DCB 6202

CONTRACT, ESTIMATING,
& COSTING FOR BUILDING
SERVICES

CHAPTER 6
BUILT UP RATE METHODS
 CHAPTER SUMMARY
The requirement and use of the price rates, schedule of
rates, basic criteria for price rate calculations,
materials, labour, plants, overheads and profits, price
rates calculations, concrete work using concrete
mixing machine and hand mixing, excavation work
rates calculation using hand and excavators.

Course Learning Outcome:

Solve problems systematically for preliminary
estimation methods and quantity measurements in
relation to project estimation. (CLO2 -C3)
 BUILT-UP RATE
DEFINITION
• A technique for analyzing the prizes to determine the types of
components of prices present and the amount of each
component.
• i.e the examination of the components that make up the
prices.
• The analysis is done on the rate or unit price of the works-
price/m3, price/m2 , etc –not on the total price of the work
unless the work is to be priced on a lump sum basis.
• To be done by QS / estimator with assistance for other
specialist e.g plant manager, contract manager, etc –to
determine the resources and other requirement.
 BUILT-UP RATE
OBJECTIVES :

1. To produce the rates for the purpose of pricing the work.

2. To obtain a tender sum of work
3. Tender sum must be competitive, realistic, reasonable, workable –
with some margin for profit.

INFORMATION REQUIRED :
• Required as much information as possible to produce more accurate
prices.
• Visit site – to determine site layout, where to build site facilities, to
dispose soil heaps, etc.
• Analyze tender documents – specifications, preambles, contract
conditions, fixed contract period, etc.
 BUILT-UP RATE
• Involves the calculation of elements that contribute to the
direct cost of the work.
• Labour cost + material cost + plant cost + site overhead =
total cost of work.
i.e the cost to the contractor is prepared to out the work.
• Total cost + general overhead + profit = tender price
• i.e the price the contractor is prepared to carry out the work
– the figure to be submitted in his tender.
 BUILT-UP RATE
BASIC CRITERIA OF PRICE RATE CALCULATION

• Built-up rates in considering the following :

• Components of prices
• Labour
• Material Direct cost
• Plant
• Overhead
• Profit

• Selected items

• Excavation and earthwork

• Concrete works
• Brickwork and blockwork
• Floor, wall and ceiling finishing
• Painting and decorating
 BUILT-UP RATE
COMPONENTS OF DIRECT COSTS
A. Material Cost
 Consists of the cost of:
 material (as per quotation from supplier)
 delivery (if not included in material cost)
 unloading & handling (storage cost may be included in
Preliminaries)
 wastage, damage, theft etc
 subsidiary fixing materials e.g – nails for roof
- jointing compound for pipes
 Price varies – places to places, market conditions, etc.
 Use current prices for accurate pricing.
 BUILT-UP RATE

COMPONENTS OF DIRECT COSTS

B. Labour Cost
 The cost of workmanship in executing the work.
 Mainly the wages – including overtime pay, bonuses, etc.
 For foreign worker –include levy charges, permits, etc.
 All works require workers
 Wages also differ – sex, market conditions, location of sites,
working condition, contract conditions, etc.
 BUILT-UP RATE
COMPONENTS OF DIRECT COSTS
B. Labour Cost
 Categories of workers:
 Skilled workers – RM 60 – RM100/day
 Semi-skilled workers – Rm 40 – Rm 60/day
 Unskilled workers –RM 20 – RM40/day

Labour constant
 is used in the calculation of labour cost for the work
 the time spent by a workman to complete a specified work.
e.g for ½ brick wall – 1 bricklayer -1 hour/m2
- 1 unskilled worker – ½ hour/m2
 A factor which cannot be fixed
 Merely an average time taken after long research
 BUILT-UP RATE
COMPONENTS OF DIRECT COSTS
C. Plant Cost
 Consider only mechanical plant
 Non-mechanical plant e.g tools scaffolding, buckets,
ladder, ropes, hammer, etc – to be included under
general overhead.
 Own plant
Consider :
- Owning cost – Purchase price, depreciation
allowances, cost of capital/interest, plant
department overhead, insurance premiums, repair
and maintenance.
- Operating cost – Fuel, lubrication, operator.
BUILT-UP RATE
BUILT-UP RATE
 BUILT-UP RATE
GENERAL OVERHEAD’S EXAMPLE:
Previous year’s turnover (total project costs) = RM10, 000,000.00
Deduct Profit = 500,000.00
9,500,000.00
Deduct Overhead = 700,000.00
8,800,000.00

