UNIT 5 PRINCIPLES OF ESTIMATING

Structure
5.1 Introdb. Hon
0hjectwes
5.2 Objectives of Estimating
5.3 Process of Estimating
5.3.1 Process Components
5.3.2 Pnontrsatlon
5.4 Identification of Components of Construction
5.4.1 Bas~chioc~ples
5.4.2 Constmaloo Sequence --
5.4.3 D ~ s c r e Con~trualon
~e Actlnties
5.5 Measurability of Components
5.5.1 Pnuaples of Measurement
5.5.2 Methodology of Measurement
5.5.3 Unlts of Measurement
'5.5.4 Llrmts of Measurements and Degree of Accuracy
5.5 5 Methods of Q u a n u f i a o n
5.6 Rate Analysis or Pricrng
5.6.1 Elements of Pnc~ng
5 6.2 Estabahment of Data
5.6 3 ksb
5.6.4 Profit Margins

5.7 Techniques of Pricing

5.7.1 Basic Techtuque
5.7.2 Matenah
5.7.3 Labour
5.7.4 Equipment
5.7.5 Overhead Costs
5.7.6 Profits

5.8 Sumrnarisation .
5.9 Approximate Eshmates
5 9.1 Purpose of Approxlmate Estimates
5 9.2 General Principle Used
5 9.3 Methods for Ohrasniug Approxlmate Esomates
5.10 Summary
5.11 Answers to S AQs

5.1 INTRODUCTION
Every construction and design company whether in the public or private sector must
perform a number of management functions in order to get into and to stay in business.
Any con;truction project goes through process of establishing the feasibility, planning,
designing, administrative and technical approval, financial sanction, and finally the
execution. Soon after the architectural and engineering designs of a project are
completed, estimating exercise is gone through in construction parlance, an estimate is an
expression of opinion or the prediction of the probable future costs of certain construction
activibes, usually based on some data having an acceptable degree of reliability. The ,-
consttuctiomindustry embraces many types of construction work, all of which can be
classified under two broad headings, namely heavy construction which includes bridges,
dams, roads, mills and the like; and buildihg construction which includes residential and
non-residential construation. In this unit, emphasis will be on the latter with some
,coverage given to roads. However, most of the principles illustrated will be applicable to
both types.
It is important to recognize right at the beginning of this study, the importance of
estimating in Ule affairs of a construction-or dekign company. The success of the business
will be directly proportional to the quqity of the estimating process and the reliability of
Estimating its results. All construction activities are divided into two categories, viz.
- those that occur outside the company and therefore beyond its significant
control, and
- those that occur within the company and therefore within its direct control, it
seems only prudent to remove as much of the risk as possible from all internal
activities, not least of which is the activity of estimating.
Estimating can be defined as the formation of an approximate judgement or opinion
regarding the value, amount, size, or weight of something. More precisely, it refers to
careful and correct measurement of various quantities involved in a construction project
as reflected in contract documents and drawings and the subsequent calculation and
application of accurate unit prices to these quantities. The purpose is to produce the
probable total costs of the work to be done. The estimating is generally carried out
component-wise for a large construction project and individual costs of components are
added up to arrive at the total cost of a project.
A well prepared estimate forms a sound basis for
(a) the efficient management of resources - such as money, men, materials and
machines,
(b) entrusting the works for execution to contracting agencies on a competitive
basis,
(c) identifying the needs for alternative solutions to achieve economy in
construction,
(d) scheduling and monitoring of the project time and cost, and
(e) submission of tenders or bills by contractors to user organisations.
Objectives
After studying this unit, you should be able to
understand the concept of "components" of a project or a structure from the
point of view of estimating,
test the identified component for quantification,
conceptualise the principles and methods of measurement and methodology of
pricing,
choose approximate units of measurements for each component and decide on
levels of accuracy,
determine the unit cost (rate) of comprising material, labour and equipment for
the given specifications of the identified component,
comprehend the complete approach of preparation of an estimate of a
structure/project,and
describe the principles and methods of approximate estimates and distinguish
between detailed and approximate estimates.

5.2 OBJECTIVES OF ESTIMATING

In general, the objectives of estimating in construction are to establish the following
criteria about any project under consideration :
The Project : The first objective is to discover the location, nature, style, magnitude,
quality, and timing of the work.
The Documentation :The second objective is to discover the amount, quality, and type
of the information being presented on which the estimate will be based.
The Responsibilities :The third objective is to discover and distribute legal and
contractual responsibilities among the vqious parties who may become involved in the
project.
The Probable Costs :The fourth objective is to establish probable costs with as much
certainty as possible in the given circumstances of time and place.
Estimating 5.4.2 Construction Sequence
It becomes necessary, therefore, to Identify these components (units of worklitems of
work) first. It 1s not a difficult job. One has to only observe/visualize the sequence in
which any construction prqject is performed. The components can be seen to emerge out
and identificat~onis simple. Moreover, preparing the construction sequence ensures that
all activities relating to construction are identified without any omission.
For example, in a building project, the following sequence of work can be observed :
-
- .Clearing of the site 1
1

- Marking the foundation lines including construction of centre line pillars and
establishing bench marks
- Earthwork excavation for foundation
- Tamping and compacting the excavated surface
- Filled with sand
- Laying foundation concrete
- Construction of substructure
- Refilling the sides of foundation etc.
A fairly experienced engineerlsupervisor should be able to write down the sequence of
construction of a particular building project without much of difficulty. Generally, the
sequence of recording measurements follow the sequence of construction but it is not a
necessity.

5.4.3 Discrete Construction Activities

The moment the sequence of carrying out the work is written down - as above - these
different activities themselves constitute, in most cases, the components of work that c&
be considered for estimating. While identifying the components, it is important to
consider the two aspects of that component :
(a) amenable for isolated treatment with regard to its material, labourlequipment
requirements, and
(b) when integrated together, should result in the whole project without any
omission of item require incurring of costs.
A building project, therefore, may involve a very large number of discrete activities - in
fact - thousands of activities theoretically. But on practical considerations, these activities
are to be grouped into a manageable number of discrete components - each component
comprising a set ot activities. Each of these components would thencomprise supply and
use of certain labour or equipment to handle and convert these materials into required
size and shape so that a finished product similar to a manufacturing system is turned out.
As an example, let us consider masonry in foundation as a discrete activity. It may
involve the use of masonry units (say, bricks or blocks of stone or concrete) laid in mortar
by a skilled mason in a manner described in drawings and specifications with the '
assistance of semi-skilledlunskilled workers and other tools and equipment. Hence, each
activity, by itself can be visualised as composing specified amount of materials (e.g.
masonry units and mortar), and labour (skilled/semi-skilled/unskilledworkers) with or
without the use of toolslequipmentfplant.It is an agreed practice to group discrete
components of similar nature for purposes of estimating.

