMPUTERIZATION OF DATA :
24.1 In view of availability of computer facilities in the project areas all the data and data rates
prepared in standard format shall be computerized to facilitate quick revision. A basic data file
shall be created to include material rates, wages of workers, capital cost of machinery /
equipment / accessories and other relevant information necessary for revision of schedule of
rates. All data rate files shall be linked with the information in this basic data file so that by
updating the basic data file it can be possible to revise hire charges, lead / lift / loading /
unloading charges and the item rates in various files automatically. Each data rate file shall
include reference data, notes, statement of requirement of materials, statement of royalty
charges, rates schedule and data rates.
36

24.2 For revising the Schedule of Rates in the Computer programme, the files shall be
opened in a perticular order to incorporate the revised data. The procedure to be followed for
revising the computerised Schedule of Rates is furnished in the Annexure IV.
25.0 REVIEW OF SR DATA :
In view of the continuous developments in the field of construction the Schedule of Rates data
shall be reviewed and updated periodically, say once in five years, for the existing items as
well as for inclusion of new items in the Schedule of Rates.

(CAPT.S. RAJA RAO)


CHAIRMAN
SCHEDULE OF RATES COMMITTEE

37

ANNEXER- II

HIDDEN COSTS ON LABOUR


CWC guidelines provide for hidden costs on labour to cover various allowances and other
expenditure on labour as percentage of the labour cost. The provision varies upto 80 percent
for skilled category to upto 55 percent for semiskilled and unskilled category. The breakup of
various provisions for hidden costs are furnished in the CWC guide lines and are subject to
modifications depending on the local conditions of working, availability local work force,
duration of work etc,. Generally most of the machinery operating crew and a few skilled/
semi-skilled workers will be on regular/ monthly employment basis and all other work force
will be on daily wages basis. Considering this the provisions to be made towards hidden
costs for dam, tunnel, canal and gate works are reviewed for each of the component based
on the provisions listed in the CWC guide-lines. The details of the review are as under:
1. Wages for weekly rest days :
Workers are to be allowed one day rest weekly and are to be paid wages for the weekly rest
day. This requirement is already taken care off while fixing the daily wages by computing the
wages for 30 days and distributing the same to 26 days. Therefore, there is no need to
consider wages for weekly rest days for computation of hidden cost on labour.
2. Wages for non-working mansoon days :
This provision is mainly applicable to workers employed on regular basis who are to be paid
wages for non-working mansoon days. However, in practice, overhauling and annual repairs
to most of the plant / machinery are taken up during non-working mansoon days and
operating crew are also deployed on this job which forms part of hire charges. Further as per
CWC guidelines the hourly wages of operating crew are worked out on the basis of annual
pay and yearly working hours of plant / machinery. In case of tunnel the works will be in
progress even during mansoon period. Similarly for gate works fabrication works can be
continued during mansoon period. Therefore, there is no need to consider idle wages for
mansoon period for computation of hidden cost on labour since the hourly wage structure
includes wages for non-working period and also due to contnuity of work during mansoon
period in certain cases.
3. Wages for leave period:
In the CWC guidelines a provision of 16.79 percent for skilled category and 1.62 percent for
semi-skilled / unskilled category is proposed based on 5 paid holidays and 40 days leave for
skilled workers and 5 paid holidays for semi-skilled and un-skilled workers. As most of the
semi-skilled and un-skilled workers will be on daily wage basis, leave facilities are not
considered in the CWC guide-lines. Even in respect of skilled workers, certain categories such
as mason, carpenter, bar bender, maistry, blaster etc., will be mostly on daily wages and their
number fluctuates depending upon availability of work fronts. Generally, in practice, works will
be continued with the available staff without providing replacement in short period leave
vacancy. Therefore, considering the above facts, about 50 percent of the skilled work-force
mainly comprising of operating crew can be considered for leave period wages for
computation of hidden cost on labour.
In respect of semi-skilled and un-skilled categories 4 paid holidays can be considered for
computation of hidden cost on labour for dam and canal works considering that these works
will be closed during mansoon months.

38

The skilled category constitutes about 10 percent for canals, about 20 percent for dam, about
25 percent for tunnel and about 45 percent for gate works.
Number of days to be considered for distribution of hidden cost :
Skilled category : ( 365 days 40 days leave 5 paid holidays ) = 320 days.
Other category :
For dam and canal :( 365 days90 non-working masnoon days 4 paid holidays ) =271days
For tunnel and gates : ( 365 days 5 paid holidays ) = 360 days
Based on the above, the provisions are reviewed as under:
For canal works:
For dam works:
For tunnel works:
For gate works :

45 x 100 x 0.1 x 0.5 / 320 + 4 x 100 x 0.9 / 271


45 x 100 x 0.2 x 0.5 / 320 + 4 x 100 x 0.8 / 271
45 x 100 x 0.25 / 320 + 5 x 100 x 0.75 / 360
45 x 100 x 0.45 / 320 + 5 x 100 x 0.55 / 360

say
say
say
say

=
=
=
=

2.05
2.60
4.50
7.10

%
%
%
%

4. Retrenchment compensation:
In the CWC guidelines a provision of 5.59 percent for skilled category and 4.87 percent for
semi-skilled / unskilled category is proposed. This provision can be considered only for skilled
category, which constitutes about 10 percent to 45 percent of the total workforce, and need
not be considered for unskilled category engaged on daily wages basis. In the skilled category
also substantial work-force will be on daily wage basis. Generally regular skilled workforce is
shifted to other work sites after completing the work on hand along with the machinery and the
question of retrenchment generally does not arise. However in case of large workforce it may
become necessary to retrench some workers if all workforce can not be accommodated
elsewhere. Considering above facts, about 25% of the skilled category can be considered for
computation of hidden cost on labour for retrenchment compensation.
Based on the above, the provisions are reviewed as under:
Canal works:
Dam works:
Tunnel works:
Gate works:

15 x 100 x 0.1 x 0.25 / 320


15 x 100 x 0.2 x 0.25 / 320
15 x 100 x 0.25 x 0.25 / 320
15 x 100 x 0.45 x 0.25 / 320

say
say
say
say

= 0.10
= 0.25
= 0.30
= 0.50

%
%
%
%

5. Housing / Water supply / Sanitation:


In the CWC guidelines a provision of 26 percent for skilled category and 18 percent for semiskilled / unskilled category is proposed. Most of the contracts include conditions for
deployment of project affected people to the extent possible. No housing or other related
facilities are needed for local workforce except transportation facilities. However, for the
semiskilled / unskilled workforce brought from outside project areas temporary hutment to
some extent are necessary during each working season and for the operating crew and other
essential skilled workforce temporary type houses are generally provided by the contracting
agencies at the work sites. In Karnataka local workforce is available in almost all the regions.
Inspite of availability of local labour if the contractors opt for bringing labour from outside it
may be for their advantage and therefore, housing facilities need not be considered for all the
workforce. Considering the above facts, housing facilities for 50 percent of total workforce for
dam, canal, tunnel works and 25 percent of total work-force for gates can be considered for
computation of hidden cost on labour towards housing and other related facilities. The cost of
hutment can be considered at 25 percent of temporary houses.
Based on the above, the provisions are reviewed as under
For canal works:

0.5 x 0.1 x 26 + 0.5 x 0.9 x 0.25 x 18


39

say

= 3.30 %

For dam works:


For tunnel works:
For gate works:

0.5 x 0.2 x 26 + 0.5 x 0.8 x 0.25 x 18


0.5 x 0.25 x 26 + 0.5 x 0.75 x 0.25 x 18
0.25 x 0.45 x 26 + 0.25 x 0.55 x 18

say
say
say

= 4.40 %
= 4.90 %
= 5.40 %

6. Workmen compensation :
In the CWC guidelines a provision of 5 percent is proposed towards workmen compensation
payable in case of death / disability etc., due to accidents while on duty. Most of the major
contracts include conditions for group insurance of the workforce against accidents and strict
enforcement of safety measures during execution of works. In view of this, for the purpose of
computation of hidden cost on labour the provision for workmen compensation can be limited
to:
For canal and allied works:
For dam and allied works:
For tunnel and allied works:
For gate works:

= 1.0
= 2.0
= 3.0
= 2.0

%
%
%
%

7. Medical/Canteen/Dress facilities :
In the CWC guidelines a provision of 4 percent for medical facilities, 2 percent for canteen
facilities and 3 percent for dresses / gum boots etc, is proposed. Dresses are generally
provided only to regular workforce. Gum boots / hand gloves etc, are provided to the workers
who handle concrete / mortar. Workforce at site are generally enrolled in the fair price shops
for subsidized food / fire wood / kerosene etc, Generally the contractors make use of nearby
Govt hospitals for medical facilities to their workers. Therefore, for the purpose of computation
of hidden cost on labour the following provisions may be considered for these facilities.

Medical facilities:
Canteen facilities:
Dresses / gum boots etc:

Canal

Dam

Tunnel

Gate

1.50
1.00
1.00

2.00
1.00
1.00

2.50
1.00
2.00

2.00 %
1.00 %
2.00 %

8. Travelling expenses:
In the CWC guidelines a provision of 6 percent is proposed for travelling expenses of workers.
Travelling expenses can be due to bringing unskilled workforce from places outside the
project areas. More output, lesser wages, non-availability of adequate local labour etc, may be
the reasons for this. For the local labour from the nearby villages only local transport facilities
may be necessary to some extent. However, some highly skilled workers may be required to
travel from project to project for repairs / replacements and erection / dismantling of plants etc.
For gate works most of the fabrication work is carried out in one place and does not involve
much of travelling expenses. In view of considering wages prevailing in the area following
provisions may be considered towards the arrangements for local transportation and travelling
expenses of highly skilled workers for computation of hidden cost on labour.
For canal and allied works:
For dam and allied works:
For tunnel and allied works:
For gate and allied works:

say
say
say
say

40

= 2.00
= 2.00
= 2.00
= 1.50

%
%
%
%

9. Gratuity:
In the CWC guidelines a provision of 5.6 percent is proposed towards gratuity payable to
skilled workers. This is applicable only to the workforce engaged on regular employment
basis. It is already explained in para 3 that about 50 percent of work-force in respect of canal
and dam works will be on daily wage basis. Generally operation and maintenance crew and
some skilled workers can be considered for employment on regular basis. Considering skilled
workforce at 10 to 45 percent of total workforce the provision to be made towards hidden cost
on labour works out to:
For canal works:
For dam works:
For tunnel works:
For gate works:

0.1 x 0.5 x 5.6


0.2 x 0.5 x 5.6
0.25 x 5.6
0.45 x 5.6

say
say
say
say

= 0.30
= 0.60
= 1.40
= 2.50

%
%
%
%

10. Employees Provident fund:


In the CWC guidelines a provision of 8.33 percent is proposed towards Employees provident
fund for all category of workers. For regular workforce, which may be about 10 to 45 percent
of total workforce, the provision may be considered at 8.33 percent. For the unskilled
category engaged on daily wages basis it is very difficult to keep account of every labour daily
by the contractor particularly in large works. In most of the major works the contractors rely on
sub-contractors for arranging required unskilled and to some extent skilled workforce on task
work basis and do not bother much about the number of workers engaged. In view of this and
also due to cumbersome procedures most of the contractors/sub-contractors do not comply
fully with the PF rules to cover all their workforce. Fluctuations in daily requirement of workers
and frequent movement of workers from one work to another work for better wages or for any
other reasons also contribute to the difficulties in complying fully with the PF rules /
requirements for all their workforce.
In respect of gate works most of the work-force comprises of skilled and semi-skilled
categories. Therefore, it is proposed to consider 25 percent of semi-skilled / unskilled category
for canal, dam, tunnel works and 50 percent of the semi-skilled / un-skilled category for gate
works for computation of hidden cost on labour towards PF contribution in the data rates and
allow the contractors to load the balance while quoting their rates.
Based on the above, the provisions are reviewed as under:
For canal works:
For dam works:
For tunnel works:
For gate works:

0.10 x 8.33 + 0.90 x 0.25 x 8.33


0.20 x 8.33 + 0.80 x 0.25 x 8.33
0.25 x 8.33 + 0.75 x 0.25 x 8.33
0.45 x 8.33 + 0.55 x 0.50 x 8.33

say
say
say
say

= 2.70
= 3.35
= 3.60
= 6.00

%
%
%
%

The overall provisions towards hidden costs on labour in the data rates as percentage of total
cost of labour component may be as under for canal, dam, tunnel and gate works:

41

ABSTRACT OF HIDDEN COST ON LABOUR

Sl
No
.
1.

Details of hidden cost components


( as percentage of labour component )

3.

Wages for weekly rest days


( incldded in daily wage structure )
Wages for non working mansoon
( not considered Refer para 2 )
Leave / paid holidays / idle wages

4.

CANAL

DAM

TUNNEL

GATES

---

---

---

---

---

---

---

---

2.05

2.60

4.50

7.10

Retrenchment compensation

0.10

0.25

0.30

0.50

5.

Housing / WS & S facilities

3.30

4.40

4.90

5.40

6.

Workmen compensation

1.00

2.00

3.00

2.00

7.a

Medical facilities

1.50

2.00

2.50

2.00

7.b

Canteen facilities

1.00

1.00

1.00

1.00

7.c

Dress / gloves / shoes etc

1.00

1.00

2.00

2.00

8.

Travelling expenses

2.00

2.00

2.00

1.50

9.

Gratuity

0.30

0.60

1.40

2.50

10.

Provident fund

2.70

3.35

3.60

6.00

14.95
15.00

19.20
20.00

25.20
25.00

30.00
30.00

2.

Total hidden cost on labour %


Say %

Based on the above analysis of hidden costs on labour it is proposed to include the following
provisions in the labour component of schedule of rates data rate analysis:
Work component

CANAL

DAM

HIDDEN COSTS ON LABOUR @


ADDITIONAL HIDDEN COSTS @

15.00 % 15.00 %
-5.00 %

TUNNEL

GATES

15.00 %
10.00 %

15.00 %
15.00 %

The additional hidden cost of 5 percent for dam, 10 percent for tunnel works is for the risk and
hazards involved in these works.
The additional hidden cost of 15 percent for gate works is for requirement of comperatively
large skilled / semi-skilled work-force in addition to risk and hazards involved in the job.

42

ANNEXER- IV
PROCEDURE FOR REVISING COMPUTERISED S R DATA
The Schedule of Rates and Data rate books shall be prepared on the basis of GUIDE-LINES
FOR PREPARATION OF SCHEDULE OF RATES and all the data shall be stored in different
files as under :
1. Basic data.
2. Hire charges of machinery.
3. Lead / Lift / Loading / Unloading charges.
4. Dam and allied works.
5. Canal and allied works.
6. Canal cross drainage works.
7. Tunnel and allied works.
8. Gate / Hoist and allied works.
9. Preliminary and Maintenance works.
10. Schedule of rates.
BASIC DATA file shall be the primary file containing all basic information such as material
rates, wages of workers, capital cost of machinery / accessories and other supplimentary
information required for revising Schedule of Rates. The computer programme shall be such
that by updating the basic data file, the rates and other data to be revised in all other files can
be changed automatically to altimately revise the Schedule of rates. All the files shall be
PASSWORD protected except the rates and other data to be updated in the basic data file
every year. Un-necessary changes shall not be made in the basic data file as all other files are
linked with the information in the basic data file. Whenever, any new material / machinery is to
be included in the basic data file resulting in shifting of information in any column or row in the
basic data file corrosponding changes are necessary in all other inter-linked files.
The following procedure shall be followed for revising the Schedule of Rates in the computer
programme :
OPEN AND UPDATE COMPUTER FILES IN THE SAME ORDER AS THEY ARE LISTED :
Open BASIC DATA file .
Change YEAR / RATES / OTHER DATA shown in BLUE colour wherever necessary.
SAVE and CLOSE the file.
Next open HIRE CHARGES file.
Click YES in the message box that appears on the screen.
SAVE and CLOSE the file.
Next open LEAD CHARGES file.
Click YES in the message box that appears on the screen.
SAVE and CLOSE the file.
ONLY AFTER UPDATING ABOVE FILES update work item data rate files one by one.
On opening any work item data rate file :
Click YES in the message box that appears on the screen.
SAVE and CLOSE the file.
Finally after updating all work item data rate files open SCHEDULE OF RATES file.
Click YES in the message box that appears on the screen.
SAVE and CLOSE the file or SAVE and take print copies of revised SR.

