Home Assignment (CIEG 306)

1. Explain the importance of Estimation and Valuation in Civil Engineering Sector with
suitable example.

2. Suppose you are required to sell your land and house and move to new place. Prepare the
valuation report of your land and as well as abstract of quantities of your house. Assume
suitable rate and find the total cost of your house. Please use the data of your home
independently. In case, if you do not have your house plan, you can measure with any
measuring tool and sketch the plan and continue to estimate it. Good Luck
 1. Explain the importance of Estimation and Valuation in Civil Engineering Sector
with suitable example.

Ans:
An estimate is a calculation of the quantities of various items of work, and the expenses likely to be
incurred there on. The total of these probable expenses to be incurred on the work is known as
estimated cost of the work. The estimated cost of a work is a close approximation of its actual cost.
The agreement of the estimated cost with the actual cost will depend on accurate use of estimating
methods and correct visualization of the work, as it will be done. Importance of correct estimating is
obvious. Under-estimating may result in the client getting an unpleasant shock when tenders are
opened and drastically modifying or abandoning the work at that stage. Over-estimating may lose the
engineer or estimator his client or his job, or in any case his confidence.
Estimating is the most important of the practical aspects of construction management, and the subject
deserves the closest attention of one aspiring to a career in the profession. It is a comparatively simple
subject to understand; however, as it brings one up against practical work, methods and procedure,
knowledge of it cannot be acquired without close application.
Estimation is done in construction/infrastructure/real estate projects:
 To ascertain the necessary amount of money required by the owner/contractor to
complete the proposed work.
 To obtain administrative approval, allotment of funds and technical sanction.
 To ascertain quantities of materials required in order to program their timely
procurement.
 To calculate the number of different categories of workers that are to be employed to
complete the work within the scheduled time of completion.
 To assess the requirements of Tools, Plants and equipment required to complete the
work according to the program.
 To fix up the completion period from the volume of works involve in the estimate.
 To draw up a construction schedule and program and also to arrange the funds
required according to the programming.
 To invite tenders and prepare bills for payment.
Advantages and aims of estimation is to ensure the list of material is completed before starting
the work so that chances of shortage of material reduces. To ensure there should not be any
misuse of the money and the material. To ensure work is completed in time
Without estimation it becomes very difficult to purchase the material in the absence of list of
material. The money is misused by purchasing smaller or excess quantities of material from
market and shortage of money can cause stoppage of work. Take more time for completion
As a civil engineer, you should know everything about estimation. Everything in the future is
unknown, but not entirely uncertain. If we want to do something in the future, we need
information about the future and the only source of that is what we estimate the future to be like.
The first reason to do estimation is to establish confidence that the project is feasible. Without
that, don’t start.
Usually, there are several projects that are possibilities to build, but there isn't enough money to
build them all. We need to look at each project and determine the cost-benefit of building that
project.
Early on, in the Planning Phase, estimating the costs of a project is very high level, meaning, we
don't go into details. We try to estimate how much it will cost to design the project and how
much it will cost to build the project within an order of magnitude. This usually includes an
estimation of how much right of way, or property, needs to be purchased as well.
We compare these costs to what we are going to achieve by building the project. For example,
will there be less accidents? Will it improve the flow of traffic (level of service)? Will it improve
sight distance? Will it allow for increased speeds? Will it improve safety of pedestrian? And the
list goes on. These benefits get some sort of ranking of importance, or are assigned a dollar
value.
We also have to look at the risks are setbacks that might result from building the project. Will we
be building in environmentally sensitive habitat? Will we be adversely affecting businesses?
Several other questions exist. These risks receive a ranking or dollar value too.
At the end, we come up with a list of projects where we have weighed the direct costs, with the
benefits and risks. Since we can't build them all, some of these floats to the top. We now decide
which projects we have money in the budget to do.
For those that float to the top and we have budget, we move into the concept design. This is
about a 20-30% design that provides the basic concept of what the project will be doing. We may
go into more detail on things like Environmental Needs, Right of Way, and other things that can
be very costly. A cost estimate is done at this level too. This cost estimate is expected to be much
closer in magnitude to the estimate in the planning stages, but not as detailed as the next
estimate.
Sometimes we learn things about costs in the concept stage that will either elevate or reduce the
costs of the project. There may need to be a go/no-go decision based on this estimate.