( I Descnhe kneily the hasic pnnclplci ot estlmatlng.

(b) i-Io~8''ectrn~nt:ng"IS difft>r~ntfrom "valuatioo-' '
(cl Grve tlii: conslrucllon sequence of :I Schoc,i Building Conslruction Prcject for
Ble purpose ot estlnlatlnp.
 The Estimating System : A final objective is to achieve the foregoing objectives by the Principles of
Estimating
development and application of a reliable and practical system of investigation,
measurement, pricing and summarisa-tion which can be integrated into the other
1 operations of a design or contracting.

k 5.3 PROCESS OF ESTIMATING

5.-,.
4 1 Process Components
The estimating process can be divided into two major components, viz. measurement
and pricing. There are some procedures very closely allied to the estimating process -
indeed, some say they arehart of the process, such as bidding and cost control. Both
measurement and pricing can each be conveniently subdivided into three main parts. In
measurement, the three parts are description (specification) of work, establishment of
dimensions (interpretation of design and drawings) and calculation of quantities of
work. In pricing, the three parts are the establishment of data related to cost and
productivity, the computation of prices based on the data and the application of prices
to the measured quiihtities of work. In the subsequent sections, these six elements will be
examined in detail.
5.3.2 Prioritisation
One objective of estimating, as already stated, is to maximize information about any
given set of proposed constmction circumstances, to minimize the unknowns and
therefore the risks, and to permit reasonably reliable predictions to be made with respect
to construction costs.
In any construction project, the various comp.onenbparts that go to make up the whole
'have varying degrees of economic or other importance. Estimators should be able to
identify the significant components, which are normally not many in number and bestow
added attention to these components rather than to other insigntficant items, which may
be large in number. This precept is now referred to as the 20180 rule, which is to say that
20% of the work will generate 8 0 8 of the cost, and vice-versa. The necessity of making
this dishnction comes about from pressures that are imposed on every estimator. There is
simply never enough time in the estimating processso give equal consideration to every
element of design and construction and to every aspect of cost on any given project.

5.4 IDENTIFICATION OF COMPONENTS OF

CONSTRUCTION
5.4.1 Basic Principles
In both the processes of measurement and pricing, the basic principle adopted is "deal
with parts first; then combine the parts to form the whole" or "analysis" and "synthesis".
Analysis is the separation of a thing into its constituent elements, and synthesis is the
combination of such elements into a composite whole. In the analytical process, the
building project requirements are divided into units of work, which are the various trade
sections or distinct disciplines of work to be done; these units are further subdivided into
items of work, which are the smallest individual portions of the various types of work
that can be readily classified, measured, priced, and accounted for. In the synthetic
process, predictions in the form of prices are made about productieity and costs of
materials, labour, and machines : these prices are then applied to the measured quantities
of work to produce the anticipated total cost of the project.
 Principles of
5.5 MEASURABILITY OF COMPONENTS Estimating

It is important that the identified components of work can be measured, i.e. identified in
physical terms. Work should always be measured in accordance with some standard
method of measurement, either internally established by the individual company or
organisation, or externally recommended for .lse throughout the industry or trade. There
are several good reasons to adopt such a practice. Some of them are as follows :
(1) The work of the estimator will be made more simple, more rapid, and probably
more dependable.
(2) Communications between concerned personnel will be clarified, strengthened,
and hastened.
(3) qn the event of a dispute, there will be some precedents on which the estimator
can rely.
5.5.1 Principles of Measurement
The cost of construction work consists of five discrete but related elements, i.e. labour,
equipment, materials, overhead and profit. The general purpose of quantification is to
present these elements separately or jointly in such a way that their individual or
combined costs can be predicted and later confirmed. In this connection, help from
readily available and well-established analysis of rates (pricing process) for a large
number of items (Standard Data) can be availed. In addition, the following general
principles of measurement are articulated for the benefit of estimators in the offices of
both designers and contractors.
Accuracy
All work should be measured as accurately as the data will permit. Estimators are
always forced with the necessity of having to make decisions about the probable
conditions under which work will be done. If measurements can be put onto the
r firmest base possible, then the approximations and judgements that inevitably have
to be incorporated into the pricing process will be rninirnised. Furthermore, in the
event'of a subsequent dispute about the quantity or cost of any item or unit of
work, it should be relatively easy to remeasure the quantity to confirm the original
estimate.
Economy
The estimator should strive to have the least number of words in descriptions of
measured items, the least number of extensions and totals. A deliberate policy
should be adopted to make the estimate as lean and tight as is practical consistent
with the maintenance of verbal and mathematical logic. There are two good
reasons for the foregoing recommendation :
(a) Every word is capable of correct or incorrect interpretation, and every
calculation may be correctly or inc.orrectly done; therefore, the less said and
calculated the better
(b) As time is always a pressing problem in estimating, rpethodology that will
hasten the process while improving comprehension and accuracy is to be
encouraged.
Standards
Work'should always be measured in accordance with some standard method of
measurement, either internally established by the individual company or
organisation, or externally recommended for use throughout the industry or trade.
There are several following good reasons to adopt such a practice :
(a) The work of the estimator will be made more simple, more rapid and probably
more dependable
(b) Communications between the concerned personnel will be clarified,
strengthened and hastened
(c) In case of a dispute, there will be precedents on which the estimator can rely.
In general, the methods of measurements, are based on recommendations
contained in various parts of IS : 1200 - 1974 (Methods of Measuremeqt of
Buildings and Qvil Engineering Works) published by the BIS, New Delhi.
Estimating Confidence
One of the prime concerns of any estimatnr is to develop confidence in his or her
own work by adopting practices that will assist in avoiding estimating error
wherever possible, and to reduce the effects of errors of measurements (or pricing)
that maypcidentally be incorporated into the estimate. One way of minimising the
chances of error in measurement is to adopt the practice of measuring overall and
deductingvdds and wants. By definition overall means from end to end, or to the
fullest extcnt possible. A void indicates an adjustment made where one item
displaces another item, such as at window space in a wall. A 'want' indicates an
adjustment made to compensate for deliberate over-measurement, such as at a
recess at edges or comers of a wall or slab.
Overall peasurement has a number of following advantages :
I
(a) Overall dimensions and the location of voids and wants are or should always be
overtly stated or clearly implied by the drawings and specifications, and there is
therefore, seldom any need for the estimator to calculate or otherwise establish
such data, by scaling or other means, and
(b) By measuring the overall first and making deductions second, the effects of any
minor errors or oversights in voids or wants will be minirnised. The result may ,
be a minor over-measurement or overpricing, but this is seldom detrimental to
the budget.
Flexibility
As a general rule, it is better to measure a few more items rather than a few less.
The time taken to do the actual measurements will be the same, but there are a
number of benefits to be considered. First, wherever a choice can be made between
measuring items of work of similar type together or separately, they are best kept
initially separate. Although it is relatively easy subsequently to combine subtotals
of quantities of similar items or identical prices, it is more difficult to separate and
price conlposite items later. Second, care should be taken to organise the
measurement of work in such a way that the labour, material and equipment
components of items can be priced separately or together, depending on what is
more expedient. For example, in a reinforced concrete framed buildings,
depending on level of quality required, concrete in foundations, beams, columns
or slabs need to be separated out for quantification. Although the quality (and even
the quantity) of concrete might be the same for all these items, the nature of work ,
tobe done is different. Even though the work in all four items may be measured in
I
,
the same measurement unit (cubic metres in this case), the unit price to be
subsequently applied to each of the quantities may be differept. The quality of '
concrete in each item may be same or different, and the waste factors may vary
from item to item. The labour crew size, type and productivity may be the same or
different for each item, as may be the equipment also.
Simplicity
It is good l.0 design and construct buildings using standard and typical components
'i
and details wherever possible. However, it is not always possible to stick to such
standards, and occasionally some non-typical work will be encountered. To keep
the idea of simplicity in measurement, one might say that non-standard and
non-typical work should be measured and kept separate from standard or typical
work, so that the additional costs associated with the non-standard aspects of the I
work can be separately calculated and added on to the costs of the standard work.
This technique is called extra-over technique. The following examples will
illustrate this technique. 4
.
1
(a) w e n measuring drain pipe around a building, the work is measured as if the
lines were straight, and the quantity is stated in linear metres, measured aloag
the centre line of the drain. The additional work involved in installing bends,
elbows, clean outs and such specials is then separately stated as numbered
items, which are later priced on the basis of extra cost of supplying and
installing such additional items over the costs of supplying and installing the
regular straight pipe.
(b) When measuring a concrete retaining wall built to a batter, that is with one face
1
I