43

ANNEXER- III

PRICE ESCALATION
1. GENERAL:
Generally, the rates provided in the schedule of rates are valid for one year and are the basis
for preparation of estimates and tender schedules. In respect execution of works on contract
system payments are regulated on the basis of rates quoted by the contractor at the time of
tendering. The quoted rates are valid throughout the contract period. As such, the quoted
rates also include probable cost escalations during the contract period fully or partly
depending upon the conditions of contract. Generally, where the contract period is more than
24 months, the contracts provide for price escalation clause applicable to value of work
beyond the specified non-escalating period. The escalating components for cost escalation on
formula basis can be worked out by analyzing the major items included in the contract.
Prices of material, hire charges of machinery and wages of workers fluctuate periodically due
to increase/ decrease in production costs, market conditions, seasonal variations, increase/
decrease in taxes/ duties/ royalties etc. As a result of this, the construction costs also vary
depending on the variations in prices of various work inputs. The rates for various work items
provided in schedule of rates are reviewed/ revised every year based on current market rates
for materials, machinery, labour and other inputs to reflect the increase/ decrease in current
construction costs on annual basis. However, in the contracts there will be no provision for
revision of quoted rates till the completion of contract period. As the fluctuation in market
prices is beyond the control of both the Employer and the contractor, contracts either provide
for some mechanism for periodical price adjustment or allow the contractors to assess the
probable cost escalations during the contract period and include the same in the quoted rates.
The trend in the fluctuation of market rates is the general guiding factor for assessing the
future cost escalations. Till about 1989 the rise in indices of various inputs was fairly steady
and annual rise was around 5 to 10 percent. In fact CWC in 1988 revision of Guide Book on
use rate hire charges of equipment has proposed 7 percent rise per annum for updating the
capital cost of machinery for working out the hire charges. In view of fairly steady changes in
indices much speculation was not involved in assessing the probable cost escalations during
the contract period and it was possible to carry out the works at the quoted rates till
completion without cost escalation provisions in the contracts. Even then for contracts of long
duration generally provisions were being made for cost escalations during the contract period
on formulae basis to minimize litigation/ claims on cost escalations for reasons not attributable
to the contractor.
However, after 1989 the situation changed due to steep rise in DPOL/ Energy prices, revision
of minimum wages of workers and unsteady trend in market rates. This affected the prices of
almost all construction materials and hire charges of machinery. The living allowance of
construction workers is linked with annual rise in the State CP index. Therefore the wages of
workers have to be revised every year to comply with minimum wages requirement. The
introduction of sales tax on works contract and revision of royalty charges also resulted in
claims and reimbursement of the sales tax / additional royalty charges for most of the ongoing
works. The rise in prices was not steady and not at regular intervals. In view of high
inconsistency in price/ index the assessment of future cost escalations to include the same in
the rates to be quoted for works became more of speculative nature rather than on the basis
of price rise trend in the past. The contractor had to take the risk and quote low or load the
rates disproportionately to be on safer side. This situation led to inclusion of cost escalation
clause in most of the contracts to give fair chance to the contractor to quote more realistic
rates based on the prices prevalent at the time of tendering. IRDB and other financial
institutions also pressed the need for inclusion of price adjustment clause in all major
44

contracts to enable the contractors to quote competitive rates without speculation on future
cost escalation.
2. NO ESCALATION PAYMENT PERIOD:
Generally separate payment for cost escalation is not allowed during the initial period of
contract and any cost escalation during this period is deemed to be covered by the quoted
rates. Generally a period of 12 to 24 months from the date of commencement of contract
period is specified as no-escalation period. For major works the rates to be quoted by the
contractor are deemed to be based on the market rates prevailing at the time of tendering or a
few days prior to last date for submission of tender. Considering one month prior to
submission of tender and three months tender validity period and further two to three months
mobilization period, the quoted rates will be already six to seven months old by the time the
work commences. In case where the price escalation is not allowed during the first 24 months
of the contract period the contractor has to assess the probable cost escalation over a period
of about 28 months from the base date and include the same in his quoted rates. In these
days cement and steel rates are fluctuating very frequently. Fuel prices are changing almost
monthly. Electric power is costing more and more every year. Other commodities prices are
also fluctuating frequently due to unsteady fuel prices. Under such a volatile trend in market
rates of major work inputs it is a difficult task to assess and include in the quoted rates the
probable cost escalation for period of over 24 months. The trend in fluctuation of indices or
market rates is generally the guiding factor for assessment of future probable cost escalations.
If this trend in market rates / indices is erratic the assessment of future cost escalations has to
be on speculative basis and mostly on conservative side in view of substantial value of work
programmed during second year of contract period. There also appears to be no specific
advantage either to the Department or to the Contractor in specifying a no-escalation payment
period of 24 months. If the rates come down during the no-escalation payment period of 24
months the department looses the benefit of reduction in rates and on the other hand if the
rates increase beyond expectations the contractor has to burn his fingures. Therefore, in view
of unsteady trend in rise / fall of market rates it is felt more rational to stipulate a no- escalation
payment period of not more than 18 months from the date 30 days prior to the last date for
submission of tender. Generally during the first year of the contract, in most of the cases, the
programme of work will be less considering the time required for mobilization of work force
and machinery. The assessment of cost escalation for the purpose of loading the rates will
also be only for few items and amount involved will be generally less. In view of this, even if
the actual cost escalation varies significantly during this period from the one assessed at the
time of tendering it may not result in any significant cost benefit / loss either to the contractor
or to the department.. Therefore, specifying a no-escalation payment period of 18 months
from the date 30 days prior to the last date for submission of tender appears to be more
rational particularly where steel and cement, which are major cost components, are to be
procured by the contractor.
3. COST ESCALATION COMPONENTS:
Material / machinery, labour, DPOL ( diesel, petrol, oil and lubricant ) and taxes / duties /
levies / royalty / electricity are the main cost escalating components. Cost escalation for any
particular period can be worked out either on formula basis or on actual cost increase /
decrease basis. Generally cost escalation for materials including machinery, labour and DPOL
components is worked out on formula basis. For taxes, duties, levies, royalty and electricity
the cost escalation is worked out on actual increase/ decrease basis. Cement and steel if
procured by the contractor may also be included in this category.
The escalating components on formula basis are expressed as percentage of total value of
work included in the contract. For the purpose of determining the escalating components on
formula basis the total value of work is classified into two portions.