If you make the decision to proceed, you take the design to Preliminary and then Final Design, or
as far as is needed before you let the project out to bid. It is necessary to have an idea of how
much the Contractor is going to bid on the project. If the Engineer's Cost Estimate is more than
we have funding for, the project may need to be put on the shelf until there is funding available.
The reason for putting together cost estimates is because you need to have the funding to design
and build the project. It is paramount to what we do.
Valuation of building or property is the method of calculating the present marketable cost of a
building. Valuation of a building depends on the sort of building, its structure, durability,
location, size, shape, the width of roads, frontage, types and quality of building materials used
and the cost of these materials.
Valuation of a building also depends on the height of the plinth, height of the building, thickness
of its walls, nature of structure (such as load bearing or framed structure), type of flooring,
roofing, doors and windows etc.
Location of a building also plays an important role in deciding the value of a building. For
example, a building located in a market area would have a stronger and higher valuation than the
same building located in a residential area. Also, the buildings located in areas with proper
municipal water supply, sewer and electricity have increased values. A building located on a
freehold land generates a higher valuation amount compared to a building located on the
leasehold land.
The valuation of a building also depends on the demands for purchase which varies from time to
time. More demands make the building more valuable.
A building may provide income to the owner in the form of rent; thus valuation also depends on
the income the building can generate if let out. If a building is not let out, then 6% of the capital
cost of the building is considered as the annual rent. It varies from time to time and location and
depends on the prevalent market rate.
The main purpose of valuation are as follows:
Buying or Selling Property: When it is required to buy or sell a property, its valuation is
required.
Taxation: To assess the tax of a property, its valuation is required. Taxes may be municipal tax,
wealth tax, Property tax etc., and all the taxes are fixed on the valuation of the property.
Rent Function: In order to determine the rent of a property, valuation is required. Rent is usually
fixed on the certain percentage of the amount of valuation which is 6% to 10% of valuation.
Security of loans or Mortgage: When loans are taken against the security of the property, its
valuation is required.
Compulsory acquisition: Whenever a property is acquired by law; compensation is paid to the
owner. To determine the amount of compensation, valuation of the property is required.
Valuation of a property is also required for Insurance, Betterment charges, speculations etc.
2. Suppose you are required to sell your land and house and move to new place.
Prepare the valuation report of your land and as well as abstract of quantities of
your house. Assume suitable rate and find the total cost of your house. Please use
the data of your home independently. In case, if you do not have your house plan,
you can measure with any measuring tool and sketch the plan and continue to
estimate it. Good Luck
Ans:
The fig above are used for estimation which is calculated in excel
VALUATION OF PROPERTY
1. INTRODUCTION
a) Property Inspection
i. Owner of the property: Jagatman Shrestha
ii. Location of property: Sundarbazaar-4, Lamjung
iii. Plot no. of the property: 1056, 1-5-0-3
iv. Land area : 4anna
v. Building construction: The building is made up of frame structure with
column of size 9’*12’. It has a flat R.C.C roof slab.
vi. Ground coverage: 1288.65 sq. feet
vii. Total built up area: 1288.65 sq. feet
viii. Detail of surrounding land:
North-land
South-Road
East-Building
West-Building
ix. Approach road detail: The property is situated on north of the main chowk.
x. Proximity to the main road: The property is situated beside the main road.
The introductory details regarding the property are in appendix I. The cadastral map,
citizen certificate, land ownership certificate is also attached with this.
b) Property Description
The property to be valued consists of a three storied building. The details of the
property are as follows:
i. Type of Property : Freehold single ownership property
ii. Land Details
Shape : Rectangular
Topography: plain
Frontage : Road
iii. Services
Water Supply: ½ “diameter pipe, Municipal Line
Electricity : Connection from Nepal Electricity
Authority
Sewage : Connection to the Drainage Pipe + septic tank
Telephone : Connection from Nepal Telecom
iv. Building Description: Three storied frame structures with first class brick
work in cement mortar.
v. Surrounding Properties
North : Land
South : Road
East : Building
West : Building
 vi. Immediate Environment: The property is surrounded by building in two
sides and road on the South side, so the environment is completely residential.
vii. Site Constraints: There is some area left in north for parking for garden.
The site, floor plans and elevation of the property are given in Appendix III and the
technical details are given in Appendix II.
c) Property Valuation
The property under valuation has been valued on the basis of the following:
i. Examination of the available drawings of the building in detail.
ii. Study of the ownership document.
iii. Surveying of the local market to determine the ongoing commercial rates of
the property.
iv. Physical verification of site by site inspection and detail measurements of
lands and drawings.
v. Comparison with the valuation of similar property and
vi. Valuation methodologies.