vertical and the opposite face inclined slightly from the vertical, it is simple to
nieasure the wall as if both faces were vertical and parallel to each other, which
-- +-
J
 is typical, standard or normal configuration for a concrete wall. The area of the Principles of
Estimating
sloped portion of the wall is then measured separately and the additional cost of
modifying all the accessories and labour to produce that particular feature are
calculated and applied to the non-typical quantity as measured.
(c) When measuring centering for a circular column, it is simple to measure it as if
it is a square column of side equal to the diameter of the circular column. The
extra cost of making a curved surface is treated as a non-typical quantity and
separately provided for.
The primary benefit of this technique is that any discrepancy in the pricing of such
non-typical or irregular items is contained within the difference in cost between the
standard work and non-standard work, and almost always has to be added to the
cost of standard work. A secondary benefit is that the estimator does not usually
have to make deductions in his measurements of the standard work, but can simply
make a note to add an item for the non-standard portion. A third benefit is that the
extent of the additional cost can be identified for study, to assist in determining
whether the non-standard feature should be retained, modified or deleted during
the design or building process.
Repetition
Work should be measured in such a way as to minimise repetition of words or
figures. If, for example, a number of floor areas are found to have a common
length but varying widths, it is probable that the widths can be totaled or summed
and the sum then multiplied once by the common length to produce the required
gross area.
Wherever possible, work should be measured using dimensions that can be used
more than once. Such dimensions are often called reflected dimensions and they
have two primary advantages. First, if they were correct for the first use, they will
be correct for all subsequent uses with appropriate modification where necessary,
and second, they eliminate subsequent calculations, thus saving time and reducing
possibility of error. Some examples of reflected dimensions are to be found in the
area of formwork necessary to form an area of concrete wall, the area of plastering
which require to be subsequently painted or the area of flooring concrete which
require to be subsequently provided with mosaic tiles.
Style
There are a number of useful exhortations to be made under the general title or
style. First, estimating work should be done using standard formats. Preferably
printed sheets with columns marked in vertical lines should be used. Other related
requirements are adequate space to laywt sheets of drawings on desks as well as
space to layout pencils, scales, calculators, books, and other useful pieces of office
equipment or documentation. It is advisable to complete most of the measurement
process before the calculation process is started. The estimator should resist the
temptation to manually do extension and summary calculations immediately
following the establishment of dimensions for each item of work, except where
absolutely necessary or logical with respect to other parts of measurements, such
as in the use of reflected dimensions. The reason for this'advice is to try to avoid
interruptions to the train of measurement thought, to avoid omissions, duplications,
or other errors that such interruption can cause. With the use of electronic
equipment, such as desktop computers and printers, such advice may not now
apply. Typical examples presented in Unit 6 demonstrate acceptable styles for
presentation of estimating data.
5.5.2 Methodology of Measurements
Let us now discuss the methodology involved in the procis of measurements. As already
stated, this consists of three parts viz.
(a) Description of work,
, (b) Establishment of dimensions, and
,