Therefore: Overhead% = RM700,000 x 100% =

RM8,800,000 7.95%

There, we can use 7.95% to calculate the approximate overhead charges on

estimate being prepared for future contracts.
 BUILT-UP RATE

GENERAL OVERHEAD’S EXAMPLE

 If indication that overhead for this year will be increased by 10%

i.e RM700,000.oo to RM 770,000.00 and estimated net turnover
for the current year is forecasted to be RM 9,800,000.00

 Overhead % to be charged = RM 770, 00.00 x 100%

RM9,800.00.00
= 7.86%
 If actual overhead > budgeted cost = under recovered.
 If overhead % can be reduced – firm will be more competitive.
PROFIT

Profit is very important element to the contractor. If the profit margin set
too high, the price rate will be less competitive. If the profit margin is too
low, the survival of the company will at risk.
Profit can be determined by the percentage of direct cost or a lump sum
figure.
Factors to be considered by contractor in determine the profit margin
are:
1. Current workload
2. Market situation
3. Risk
4. Availability of resources.

Normally, the typical value used by contractors are between 7% – 10% of

the direct cost.
BILL OF QUANTITY
BILL OF QUANTITY
EXAMPLE OF BILL O
F QUANTITY
CONCRETE WORKS
 CONCRETOR
IN-SITU CONCRETE
Materials for concrete
Types:
a) Cement.
• types – ordinary Portland cement, rapid hardening, etc.
– 1 bag – 50 kg
b) Fine aggregate – sand, crushed rock, gravel, etc. that will
pass through 5mm BS sieve.
c) Course aggregate – crushed rock, gravel, etc. that is retained
in this sieve.
d) Water – clean i.e. free from suspended solids, organic matter,
etc. to be used for mixing concrete – included in Preliminaries
section and therefore not considered in the calculation of
rates for concrete.
 CONCRETOR
IN-SITU CONCRETE
Weights and volumes Materials Volume Weight
Cement 1 m³ 1,400.00 kg (28 bags)
Sand 1 m³ 1.52 tonnes
Aggregate 1 m³ 1.62 tonnes

Strength
• strength of concrete – depends on the proportion of materials
in a particular mix.
Nominal Cube strength after Maximum size Minimum content
Mix of mixing (N/mm²) of aggregate of cement/m³
materials 7th day 28th day (mm) concrete (Kg)

1:1:2 20 30 19 380
1:1½:3 17 25.5 19 361
1:2:4 14 21 19 321
 CONCRETOR
IN-SITU CONCRETE
Strength
• concrete may be specified according to:
• designed mixes – examples, Grade 20, Grade 30, etc. – user
specify the performance and producer will select the mix
proportions that will conform with the performance
requirements.
• prescribed mixes – examples, 1:1:2, 1:2:4, etc. – user specify
the mix proportion for the required performance and producer
will produce the concrete accordingly.
 CONCRETOR
IN-SITU CONCRETE
Shrinkage, wastage & consolidation in concrete mix
• Reduction in bulk during mixing – finer particles of sand and cement
filling the voids between course aggregate.
• Wastage occurs during transporting, mixing and placing of concrete.
• Vibrating and compacting during placing - also cause reduction in bulk.
• To get the required volume in a mix – increase the quantities of
materials.
• Studies shows maximum shrinkages, etc = ⅓ of original quantity i.e.
33.33%
Allowance for shrinkages, etc. for 1m³ concrete = 0.333 m³ x 100 = 50%
0.667 m³
:. add 50% to material cost to compensate for the reduction in bulk.
 CONCRETOR
IN-SITU CONCRETE
Mixing of concrete
Methods of mixing concrete on site:
a) By hand – normally for small quantities.
– labour constant – 2.00 hours/m³.
b) Using concrete mixer.

Concrete mixer
Size, example 5/3:
• Maximum quantity of materials loaded into mixer (before
mixing) = 5 f.c.
• Quantity of concrete discharged (after mixing) = 3 f.c.
 CONCRETOR
IN-SITU CONCRETE
Concrete mixer
No. of workers Output/hour Diesel/hour Lubricant/hour
Size required (m³) (litre) (litre)