2. Qualification and Limiting Conditions

a. According to the land ownership paper, the area of the land in 4anna.
b. The land is located near homely environment that is good for residential purpose.
c. As the main city area is getting crowded people are willing to make their
residential building in this area.
The plinth rate is determined based on the current market rate of the comparable
building and the value of the building is determined.
d. Since the property is freehold with no tenancy right, there is no restriction to sell,
lease and transfer the property as long as the owner observes the law of land, the
prevailing zoning rules and regulations and does not interfere with neighbors.
e. It must be noted that the value of the land calculated here is only indicative and
the actual sale figure, if the property is sold, is very much dependent on the
psychology of the buyer and the seller during the final sale negotiations.

3. Value Calculations
i. Valuation of Land:
During the valuation of this property, the value of the land has been determined
by giving 15% weightage to the government value, 25% to broker rate and 60% to
commercial value of the land fixed by the market survey.
i. Government Rate = Rs 15,50,000 per anna
ii. Broker Rate = Rs 32,00,000 per anna
 iii.Market Rate = Rs 30,00,000 per anna
iv.By weight average method, the value of the land has been calculated as
0.15*15.50+0.25*18.00+0.60*30.00(lakh)= Rs 28.325 lakhs per anna

Table 1. Value of Land

Description Area of Land Recommended land Value of Land (Rs)
Rate per Anna (Rs)
Residential Land 4 Anna 28.325 lakhs 1,13,30,000

ii. Valuation of building

The valuation of a building depends on the type of the building, its structure and
durability, on the situation, size, shape, frontage, width of roadways, the quality of
materials used in construction and present-day prices of materials. Building
located in market area will have higher value than a similar building in the
residential area.

The main building has a plinth area of 1288.65 sq. ft.

Year of Construction=2050
Age of building=27 Years
 Table 2: Value of Building
S.N Description Quantity Unit Rate Amount
o
1. Plinth area rate (excluding
water supply, sanitary and
electrification)
Plinth area 1288.65 Sq.feet 3800 4896870

SUB-TOTAL 4896870
2. Cost of water supply and 391749.6
sanitary @ 8%
3. Cost of electrification @ 391749.6
8%
4. Total value of building 5680369.2
5. Depreciation @ 0% p.year 0
6. NET VALUE OF 5680369.2
BUILDING
Say: 56,80,369.2

SYNOPSIS OF VALUATION
The value of the freehold property belonging to Mr Jagatman Shrestha be synopsized as follows:
 Value of land = Rs 1,13,30,000.00
 Value of building = Rs 56,80,369.00
 Total value of property = Rs 1,70,10,369.00
(In words: One crore seventy lakhs ten thousand three hundred and sixty nine rupees
only)