;(c) Calculation of work,

Invariably, architects, designers pr construction companies make available standard
printed formats to the estimators for recording measurements and other relevant data. If
computers are used for estimating, the program can be selected or designed to present a
spreadsheet .of the correct configuration on the screen for the use of the estimator.
,'
Estimating Descripti~nof Work or Specifications : The estimator must review with great care, the
proposdd chditions of c w a c t , the drawings, the specifications for the work of various
trades and all other information issued from the architect'sldesigner's office or otherwise
made available for examination in connection with the project in question. Careful
noteslc~ecklistmust be made of all items likely to affect cost, time, or quality. Based on
the checklist, the estimator prepares a complete list of items of work involved in the
project. These items are listed in a certain sequence in the appropriate column of the
format.
Establishment of Dimensions : Every item of work consists of three dimensions and a
number. These four elements can be arranged in any configuration convenient to the
estimate. For example, the dimension for the thickness of a concrete slab can be placed in
the description column, and the remaining two~irnensionsof length and breadth placed
in the appropriate columns to calculate the area fc: that thickness of slab. Dimensions are
of two types : direct and derived. Where possible, the dimensions should be read directly
off the drawings. If it is not possible to read the dimension of any part of the work
directly from the drawings, a small calculation should be made and a note recorded as to
how the dimension was derived.
Calculation of Work : Once all the dimensions have been entered in their proper places,
the measurement is now ready for calculation. All measurements related to a particular
item of work are totaled up to arrive at the quantity for that item. Deductions, if any, are
also recorded as negative quantities and the net final quantity is arrived at.
5.53 Units of Measurement
The units of measurements for components of work can be either one of the following :
Volume : Voluminous and mass components are measured in volume basis (viz.
cubic metre)
Area : Thin, shallow and surface works are measured in square unit, or over area.
The thickness is specified in the description of the item and the measurement of
length and breadth or projection shall be taken to calculate the area (viz. square
metre)
Length : Components, which are long and unidirectional in nature, are quantified
in linear or running unit (viz. running metre)
Number : Pieces of material in a finished state are quantified in numbers.
The following are the conventional units of dimensions used while specifyingldescribing
materials and works.

Name of MaterialsrWork Dimensions in Metric System

I Bricks. blocks etc. 1 All dimensions in mrn I
1 Aggregates, ballast, grit, sand etc. I Size in mm 1
I AC Sheets, tiles, glass panes, boards 1 Length and breadth in cm or m I
Thickness in mm
Timber Length in mm and cross-sectional
dimensions in mm or cm
I ~ollcxisteel sections
I Length in mm and sectional dimensions
inmm
\ Reinforcing bars Length in mm and sectional dimensions
inmm -
Masonry Length and Height breadth in m
I I Thickness or breadth in cm 1
Concrete work Length and breadth in m
P
Thickness in cm
I ~ o o ~di d o w etc.
s I Height and breadth in cm or m 1
-

Whitewashing, colour washing,

Painting etc,
-1 - -

Leng&, breadth, a i d height in m

I Hardware i t ~ m 1 Size of items in mm or cm I

 $ 5 4 Limits of Measurement and Degree of Accuracy Principles of
Estimating
Generally, the degree of accuracy in calculations depends upon the rate of the item of
work: Items of work with high rates shall be measured more accurately than items of
b work- with lower rates.
(a) The dimensions shall be taken to the nearest 0.01 m except for
I ., thickness of slab which shall be measured to the nearest 0.005 m.
(i)
(ii) woodwork to the nearest 0.002 m,
(iii) structural steelwork to the nearest 0.001 m, and
(iv) thickness of roadwork (where the thickness is less than 200 mm) to the
nearest 0.005 m. '
(b) Areas shall be worked out to the nearest 0.01 sq m. For steelwork, areas
excluding cross-sectional measurements shall he worked out to the nearest
0.001 sq m.
(c) Cubic contents shall be worked out to the nearest 0.01 cu m except for
woodwork, which shall be worked out to the nearest 0.001 cu m.

k (d) Weights shall be worked out to nearest 1.0 kg.

t 5.5.5 ~ e t h o d of
s Quantification
The quantities of various items such as earthwork excavation, foundation concrete,
masonry in foundation and basement, masonry in superstructure etc. can be estimated by
any one of the following methods whose brief description is given below :
(a) Long and short wall or "out-to-out" or "in-to-in" method
(b) Centre line method
(c) c;ossing method
Long and Short Wall or "Out-to-Out" or "In-to-In" Method
Longer walls in a building (generally hl one direction) are considered as 'long
walls' and measured from 'out-to-out'; and shorter or partition walls, perpendicular
to the longe: walls, are considered as 'short walls' *andmeasured from 'in-to-in' for
a particular layer (level) of work. These lengths of long and short walls are
multiplied separately by the breadth and height of the corresponding layer and are
added up to get the total quantity for that layer. Such lengths of long and cross
walls are computed for every layer in which the breadth changes. To calculate the
lengths of long and short walls, their centre to centre lengths are individually
determined from the plan. Then the length of the long wall out-to-out is calculated
after adding half breadth of wall at each end to the centre-to-centre line length. The
length of long wall generally decreases from earthwork to brickwork in
superstructure whereas the length of short wall increases. In case of short walls,
the length of short wall is computed by subtracting the half breadth of wall at each
end to the centre-to-centre line length.
Centre Line Method
The total centre lines of walls in a building are calculated and the breadth and
width of the respective item to get the total quantity at a time multiply the same.
For different section of walls in a building, the centre line length for each type
shall be worked out separately. In case of partition or verandah walls joining the ".
main walls, the centre line length shall be reduced by half of the breadth of the
layer of main wall that joins with the partition or verandah wall at the same level.
Number of joints is first studied to calculate the centre line length. In case of
unsymmetrical wall, the centre line varies at every layer.
Crossing Method
To obtain the centre line length, the overall perimeter of the buildings are
calculated and subtracted with four times the thickness of the wall. Internal walls
are grouped separately to their sections and measured in between the internal faces
of the main wall at that level.

I
Example 5.1
Here, an illustration of recording measurements in typical format is pregented.
Figure 5.1 shows theplan and cross-section of wall of a two-roomed building.
Estimating Measurements and quantities relating to the following items of work are illustrated
and the centre line method is followed for their quantification :
(a) Earthwork in excavation in foundation, '
(b) Cement concrete in foundation, and
(c) Brickwork in foundation and plinth.
The total length of the centre line
= Length of centre line for the outer wall + Length of centre line
for the cross wall

Referring to-the foundation plan, it is found that where the centre line of the cross
wall joins with the centre line of the outer wall at the same level, the portions PQ
and RS from the centre line of the cross wall has already been excavated from the
main wall. So these portions each equal to the half of the trench width shall be
deducted from the total length of the centre line length of 25.6 m.
So, the excess length of centre line for earthwork in excavation

To estimate the earthwork this centre line length shall be multiplied by its breadth
and depth.
As the foundation concrete of the cross wall joins with the main wall at the same
level and the width of the earthwork and concrete work is the same, the total centre
line length of 25.6 m remains constant for concrete work.
For brickwork of different footings, the same principle, i.e. deduction by half the
width of footing which the cross wall joins at the same level shall be made per
junction as shown in the section figure.
Thus, the centre line length for brickwork, 1st footing, 50 cm wide

For 2nd footing, 40 cm wide =

(I25.6 - 2 x
2

And so on for plinth footing, 30 cm wide =

L
These net centre line lengths shall be multiplied by their respective breadths and
heights to arrive at the quantity as shown in Table 5.1.
Table 5.1 :Details of Measurement and Calculation of Quantities

Item Description of No. Len th Breadth Height Quantity

(4
'
NO. Item (m) (m)
1. Earthwork in
excavation in 1 24.85 0.75 0.90 16.77 cu m
foundation
2. Cement
concrete in 1 24.85 0.75 0.20 3.72 cu m
foundation
3. First class
h -ickwork in
foundatioi~
and plinth
1st footing 1 25.10 0.50 0.20 2.51 cu m
2nd footing 1 25.20 0.40 0.20 2.02 cu m

-
plinth footing 1 25.30 0.30 0.75 . 5.69 c u m
Total Brickwork 10.22 cu m
 Principles of
More illustrative examples of structures involving different types of items of work are Estimating
given in Unit 6 of this block.