5/3 1 operator 1.25 1.10 0.04

1 unskilled
workers

7/5 1 operator 2.25 1.60 0.06

3 unskilled
workers

10/7 1 operator 3.25 1.80 0.07

4 unskilled
workers

14/10 1 operator 4.50 2.10 0.08

4 unskilled
workers
 CONCRETOR
Placing of concrete
• Placing output depends on the output of mixers and the
locations where concrete is to be placed, examples
foundation, slab, columns, etc.
• workers normally use wheelbarrows to transport the
concrete.
• For large site or high rise building, dumper, cranes, etc may
be used for transporting concrete.
• Non-mechanical plant – wheelbarrow, spades, etc. –
included in overhead cost.
• Mechanical plant – need to be considered if not yet priced in
the Preliminaries.
 CONCRETOR
Labour output for hoisting, placing & compacting & packing
concrete around reinforcement bars
Descriptions Unit Unskilled worker
(Hour)
Pad foundation m³ 6.00
Ground floor slab
≤ 150mm thick m³ 7.75
150mm – 300mm thick m³ 6.50
> 300mm thick m³ 5.00
Upper floor slab
≤ 150mm thick m³ 9.25
150mm – 300mm thick m³ 7.50
> 300mm thick m³ 6.50
Wall
≤ 150mm thick m³ 10.00
150mm – 300mm thick m³ 8.50
> 300mm thick m³ 7.50
Columns and beams m³ 8.00
Concrete Grade and Ratio
GRADE RATIO
GRADE 15 1:3:6
GRADE 20 1:2:4
GRADE 25 1:11/5 :3
GRADE 30 1:1:2
 CONCRETOR
Example 1
Reinforced in situ concrete Grade 25 in isolated column. – m³
Data:
• Mixing and placing of concrete are to be done by hand.
• Cement = RM10.50/bag Unskilled worker = RM40.00/day
• Sand = RM28.00/m³ Skilled worker = RM50.00/day
• Aggregate = RM35.00/m³
 CONCRETOR
Example 1
Material cost
1 m³ cement = 28 bags x RM10.50 = RM 294.00
1.5 m³ sand = 1.5 m³ x RM28.00 = 42.00 =
3 m³ aggregate = 3 m³ x RM35.00 = 105.00 =
= 441.00 =
Add 50% for shrinkages, compaction and 220.50 =
wastages RM661.50 =
Material cost for 5.50 m³ RM120.27

Material cost for 1 m³ = RM661.50

5.50 m³ 10.00
Labour cost
Mixing 1 m³ = 2.00 hours x RM40.00 40.00
8 hours
Placing 1 m³ = 8.00 hours x RM40.00 170.27
8 hours 25.54

RM195.81
15% profit and overhead
 CONCRETOR
Example 2
Reinforced in situ concrete Grade 25 in isolated column. – m³
Data:
• Same situation as in Example 1 but own concrete mixer is
used for mixing concrete.
• Concrete mixer type 7/5.
• Economic life of concrete mixer = 4 years
• Initial cost of concrete mixer = RM15,000.00
• Resale value of concrete mixer = RM2,000.00
 CONCRETOR
Example 2
Material cost
1 m³ cement = 28 bags x RM10.50 = RM 294.00
1.5 m³ sand = 1.5 m³ x RM28.00 = 42.00
3 m³ aggregate = 3 m³ x RM35.00 = 105.00
= 441.00
Add 50% for shrinkages, compaction and = 220.50
wastages = RM661.00
Material cost for 5.50 m³ = RM120.27

Material cost for 1 m³ = RM661.00

5.50 m³
Mixing cost (using concrete mixer 7/5) = RM15,000.00
Capital cost
Initial cost = 6,000.00
Interest on capital for 4 years @ 10% p.a.
= 10 x 4 x RM15,000.00
= 1,500.00
100
Maintenance cost for 4 years
= 1 x RM15,000.00
 CONCRETOR
Example 2
RM120.27
Capital cost (cont’d)
Transportation cost for 4 years
= 1 x RM15,000.00 = 750.00

20 = 23,250.00
Less = 2,000.00
Resale value = 21,250.00

Cost for 4 years = RM5,312.50

:. Cost for 1 year = RM21,250.00
4 years
Average no. of working days for the mixer in a
year = 200 days (Assumption) = RM3.32
Total working hours/year = 200 x 8 = 1,600 hrs.
:. Capital cost/hour = RM5,312.50

1,600 hours
 Example 2 RM120.27
Running cost/day
Operator = RM 50.00
= 120.00
3 unskilled workers @ RM40.00 = 21.76
Diesel = 1.60 litres x 8 hours x RM1.70 = 9.60
Lubricant = 0.06 litre x 8 ours RM201.36
x RM20.00
Total = RM25.17
Running cost/hour = RM201.36
8 hours
EXCAVATION WORKS
 EXCAVATOR
EXCAVATOR
• Works associated with excavation works:
• Excavation.
• Disposal of excavated materials.
• Filling.
 