STRAIGHT LINE METHOD OF DEPRECIATION

"Straight Line Method" of the depreciation has been adapted to calculate the building depreciation.
Age of the Building: 27 years
Total Value of Present Value of
Depreciation
Building Building
Col (A) Col (B) Col(C ) = (A-B)
56,80,369.00 1533699.00 4146669.37
Total present Value of the Building Rs. 41,46,669.00
Note:
1 Depreciation rate of the building is taken as 1% p.a
2 Age of the building: 27
 years
3 Construction period of the building is taken as 2 years.
Appendix I

INTRODUCTORY DETAILS
i. Location of property : Sundarbazzar-4, Lamjung
ii. Plot no. of property: 1056,1-5-0-3
iii. Land Area : 4Anna (as per the land ownership)

iv. Detail of surrounding land

North: land
South: road
East: Building
West: building
v. Detail of access road
a) Type of road: Pitch foot
b) Width of road: 12 feet
vi. Site detail
Shape: Rectangular
Topography: Plain
Frontage: Road
vii. Services
Water supply: 1/2 “dia. Pipe, Municipal line
Electricity: Connected from Nepal Electricity Authority
Sewage: Connected to the septic tank+ septic tank
Telephone: Connected from Nepal Telecom
Appendix II

Description of building
Number of building 1
Number of Stories Ground floor
Approved From Sundarbazzar Municipality
Types of Construction Isolated Footing/ Frame Structure
Types of the Building Residential Building
Face of the Building South
Frontage of the Building
Depth of the Building
Height of the Building
Plinth Area of Building Area(sq ft)
Ground Floor 1288.65

TECHNICAL DETAIL OF BUILDING

Age of the Building: 27 years
Probable Life: 60-80 years
Facility :
1. Electric line
2. Water supply
Architecture of the Building: Modern
Comments to the Building: No Comment
Strength of Construction: Strong
Requirement of Repair: Not at Present
STRUCTURAL ELEMENTS
a. Structural System
The building under consideration is frame structure with D.P.C. at plinth level. The size
of the beam 9”*9”. The exterior partition (long wall) is made up of 9” thick first class
brick masonry with cement mortar and exterior part (short wall) of 9”. The interior portion
in the ground floor and first floor are 4” thick masonry with cement mortar.

b. Types of Foundation
RCC isolated footings are provided on all the columns. The footings are placed at the
depth of 5 feet from the ground level. The average size of the footings are 4’*4’. The
thickness of the footing varies from 9” at the edge to 2’6” at the column face. The plinth
level of the building is 2.0 feet above the ground level. The size of the tie beams is 9”*9”.
The foundations of these walls are at the depth of 2 feet from the ground level.

c.Damp proof course

RCC tie beam at the plinth level behaves like damp proof course for all walls. The size of
these beams is 9”*9”. To control dampness on the floor, the floor are well compacted by
earth, sand. Three inches PCC was provided on the layer of the flat brick soling.

d. Flooring/Roofing
Ground floor is well compacted by earth and sand and lean concrete was provided on the
layer of the flat brick soling and rest of the floors are constructed with 4 inch thick RCC
slab.
Types of Flooring
Cement punning flooring are done in living room, bed rooms and other rooms of the
building, kitchen/dinning are provided with floor tiles and bathroom are provided with
porcelain glazed tiles in wall surface and non-glazed tiles in floor surface.

e.External wall
External wall is provided with 9” thick machine-made brick wall with cement mortar and
provided with exterior plaster.

f. Internal wall
Internal wall are provided with cement plaster and plastic emulsion paints in passage area,
staircase area and rooms of the building.

g. Ceiling surface
Ceiling surface are provided with cement plaster and plastic emulsion paints.
h. Doors and Windows Frame
Frame of doors and windows are provided with Agrakh wood.

i. Doors and Windows panel

Panel of doors and windows are provided with Agrakh wood.

j. W/S System & Sanitary

The building is facilitated with drinking water supply connected to the main water supply
system. There is a provision of overhead tank for water storage. The bathroom of the
building has pan, shower, wash basin etc. The outlet of the bathroom and kitchen are
connected to drainage directly.

k. Electricity Supply System

All the rooms in the building have adequate light fixtures and power points required for
residential building of such standard.