Hil * ROOM -I
111 ROOM-2.
"Ull

I PLAN
$ ,
5
7 A

_PLAN FOR FOUNDATION TRENCH E W V N .

4 FOUNDATIO~J cONCRFTE.

( ~ i m e n s i o n sin. cm/rn)

Figure 5.1
Estimating

[ aj Expiarij ikie?,C,.....t.Tz..i a . i l p ~ i l l ~ l p !ot >f ??!easl~rcment.

~ HOW!htls; &rtt uci.lu! ti7r 4
Penelit i!f estimatois ?
!h! f)isi.us.; Ihc various unr ts of messurcnient normally usel?in'a?&mh&~g
:.(tit.::
suitable examples of cach type.
(c'l Write sn:xrt note 01: '-degree ot accuracy". ()11 is11an tactcirs. l r c1ej:enci '

(dl Descrik the ilifferel~trnethds of quanlific:ilior~zmpl~zya~cgi~iwg'ttrci:

rri:ttlvi:
nlc?rirsand ~lt.rrzerita,

It can be argued that the study of pricing should precede the study of measurement,
because the objective of measurement is to permit pricing to be done, and that one should
therefore know how to measure it. As a matter of practical fact, the measurement and
pricing processes are interdependent to such an extent that it is immaterial which is
tackled first; ideally, they should be considered simultaneously. However, it is expedient
to separate them for one important reason, i.e. measurements for a particular project do
not change with respect to time whereas the costs associated with pricing change. If the
project, for some reason, is taken up for execution, on a fairly later occasion, costs would
have changed considerably and the pricing part alone, but not the measurements part of
the estimate, needs to be revised.
Measurement is a relatively simple exercise - as compared to pricing. While
measurement is almost totally based on almost frozen drawings and specifications,
pricing involves consideration of large number of parameters. Measurement remain
constant for a given project but pricing (especially, relating to labour and equipment) can
vary from place to place and from time to time.