EXCAVATION
• Factors affecting cost of excavation:
• Type of soil.
• Method of excavation.
• Type of excavation.
 EXCAVATOR
Earthwork Supports
• This is to protect sides of
excavations. Starting Level

• The cost is dependent on type of

soil, type and size of excavations, 200mm x
38mm
designs and number of uses. boarding at
1.50m
• It may not be necessary for hard 1.50m centres

ground or shallow excavations. 100mm x

75mm struts
• Can be used more than once. at 1.50m
centres
• For estimating purposes – allow
RM3.00/m³ of excavation for
600mm
planking and strutting.
Fig. 1: Section of trench.
 EXCAVATOR
Methods of excavation
• Hand excavation – with the use of non-mechanical plant
such as spades, hoes, baskets, etc.
• Machine excavation – by using mechanical plant such as
tractors, excavators, backhoes, etc.
 
Hand excavation
– suitable for small excavation works or where plant is not
accessible to excavation areas.
 EXCAVATOR
Example 1
Excavate trench to receive foundation starting from reduced
level not exceeding 2.00 m maximum depth. – m³

Labour cost
Excavation
1 unskilled worker = 4.00 hours x RM40.00 = RM20.00

8 = 3.00
Planking and strutting, say 23.00
= 3.45
15% for profit and overhead

Price/m³
 EXCAVATOR
Machine Excavation
Cost of plant
• is much dependent on the plant procurement methods.
 
Hired plant
a) Rental cost
b) Operating cost
• cost of running the plant on site.
• Factors to be considered:
i. Cost of fuel.
ii. Cost of plant operator and other workers handling the plant.
iii. Capacity and output of plant
iv. Number of hours the plant is utilized in a year.
 EXCAVATOR
Machine Excavation
• Fuel required for excavators

Types (Capacity) (m³) Diesel/hour (litre) Lubricant/week (litre)

¼ 4 9
⅜ 5 12
½ 6 14
¾ 7 16
1 9 18
 EXCAVATOR
Machine Excavation
Owned plant
a) Capital cost
Factors to be considered:
i. Initial cost (purchase price).
ii. Interest on capital.
iii. Economic life of the plant.
iv. Maintenance cost throughout the economic life of plant.
v. Cost of transporting plant to site.

b) Operating cost
• same as that for hired plant.
Capacity of plant
• important for the estimator to determine the type or size of
plant to be employed for the work.
 EXCAVATOR
Machine Excavation
Output of excavator
• amount of work that can be completed by using the plant within
a certain amount of time.
Output of excavator for excavating Output of excavator for excavating
and loading ordinary earth. and loading other types of soils.
Type/capacity (m³) Average output/hour (m³) Types of soils Multipliers
¼ 8 (hours/m³)
⅜ 9 Sand x 1.00
½ 12 Heavy clay x 1.25
¾ 18 Soft rock x 1.50
1 25 Rock x 4.50

Economic life of plant

• a duration where the benefit of using the plant exceeds its maintenance costs.
• Economic life for excavator = 5 years
 Machine Excavation
Example 5
• Excavate to reduce level not exceeding 1.00 m maximum depth. – m³
Capital cost
Initial cost = RM150,000.00
Interest on capital for 5 years @10% p.a.
= 1 x 5 x RM150,000.00 = 75,000.00

10
Maintenance cost for 5 years = 15,000.00
= 1 x RM150,000.00

10 = 7,500.00
Transportation cost for 5 years = 247,500.00
= 1 x RM150,000.00 8,000.00
20
= RM239,500.00
Less resale value
= RM47,900.00
Cost for 5 years
 Machine Excavation
Example 5
• Excavate to reduce level not exceeding 1.00 m maximum depth. – m³
Assumption: Average no. of working
days for excavator per year = 200 days.
Total no. of hours per year = 200 x 8
= 1,600 hours = RM47,900.00 = RM29.94
Capital cost/hour 1,600
Operating cost
Operator = RM 50.00
Diesel = 6 litres x 8 hours x RM1.70 = 81.60
Lubricant = 14 litres x RM20.00 = 40.00

7 days = RM171.60
= RM171.60 = 21.45
Operating cost/day = 8 hours = RM51.39
Operating cost/hour
Total cost/hour = RM51.39 RM4.28
Output/hour = 12 m³ 12 m³ 0.64
:. Cost of excavating & unloading/m³ = RM4.92
Allow 15% profit and overhead
THANK YOU