45

i.
ii.

Non-escalating portion.
Escalating portion.

Non-escalating portion includes:


i.
Cost of all materials supplied by the department at fixed rates during the contract
period. The cost escalation on these materials is borne by the department.
ii.
Value of work programmed during the no-escalation contract period of 12 to 24
months. The probable cost escalation on the value of work carried out during this
period is deemed to be included in the quoted rates.
iii.
Part of enabling works included in the contract. Cost of first stage diversion works,
erection of plant / machinery, stores, sheds, electric sub-station etc., are treated as
non-escalating as these works are carried out during initial period of contract.
iv.
Escalating components covered under actual increase / decrease basis. Cost
escalation for taxes, duties, levies, royalty, electric power etc., is regulated on actual
increase / decrease basis. Therefore, these are treated as non-escalating for
determining the escalation components on formula basis.
Escalating portion on formula basis includes:
i.
Value of work programmed beyond no-escalation period excluding cost of materials
supplied by the department and the escalating components covered under actual
increase / decrease basis.
The escalating portion on formula basis is further classified into three components
representing material, labour and DPOL.
Material component includes all materials, small tools & plants and machinery hire charges
( excluding fuel, crew and part of repair charges ). Labour component includes wages of
workers, wages of machinery operating crew, part of repair charges and hidden costs on
labour. DPOL component includes diesel, petrol, oil and lubricants.
Profit, overheads and cost of enabling works carried out beyond non-escalating period are
distributed to the three components proportionately.
For determining the escalating components on formulae basis all major items, in terms of cost,
are analysed for escalating and non-escalating components and then are combined together
on the basis of their weightage in the total value of work included in the contract.
4. BASE DATE FOR COST ESCALATION:
In the contracts where provision is made for cost escalation during the contract period, the
contractors are required to assess their rates for various items based on the market rates
prevailing as on a particular date prior to the last date for submission of tender. In case of
major works, as sufficient time is needed after collection of basic rates for materials,
machinery and labour, generally 30 days time is allowed to assess the work item rates for
inclusion in the tender. The contractors have to base their quoted rates on the basis of market
rates prevailing as on the date 30 days prior to last date for submission of tender. This date (
the date 30 days prior to last date for submission of tender ) shall be reckoned as the base
date for cost escalation and the indices as on this date shall be reckoned as base or initial
price indices.
5. PRICE INDICES:
Material, labour and DPOL are the main cost escalation components for regulating cost
escalation on formula basis. The material component may further consist of cement and steel
components separately in addition to other material/ machinery if the same are to be supplied
by the contractors in substantial quantity. If cement and steel are supplied departmentally the
cost of these materials is treated as non-escalating.
For material component the index to be used in the formula may be average wholesale price
index number published in the monthly bulletin of Reserve Bank of India. Generally all
46

commodity index number is adopted in the formula for working out cost escalation for
material/ machinery component. However, in certain cases such as earth dam, canal
excavation etc., where machinery hire charges constitute major portion of material
component, the index applicable to machinery may be adopted. For cement and steel either
RBI index number applicable to these materials or the prices of these materials from approved
source may be adopted for working out cost escalation.
For labour component, generally, the consumer price index number for industrial workers
applicable to the center nearest to project area and published monthly by State Labour
Department may be adopted in the formula as price index for working out cost escalation.
For DPOL component, generally, the diesel price at the local retail DPOL outlet may be
adopted in the formula as price index for working out cost escalation.
6. MULTIPLYING FACTOR:
The cost escalation on the materials procured and supplied by the department to the
contractor at fixed rates is fully borne by the department. Similarly, the cost escalation on the
escalating components such as taxes, duties, royalty, electricity etc., which are not covered in
the escalation formula is also fully borne by the department by way of reimbursement on
actual increase / decrease basis. To this extent, the contractor is totally free from any
additional financial burden due to variations in market prices of cement, steel, explosives and
statutory levies. In view of this, machinery and materials other than departmental supplies,
labour and fuel components only are included in the cost escalation formulae.
However, the system of department procuring and supplying materials like cement, steel and
explosives has now been almost discontinued and the contractors are required to make their
own arrangements for these materials also. Arranging adequate materials, plant and
machinery, fuel and labour force as per the requirement at work site is wholly the
responsibility of the contractor. Any lapse on the part of the contractor in arranging any
material as per requirement of work may result in loss of progress and may also result in
additional cost to the contractor. The contractor is expected to be more time and cost
conscious in arranging various work inputs from his side if he is also required to share at least
a portion of the additional cost due to cost escalations. With this idea of involving the
contractor also in the process of minimising the increase in cost due to price escalation a
multiplying factor shall be incorporated in the cost escalation formulae. Generally the
multiplying factor will be in the range of 0.75 to 0.90 depending upon the type of work.
7. COST ESCALATION FORMULA:
Generally payment for cost escalation is regulated on quarterly basis. The current idex is
taken as average index for the quarter under consideration. RBI publishes whole sale price
indices for month average and month end basis. Generally, month average indices are used
in the escalation formula. The general cost escalation formulae covering material/ machinery,
labour and DPOL components are as under:
For other material / machinery component:
a x Pm
Vm = -------- x
100