5.6.1 Elements of Pricing

The pricing portion of the estimating process consists of three major segments: the
establishment of appropriate data, the computation of unit prices based on these data and
the application of such prices to the measured quantities of work. Before beginning a
detailed study of the elements of pricing, it is appropriate, in order to avoid ambiguity
and confusion, to examine the meanings of some words and phrases commonly used with
the subject matter of pricing.
Unit Rate and Unit Price I
There is no universal agreement among estimators about the precise meanings of
the terms unit rate and unit price. The expression unit rate has two common
meanings : average output for a measured unit of work, or basic cost to the
contractor to perform a unit of work. The expression unit price usually means a
composite figure, consisting of a basic cost plus a percentage marks up for
overhead and profit. In this block, 'unit rate' refers to output, and 'unit price' refers
to cost, item of work, and unit of work. An item of work is a part of the total
construction project which can be distinguished from all other parts, and for which
costs can t ~ determined
e separately - e.g. concrete beam as distinct from a concrete
slab. A unit of work is a collection of item, generally comprising the work of one
distinct trade, such as masonry or roofing. Synonym for item of work is a pay item
and for a unit of work is a specification section.
Wage Rate and Labour Rate
Wage rates are those paid to the workers for doing work on an hourly basis; labour '
rates are those used by the contractor to calculate labour costs, and include wage
rates plus all other pay roll burden, such as fringe benefits and statutary
requirements. Some estimators use wage rates in calculating unit prices for labour;
such estimates should theoretically equal actual payroll disbursements. Some
estimators prefer to use the more comprehensive labour rate, because it is more
representative of the costs ?f the work being done.
Plant, Equipment and Tools Principles of
Eqtimating
. These three words require some comment because of the special meanings
ascribed to them by estimators. Plant means relatively large, immobile machinery
, and often includes the buildings or other fixtures housing such machinery, e.g.
concrete ready-hix plants. Equipment means heavy but relatively mobile
machinery, e.g. concrete mixer machine, power hoist, power trowel. Tools means
light weight manual devices such as hammers, chisels hand-held machines like
drills. Plant and equipment are usually provided by the construction company,
whereas tools are usually provided by the tradesman themselves for their own use.
Mobilisation
Mobilisation refers to the costs of transporting a piece of equipment from the
contractor's storage yard or other source, such as a rental agency, to the
construction site setting it up ready to do work and returning to the source upon
completion of work. If the equipment has to be transported using another vehicle,
such as a flatbed truck or van, the costs of the second vehicle must also be
calculated and charged to the project generating these costs. Specifically, the costs
of mobilisation should be charged to the item of work precipitating the necessity to
provide the equipment under consideration, e.g. mobilisation of a pile driving rig
to the foundation work.
5.6.2 Establishment of Data
There are two types of data, viz. Factual data which involves determination of costs of
specific types of materials, labour, equipment and overhead expenses; and Productivity
Data, which involves the determination of materials coverage and waste, crew size and
outputs, equipment types and capacities, and the general risks involved.
Factual Data
The four topics under this category are materials, labour, equipment and
overheads, the cost of each are influenced and determined by the normal pressures
of supply and demand in the market in any region at any time. Such cost data are
therefore not permanently Axed; they can only be established as of a given point or
finite period of time. This is sufficient for the purposes of most estimators and
designers provided that care IS taken with definition of the point of or period of
time.
Materials
Most contractors or designers can readily determine the cost of the purchase and
delivery of specific types of materials in known quantities to designated sites.
Manufactures and suppliers circulate current prices for use by designers and
contractors, who are lcnown to be working on current building projects. It is
important to note that cost of materials at any site is the cost at source of supply
plus transport costs.
Labour
Contractors and designers can determine the current cost of labour in any
particular region and for any particular trade, such as masonry, carpentry,
painting, or general labouring work. Labour costs consist primarily of three
major components : basic wage rates, legislated requirements and fringe
benefits. The first component represents the actual hourly or daily rate of pay
agreed between the employee and employers. The second component covers
additional amounts of money required to be paid by the employer to cover such
social security items as provident fund, pensions, holiday pay, bonus and the
like. The third component deals with the monetary effects of negotiated
working conditions, achieved through bargaining between the employee and the
employer (individually or collectively), such as seniority differentials, shift
work, danger pay, and so on. Each of the these three major components has
more sub components, each of which require further investigation and
determinaticp to establish the corrrxt and complete labour cost for any specific
trade in any spe~ificregion at any specific time.
Equipment
Realistic costs for equipment are more difficult to estimate than are material or
labour costs. The following are the reasons for the difficulty :
l
 Estimating (a) Use of a variety of equipment in construction industry.
I
(b) Variety of ways in which the use of such can be procured - such as by
I purchase, rental, or lease.
(b) Large number of variables that enter into the calculation of costs such
as depreciation, investment, salvage value, tax benefits and so on.
(c) Variables in the output or productivity of a specific piece of equipment
and the skill of its operator.
But, in general, costs of equipment are considered under two broad headings -
vlz. owning costs and operating casts. Owning costs include investment,
mainsenance and depreciation. Operating costs include r u m g costs (fuel etc.),
repairs and wageslexpenses of operator.
Overhead
Overhead can be convemently divided into two major categories : direct and
indirect cost. Direct (or job) overhead costs arise out of the fact that
administrative work has to be done at each site where construction work is
under way. Indirect (or operating) overhead costs arise out of the fact of being
in business as a contractor, whether or not construction work is going on.
Therefore, there will be one continuous set of (possibly fluctuating) indirect
overhead costs, in addition to a number of intennittent sets of (possibly
variable) direct costs, arising out of a number of construction contracts.
Direct costs consists of administrative items such as building pennit fees, site
offices, hoists and scaffolds and so on necessary to run a construction job site.
Such costs are distinguished from costs of actual construction work, such as
excavation, masonry or carpentry. Indirect costs consists of administrative items
such as head-office rental, salaries of head-office staff, advertising for the
company as a whole, legal and insurance costs, and so on, necessary to run a
bus~ress.Such costs are to be distinguished from costs arising out of any
specific construction contract. Direct costs are estimated by preparing a list of
such items and determining their individual costs from appropriate sources,
usually external to the company. Indirect costs are usually determined internally
by the company accountancy on an annual basis over each of the construction
contracts under way in that company in that year.
Productivity Data
The four topics in this category are materials, labour, equipment, and risk. The
development of reliable data for these factors is to a large extent determned by the
exercise of judgement on the part of the estimator. Like factual data, productivity
factors are not permanently fixed, although they can also be established w~thin
acceptable margins with respect to points or period of time.
Materials
Most construction materials are marketed in standard sizes, containers, or unit
quantities such as sheets or boards, cans or drums, or in loose form such as sand
or gravel. When considering some prefabricated materials, such as plywood or
concrctk block?, the estimator has to decide how much work can be done w ~ t h
whole units and how much with p+rt units (resulting in some waste if whole
units have to be cut). When considering products such as paint or asphalt the
rate of coverage is going to vary depending upon the type of material supplied,
the type of surface treated, the type of equipment used, the skill of the
applicator and general environmental conditions at the place of the work. Each
product has its own characteristic factors of coverage and waste, and it is
possible for the estimator to acquire or prepare tables or charts to indicate such
characteristics for common materials likely to be encountered in the work of
any trade.
Labour
Labour productivity, probably, is the most difficult factor of the four to predict
with any accuracy. In general, there are two primary reasons for the difficulty:
first, the large number of variables that have to be taken into account, and
second, the somewhat arbitrary decisions that have to be made by the estimator
about many of these variables. Some important aspects of labour productivity
are discussed in subsequent paragraphs.
 ~GenernlFuctors
Proper management and direction of work force.
Time of the year and weather conditions.
Availability of qualified tradesmen.
Quality and quantity of organisation and Congestion at the place of
work.
Location of project - labour productivity is generally higher in
town than in rural areas.
Institutional work is generally less productive than commercial
work.
General level of business activity in the region.
Worker morale, pay rates, absenteeism.
The training and edu:;ation of supervisors.
Building codes.
Union regulations.
SpeciJic Factors
Nature of work of each trade.
Amount of work to be done.
Whether the work has to be done on a continuous or intermittent
basis.
The time available to do the work.
The complexity or interest of each work task or item.
7,' . Logistics of organisation to keep workers fully and productively
occupied.
Distribution of Time
Within the work of any specific trr~de,there are proportions of time which are
clearly more productive than others. For example,
Fully productive time - i.e. the work of the trade or related work is actually
being perfornled by workers
Semi productive time - i.e. planning or other arrangements lo do some actual
work are considered or discussed
Non-praductive time - i.e. Activities such as rest breaks, delays and other
diversions
This would mean that productivity levels are always less than 100%
(time-wise). In particuiar, carpenters are found to achieve just over 50%
productivity - but masons can achieve just under 75% productivity under
typical and normal conditions of work. Several poiilts arise out of these features
- of productivity which are of importance to the estimator. They are
Each trade has its own characteristic feature.
The proportion of productive to non-productive time is a reflection
of the nature of work and its organisation.
The estimation of probable time to do work of every type must
include an all~wancefor the appropriate proportion of
semi-productive and non-productive time.
Improvement of productive time is largely a function of
management, not of labour.
Atleast following two conclusions can be drawn from the foregoing discussion
of labour productivity :
 (i) The estimator must consider allowing for what appears to be up to two
hours pay for one hour of productive work - depending on the type of
work under consideration, and
(ii) Any improvement made to the proportion of productive time will have
a double benefit on the cost of having work done.
It should be noted in passing that labour productivity factors contained in most
construction estimating data books are composite figures which include the
fully productive, semi-productive and non-productive component of the
workers time. Such data would have to be analysed by investigation and site
observation to discover the actual distribution of time for the labour content of
any specific item of work. The responsibility of management to make such
investigation and observation is clear, if improvement of efficiency and
reduction of cost is an objective of any company.
Equipment
Construction equipment falls into three main categories :Production
equipment such as backhoes, power shovels, bulldozers, ancillary equipment
such as buggies, hoists, scaffolds, and administrative equipment such as site
offices, furniture. Production equipment actually carries out the work predicted
in the estimate. Ancillary equipment assists or requires the production
equipment to produce and administrative equipment, although not associated
with the construction process, is required to permit that process to occur in an
efficient manner. Productivity of construction equipment of every type depends
primarily on three factors : the nature of work to be done, the type and capacity
of thc: machine selected to do the work and the skill and experience of the
machine operator. As with labour productivity, productive and non-productive
proportions of time have to be taken into account by the estimator. These can be
considered under the following headings :
Potential Production :For every machine, a maximum number of working
days are available in any one year. Of these possible days, the machine may not
be used on all of them. On the days that it is used, it may not be used for a full
working day. Finally, it may not be used for the full 60 rmnutes out of each
hour, it is actually in operation. Factors can be developed and tabulated to
represent potential production for any machine, for the use by the estimator.
Actual Production :When any machine is in actual operation, inefficiencies
may develop, resulting in a reduction from maximum potential. Some causes of
such reduction are adverse working conditions, poor weather, lack of skill of the
operator, difficulties in the actual work being done, power-cuts / fuel shortage
and so on. Factors can also be developed and tabulated for potential production
figures suitably adopted for actual production. Actual production figures for any
machine can be predicted quickly by the estimator.
The factors to he applied can be determined from data gathered primarily from
following two sources :
The theoretical performance, based on data provided by the
manufacturer of the machine, and
'
The actual performance, based on direct observations of the
machine in operation in the site over a reasonable period of time,
Data from both sources require confirmation by a dst-accounting process.
5.6.3 Risks
As in other fields of life, risk in construction is a function of the quantity and quality of -
appropriate information. The more and better the information, the less the risk and
vice-verse. However, the construction industry is generally a risky one, because complete
and reliable information is seldom available. In the following paragraphs, a number of
factors representing opportunities and difficulties with which the. estimator must deal
with are discussed.
/
Opportunities
As already mentioned, estimators have good control over information relating to
internal affairs such as cost accountine. contract manaeement. nersonnel
 work schedules for the time frame under consideration, to assess what work is
under way, what other work is just about finished, and how much work is needed
to maintain any desired level of company performance. They can study the market
in general and the competition in particular when bidding for any specific project;
data can be assembled on the numbers, names, bidding practices and past
performances of the competifion, as well as their current commitments where
known. The level of profrf desired or expected from any specific project can be
established with some certainty in advance, by following some estimating practices
and by making a review of present needs and past performance. Furthermore,
contractors have,considerable control over the development and introduction of
innovative construction methods to make their operations more efficient.
Difficulties
With respect to affairs beyond the control of contractors, they have little control
over the general market trends, which fluctuate throughout the year as a result of
national and international political and fiscal policies. There is little that the
individual contractor can do to prevent labour unrest resulting in strikes and
lockouts in the industry at IArge, brought about by h i o n activity, and government
intervention. A common risk that contractors face is delay in material and
equipment deliveries. Some protection against this risk can be achieved by
including a damage clause in supply contracts. The best that most contractors can
do with regard to the weather is to hope that it will be more or less normal for the
period and to arrange insurance to cover unusual conditions.
Another common and potentially damaging risk is escalation of cost through
inflation, price changes, scarcity of supplies, or other causes, because most
I' construction contracts include a clause that excludes claims based on escalation.
Even in contracts with clauses permitting ckaims for escalation, there are a number
of practical problems in operating such clauses. As every constrvlction give rise to
some event that was unpredictable either in nature or magnitude, most contractors
include a contingency allowance, which is a sum of money that may cover most or
all of these additional unforeseen costs.
5.6.4 Profit Margins
The rqugins of profit in the construction industry can vary all the way from 0% to 100%
and beyond. In general, however, profit margins usually lie somewhere between 5 and
25% of the sum of the direct and indirect costs, with the lower end of the scale applying
to projects for which good information is available, and runnink up the soale as the ,
quantity and quality of information declines. Profit margins are not intended to allow'for
poor estimating practices or other mistakes of fact or judgement in the assembly of the
figures for the final bid or price negotiated for the construction contract.
Profit is the residue left to the contractor after all costs have been met and should
generally equate to about 20 to 25% of risk capital, before taxes,'where risk capital is
defined as amount of money required to operate the construction company as a business.
At present, such risk capital should be in the region of 10 to 12% of total annual turnover
of the company. For example, if a company has a annual volume of business of
Rs. 1 crore, the risk capital would be around Rs. 10 lakhs. The annual profit to be earned
should therefore be around or above Rs. 2.5 l d s , to provide a proper return on the
capital invested. Thus, if a company completed, say, three trouble-free construction
contracts in one year, each worth approximately Rs.30 lakhs, the theoretical profit on
each job should be at least Rs. 1 lakh or about 3.33%. In practice, a figure of 5% to 6%
would probably be included. The most appropriate profit margin for any construction
company should be established by we company management hnd accountants. Margins
that are too low or too high will inevitably lead to problems, one because of diminishing
volume of business (by not getding the contracts awarded).
Allowances for contingencies can take two forms : first, they can be overly-stated'as a
condition of the contract; second if (such overt statkment is not permitted), they can be
hidden within the lump-sum price or item-rates. Such allowances can vary from 0% to
5% with figures of 2% to 3% being common.
Estimating . ,