Mi Mo
R x -----------Mo

For labour component :


a x PL
VL = -------- x
100

Li Lo
R x -----------Lo
47

For fuel ( DPOL ) component :


a x Pf
fi fo
Vf = -------- x R x -----------100
fo
If contract provides for procurement of cement and steel by the contractor, additional
components representing cement and steel may be included in the formula as under:
For cement :
a x Pc
Ci Co
Vc = -------- x R x --------100
Co
For steel :
a x Ps
Si So
Vs = -------- x R x --------100
So
If the cost escalation on cement and steel is to be paid without applying the multiplying factor,
these components may be included under sub-clause -2 of the cost escalation clause (
relating to reimbursement on actual increase / decrease basis ).
In the above formulae:
Vm / VL / Vf / Vc / Vs :Escalation amount payable on the value of work carried out during the
quarter under consideration.
a:
Multiplying factor ( to be specified in the contract ).
R:
Value of work at the quoted rates carried out during the quarter under consideration.
Pc :
Percentage component of cement in the total value of work included in the contract ( to
be specified in the contract ).
Ps :
Percentage component of steel in the value of work included in the contract ( to be
specified in the contract ).
Pm: Percentage component of other material / machinery in the value of work included in
the contract ( to be specified in the contract ).
PL : Percentage component of labour in the value of work included in the contract ( to be
specified in the contract ).
Pf : Percentage component of diesel, petrol, oil and lubricants ( DPOL ) in the value of
work included in the contract ( to be specified in the contract ).
Ci : Average whole sale price index number applicable to cement as published in the
RBI bulletin or the unit price obtained from the approved supplier for the quarter under
consideration ( source of index to be specified in the contract ).
Co : Whole sale price index number applicable to cement as published in the RBI bulletin or
the unit price of the approved supplier as on the base date specified in the contract
(source of index to be specified in the contract ).
Si :
Average whole sale price index number applicable to steel as published in the RBI
bulletin or the unit price obtained from the approved supplier for the quarter under
consideration ( source of index to be specified in the contract ).
So : Whole sale price index number applicable to steel as published in the RBI bulletin
or
the unit price of approved supplier as on the base date specified in the contract (
source of index to be specified in the contract ).
Mi : Average whole sale price index number applicable to all commodity as published in the
RBI bulletin for the quarter under consideration ( source of index to be specified in the
contract ).

48

Mo :

Li :

Lo :

Fi :
Fo :

Whole sale price index number applicable to all commodity as published in the RBI
bulletin as on the base date specified in the contract ( source of index to be specified
in the contract ).
Average consumer price index number for industrial workers applicable to the
nearest center to the project as published in the monthly bulletin of State Labour
Department for the quarter under consideration ( source of index and center to be
specified in the contract ).
Consumer price index number for industrial workers applicable to the nearest center to
the project as published in the monthly bulletin of State Labour Department as on the
base date specified in the contract ( source of index and center to be specified in the
contract ).
Retail price of diesel at the DPOL retail outlet in the project area during the quarter
under consideration ( location of outlet to be specified in the contract ).
Retail price of diesel at the DPOL retail outlet in the project area as on the base date
specified in the contract ( location of outlet to be specified in the contract ).

49

ANNEXER-I

CHEMICAL ADMIXTURES FOR CONCRETE


Commercially available admixtures conforming BIS or other international standards can be
used in irrigation works, particularly for concrete, for better homogeneity and workability of the
mix during handling / placing. Controlled air-entraining also reduces permeability of concrete.
Commercially available concrete admixtures reduce mixing water requirement by about 10 to
15 percent for the same degree of workability and strength. This results in reduction in cement
content of the concrete mix, which is a major advantage in mass concrete to minimise heat of
hydration. The admixtures, which are useful for irrigation works are listed below :
a. Water reducing admixture:
Improves workability and cohesiveness of the mix. About 10 to 15 percent reduction in cement
content may be possible due to reduction in mixing water requirement. Savings
in cement content almost offsets the extra cost of admixture. Therefore, practically without
extra cost better quality concrete can be produced.
b. Set retarding admixture:
In addition to the advantages mentioned above for water reducing admixture, this admixture
retards the setting time. Useful for works where the time gap between mixing and placing is
more.
c. Air-entraining agent:
In addition to the advantages mentioned above for water reducing admixture, this admixture
reduces the permeability of concrete due controlled air-entraining. Very useful for low slump
mass concrete works where impermeability and reduction in heat of hydration are important.
d. High strength grout mix:
This is high strength, free flow and non-shrink grout mix. Useful for grouting machine
foundations, anchors and rock bolts. For rock-bolts the grout mix is used in the form of
capsules.
e. Curing compound:
Prevents evaporation of moisture from laid concrete and eliminates water requirement for
curing. Though reduces the strength slightly it is quite useful for canal lining works particularly
in the regions where water for curing is to be brought from water sources faraway from work
sites.

50

ANNEXURE: 5
USEFUL DATA FOR RATE ANALYSIS:
1. FOR MATERIAL COMPONENT:
1.1. Excavation in hard rock:
Requirement of explosives
Spacing of drill holes

Life of drill rod


Life of air/ water hose

: 0.30 to 0.40 kg / cum of in-situ rock for open excavation.


: 1.00 to 1.20 kg / cum of in-situ rock for tunnel excavation.
: 10 times dia. of hole for pre-splitting / smooth blasting.
: 25 to 30 times dia. of hole depending on the joint pattern and
extent of fragmentation required for normal blasting.
: 2 to 3 holes per sqm of tunnel face area for tunnels.
: 100 to 150 Rm.
: 800 hours

1.2. Cement concrete:


Cement
: 43 Grade OPC / PPC ( fly-ash based )
Concrete shall conform to following requirement for moderate exposure conditions:
Minimum cement content:
For use of 40 mm down coarse aggregate : 210 kg / cum for plain concrete
For use of 20 mm down coarse aggregate : 240 kg / cum for plain concrete
: 300 kg / cum for reinforced concrete
For use of 10 mm down coarse aggregate : 280 kg / cum for plain concrete
: 340 kg / cum for reinforced concrete
Minimum grade of concrete
: M-15 for plain concrete
: M-20 for reinforced concrete
Maximum W / C ratio by weight
: 0.60 for plain concrete
: 0.55 for reinforced concrete
As per clause-6.1.3 of IS-456: 2000 concrete of grades lower than those specified above may
be used for plain concrete constructions, lean concrete, simple foundations, foundation for
masonry walls and other simple or temperary reinforced concrete constructions.
Therefore, for mass concrete works where 80 mm down coarse aggregate is proposed
minimum cement content may be modified suitably. Similarly, for levelling course, bed and
side lining of canals, gravity type walls of CD works etc particularly where reinforcement is not
proposed, grade of concrete may be below M-20.
Shuttering and scaffolding for concrete:
Location of concrete
Drainage gallery
Gravity walls/piers
Counter-fort walls
Spillway bridge
Trash rack structure
Block-out concrete
Mass concrete in dam
Spillway bucket
Solid parapet
Kerb concrete
Side / arch concrete

Shuttering

Scaffolding

0.8 to 1.0 sqm / cum


50 % of shuttering cost
0.6 to 0.7 sqm / cum
25 % of shuttering cost
2.3 to 2.5 sqm / cum
10 % of shuttering cost
2.5 to 2.7 sqm / cum
375 % of shuttering cost
2.0 to 2.5 sqm / cum
100 % of shuttering cost
2.8 to 3.0 sqm / cum
50 % of shuttering cost
0.2 to 0.3 sqm / cum
-0.3 to 0.35 sqm / cum
-10 to 12 sqm / cum
-0.8 to 1.0 sqm / cum
20 % of shuttering cost
Steel gantry @ 150 kg / sqm of side/arch area

51

Where the location of concrete is not specified the requirement of shuttering may be assumed
at about 2 sqm per cum of concrete. The cost of scaffolding may be assumed at 50 percent of
cost of shuttering.
No provision shall be made for shuttering for concrete lining of canals where mechanical
concrete paver is assumed in the data rate.
Life of steel shutters / scaffolding materials :
40 to 50 use.
Provision may be made for repairs and replacement of damaged shutters at 15 percent of use
rate of shutters.
Shutter oil requirement may be taken at 0.20 ltr / sqm of shutter.
For mass concrete dams in view of use of large size aggregates and about 1.0 to 1.5 m
concrete in each lift heavy duty shutters are to be used. The cost of such heavy duty shutters
per sqm area will be about 1.5 times the cost of ordinary steel shutters. For mass concrete
dam since the shutters are fixed to the sleeves embedded in previous lift of concrete no
scaffolding is required.
In the SR data the use rate of shuttering includes shutter oil and also repair and replacement
provisions.
1.3. Reinforcement:
Requirement binding wire
Lap joints for reinforcement
Welded joints for reinforcement
No. of welding electrodes per joint

: 8 to 10 kg / tonne of steel
: Bars upto 32 mm dia
: Bars above 32 mm dia
: 5 to 8 No. of 300 mm length

1.4. Masonry:
UCR stone masonry:
Rubble stones
Stone chips
Mortar content

: 0.85 cum / cum of masonry


: @ 15 % of rubble
: 40 to 45 %

2. FOR MACHINERY COMPONENT:


Requirement of compressed air for Jack hammer : 3.50 cum / minute
Rate of drilling by Jack hammer
: 8 m / hour
Requirement of compressed air for wagon drill
: 7 cum / minute
Rate of drilling by wagon drill
: 12 m / hour
Rate of core drilling( depends on depth & rock type): Generally 1 to 2 m / day
Output of shovel for digging & loading:
In all kinds of soil
0.5 cum capacity shovel
: 400 to 450 cum / day
0.85 cum capacity shovel
: 700 to 750 cum / day
1.50 cum capacity shovel
: 1200 to 1250 cum / day
In soft rock
0.5 cum capacity shovel
: 300 to 350 cum / day
0.85 cum capacity shovel
: 500 to 550 cum / day
1.50 cum capacity shovel
: 850 to 900 cum / day
For hard rock
0.5 cum capacity shovel
: 150 to 175 cum / day
0.85 cum capacity shovel
: 225 to 250 cum / day
1.50 cum capacity shovel
: 450 to 500 cum / day
Output of dozer for stripping
: 60 to 70 cum / hour
Output of dozer for levelling collected soil
: 300 cum / hour
Rolling embankment by vibratory pad-foot roller
: 150 to 160 cum /hour
Output of 300/200 ltr concrete mixer
: 10 to 15 cum / day
Output of 600/400 ltr concrete mixer
: 20 to 30 cum / day
52

Output of 0.5 cum single drum batching plant

: 30 to 35 cum / day
ANNEXURE- 5

COMPARISION OF HIRE CHARGES FOR OLD AND NEW MACHINERY


The rates provided in the schedule of rates for various items of work are estimated rates
based on market rates for materials, hire charges of machinery and wages of workers
prevalent at the time of preparation of schedule of rates. Similarly, the rates quoted by the
contractors are also the estimated rates at the time of bidding and are supposed to be based
on current market prices for various inputs. The rates quoted by the contractors may be more
or less compared to the estimated rates depending on the assessments made by the
individual agency for various work inputs. One such assessment is for the investment on the
machinery required for the work. In view of long working life, a plant purchased for any
particular work has to be either disposed off or has to be shifted to any other work after
completing the work on hand.
If the plant maintained in good working condition is to be disposed off, the assessed value of
the plant will be the depreciated book value updated to current market value.
Current price of new plant
Assessed value of used plant = Depreciated book value x -----------------------------------Original price of used plant
On the other hand, if the used plant is to be shifted to other work, its assessed market value
for all practical purposes will be the indirect investment on plant for the new work. Whether it
is machinery or any other property its current market value will be the criteria for selling or for
hiring. Whether the machinery is old or new the repair, fuel and crew charges will be at the
current price level. Only depreciation and interest can be based either on the depreciated
current market value or on the original purchase price. Generally, the contracts for major
works include provisions for cost escalations during the contract period to compensate for the
price variations in materials, labour and DPOL components. Material component also includes
hire charges of machinery excluding fuel and crew charges. Payment of cost escalation on
material/ machinery amounts to updating the cost of machinery periodically to current market
level on the basis of increase/ decrease in the specified price index. Therefore, for working out
the hire charges of any old plant also its current market price will be the criteria.
The hire charge of any plant/ machinery comprises of the following components.
1. Depreciation
2. Interest on investment
3. Repair charges
4. Miscellaneous charges
5. Fuel charges
6. Crew charges
It is already explained that the repair including miscellaneous, fuel and crew charges will be at
the current price level as these are the expenditures to be incurred during operation of the
plant. As the plant becomes older and older repair charges increase due to increase in wear
and tear of the plant. The distribution of repair cost during working life of plant as per IS:
11590 is as under:
First stage
: 10 percent of total repair cost
Second stage
: 15 percent of total repair cost
Third stage
: 25 percent of total repair cost
Fourth stage
: 30 percent of total repair cost
Fifth stage
: 20 percent of total repair cost
Depending on the type of machinery the repair charges during the life span of machinery vary
from 60 percent to 240 percent of capital cost. For most of the commonly used construction
plants repair cost is the major component of the hire charges.
Further, in case of old machinery, frequent break-down results in loss of working hours. In
most of the cases a particular machine performs a particular task. In multi-task activities if a

53

machine goes out of order other machines dependant on this including crew remain idle which
adds to the cost.
As per CWC Guide book on use rate hire charges the scheduled production hours for old
machines will be as under
Life stage of equipment in hours
Scheduled production hours as %
0 to 40 %
100 %
40 to 75 %
80 %
75 to 100 %
65 %
Above 100 %
40 %
From perusal of distribution of repair charges and scheduled production hours during the life
span of a machine it can be observed that inspite of increase in repair charges from stage to
stage there is reduction in machine availability period. This means year by year while the
machine maintenance cost increases its annual production efficiency decreases. No machine
maintained properly can be expected to become absolute or scrap all of a sudden at the end
of its scheduled working life. The machine may be still in working condition but the difficulty of
getting spares for old models, high repair and maintenance costs, reduction in production
hours resulting in idling of other equipments etc., make its use highly un-economical. The
repair charges will be less in the beginning and increase year by year. In the fourth stage of
life the repair cost will be three times the repair cost of first stage.
For working out the hire charges in the SR based on current cost the interest on capital cost
and repair charges are distributed evenly for the entire life of machinery. While, the actual
repair charges vary from 10 percent of total repair cost during first stage to 30 percent of total
repair cost during fourth stage, the repair charges considered in the SR is at 20 percent of
total repair cost throughout the life of the plant.
Consider the case of a compressor:
Original capital cost
Current capital cost
Life in years
Life in hours
Number of hours used
Balance life in hours
Balance life in years

Rs:
Rs:

500000
700000
10 years
12000 hours
7500 hours
4500 hours
5 years

The plant is in fourth stage of its life.


Hire charges per hour by updating capital cost:
Current market value =

700000 x 4500 / 12000

Depreciation
=
0.9 x 262500 / 4500
Interest on av. capital cost 6x262500x0.15x5/10/4500
Repair charges for fourth stage 700000x0.3/2400
Miscellaneous charges at 10 % of repair
Total

Rs: 262500
Rs: 52.50
Rs: 26.25
Rs: 87.50
Rs: 08.75
Rs: 175.00

Hire charges per hour without updating capital cost:


Depreciation
=
0.9 x 500000 / 12000
Interest on av. capital cost = 11x500000x0.15/20/1200
Repair charges
=
700000x0.3/2400
Miscellaneous charges at 10 % of repair
Total
54

Rs: 37.50
Rs: 34.38
Rs: 87.50
Rs: 08.75
Rs: 168.13

Hire charges considering SR norms:


Depreciation
=
0.9 x 700000 / 12000
Rs: 52.50
Interest on av. capital cost 11x700000x0.15/20/1200
Rs: 48.12
Repair charges
=
700000/12000
Rs: 58.33
Miscellaneous charges at 10 % of repair
Rs: 05.83
Total
Rs: 164.78
From the above, it may be noticed that the hire charges of the old machinery is more even
without updating the capital cost of old machinery to current level because of high repair
charges for the life stage of machinery considered. However, if the machinery in its second
stage of life is considered the actual hire charges will be less than the hire charges as per SR
norms. In the SR procedure though cost of new machinery is considered the interest and
repair charges are distributed evenly for the entire life of machinery. As such the hire charges
provided in the SR based on capital cost of new machinery very well compares with the
average hire charges of old machinery in view of comparatively high repair costs off-setting
the lower depreciation and interest charges of old machinery.

55