i ?,:
.
:
';: .!.
. ~. -. .

5.7 TECHNIQUES OF PRICING

In this section, the techniques of computation of unit prices and their application to
measured quantities of work are explained.

5.7.1 Basic Technique

There are five major components of construction cost, i.e. material, labour, equipment,
overhead and profit. For any particular item of work or an element of building, the total
cost of a selected or a representative proportion of the total amount of work is divided by
number of units of such work. This is the basic technique adopted at the unit prices of
different items of work.

5.7.2 Materials
The cost of purchase, transport (delivery), taxes and all other factors to acquire sufficient
quantities of proper (specified) materials to adequalely complete the required work must
be determined. Other factors include such things as waste, absorption, losses and
accessories such as adhesives, anchors, nails, screws, trim and the like. The total material
cost is then divided by the number of units to establish the estimated cost.
As an example, let us take the item of work "construction of brick masonry built in
cement mortar using metric bricks". The materials that constitute this work are metric
bricks of standard size, cement and sand (for mortar). The unit of this work is 10 cu m
(say), then, in order to arrive at the cost of these materials, we should know how much
quantity of these materials go into 10 cu m of finished item of work.
To calculate this, let us assume a wall 30 cm thick (lf brick) of known dimensions. With
the specified bonding arrangement and thickness of bedding and prepared mortar, which
is normally 1.0 cm, it is possible to theoretically arrive at the volume of bricks and
mortar, as described below :
Bricks
Actual size of brick = 190x90x90mm
The actual thickness of wall = 29 cm
Therefore, actual volume = 52 9 c u m
= 20~0.29~
Number of standard bricks of size 20 cm x 10 cm x 10 cm (nominal size)

14500
Thus, number of bricks (10 cu m) = x 10 = 4833 nos.
(20 x 5 x 0.3)
Allowing about 3% to 4% for breakage, wastage etc, this may be taken as 5000 nos.
Mortar
Wet mortar requirement = Total number of brickwork -net volume of bricks
= 29 - (0.19 x 0.09 x 0.09 x 14500) = 6.685 cu m
For frog filling, for use of cut bricks, for bonding, for uniform joints wastage etc.,
about 15% extra mortar will be required.
Total actual volume of mortar = 6.685 x 1.15 = 7.688 cu m
For dry volume, increase wet volume by 25%.
Then, dry volume of mortar required = 7.688 x 1.25 = 9.61 cu m
22 For 10 cu m of brickwork, dry volume mortar required = 9.61 x 10130 = 3.2 cu m
 In practice, about 3.0 cu m dry cement mortar is taken for pricing. Further, to Principles of
calculate materials of mortar, it is generally assumed that for every 1.0 cu m of dry Estimating
mortar, 1.0 cu m of sand is required as cement is assumed to fill the voids in sand.
For example, for cement mortar of proportion of 1 : 5 (by volume), we require
1 cu m of sand and 115 cu m of cement. As the dry density of cement is taken as
1440 kg/m3, the quantity of cement required is '/5 x 1440 = 288 kg. Therefore,
for 3 cu m, we require 3 cu m of sand, and 864 kg (3 x 288 kg) of cement.
Costing
Now, cost of materials required for 10 cu m of brick masonry can be computed as
the total cost of 5000 bricks, 864 kg of cement and 3 cum of sand.
Assuming cost of the above materials at work site as below :
Bricks (1000 nos.) = Rs. 2500, cement, (kg) = Rs. 4, ;md sand (cu m) = Rs. 50.
Total cost of materials required for 10 cu m of brick masonry is
= Rs. 12500.00+ Rs. 3456.00 + Rs. 150.00 = Rs. 16106.00
Total cost of materials required for 1 cu m of brick masonry = Rs. 1611.00
Similar procedure can be followed for estimating cost of materials of other elements of
building. Help may be taken from standard texts relating to usage of materials.
5.7.3 Labour
The steps involved in determining the labour cost are as follow :
(a) The type of work has to be clearly established.
(b) A decision is made about the composition of the work crew.
(c) Productivity factors for that crew to do that work have to be determined from
company or published records (standard data books).
(dl The hourly or daily labour rates to employ such a crew are added up to produce
a total hourly or daily cost.
(e) The total hourly or daily cost is divided by the productivity factor to produce
the estimated cost.
The factors involved in productivity of labour have already been discussed in detail.
By the way of examples, the following extracts from the report on "productivity projects
in building industry" issued by National Building Organization (NBO), are given below :

I Type of Work

(a) Excavation in foundation

I Labour Crew

Beldars - 5 nos.
Quantity of Out-turn
(Productivity) I
trenches etc. in orditiary Mazdoors- 4 nos.
soil including disposal
upto 30 n~l e d (100 feet)
and left of 1.5 m (5 feet )
(b) Refillin excavated earth Beldars - 3 nos. 28.30 cu m
in founcfations, plinth etc. Mazdoors- 2 nos. (1000 cft)
including consolidation in Bhishti - 1 no.
15 cm (6") layers
(c) Dis osal of surplus earth Mazdoor - 1 no. 2.83 cu m
witKin a lead of 30 m (100 cft)
(100 ft)
(d) Laying plain cement Masons - 114 nos. 2.83 cu m
concrete Beldars - 2 nos. (100 cft)
Mazdoors - 3 nos.
Bhishti - 3/4 nos.
2.83 cu m
(100 cft)
Mazdoors - 3 nos.
Bhishti - 1 10 nos.

for flat surfaces like slab Beldars - 4 nos.

1 (g) Reinforcement grill work

fnRCCwork I 1 Quintal
1
 For similar details of many other work components, "Standard Data Books" published by
the Central Public Works Department (CPWD) or Public Works Department of States can
be referred to. The numbers given under crew (comprising different type of craftsmen)
refer to so many man-days, each day comprising 8 hours of work. Wherever, labour-day
is given in fraction, it should be taken that the services of that particular labourer are not
required for the full day. For example, mason - 114 no., indicates that the services of the
mason are required for 114 day only.
As already mentioned, these numbers are to be multiplied by the daily wages payable to
the different types of labour and added together for each item to arrive at the total labour
cost for that out-turn quantity of that particular item.
For example, let us take the same item as in the previous section, viz. "construction of
brick masonry built in cement mortar using metric bricks". The labour required as per
Standard Data Book for an out-turn of 2.83 cu m (100 cft) is as follows :
Masons 241
1
Mazdoor 4:

Bhishti -
1 4

\ I

Let the following be the daily wages of the labour at the particular site of work.
[Masons : Rs. 1SO] [Mazdoor : Rs. 1001 [Bhishti : Rs. 851
I
Then, the total cost of constructing 2.83 cu m of brick masonry is

(2: 150 )+ (4; x O

l O)&, 85 ) = Rs. 780

Therefore, for 1 cu m of brick masonry = %Rs. 176

2.83 -
Thus, total material and lahour cost of 1 cu m of brick masonry = 1611 + 276 = Rs. 1887.

5.7.4 Equipment
As already stated, the development of unit prices for consmction equipment is
complicated by following two factors :
- there are so many types of equipment from which to choose, and
- there are so many ways to calculate the probable cost of owning and operating
any selected piece of equipment.
Nevertheless, there are some general aspects of cost that apply to most pieces of
construction equipment, with minimal modification. These are presented below under the
four headings, namely owning, operating, operator and mobilisation costs.
Owning Costs
The steps to calculate the hourly owning costs of a piece of construction equipment
are as follows :
(a) Find the total delivered price, including attachments and investment costs, such
as interest and inflation.
(b) Deduct the cost of all items that will be replaced during the expected life of the
machine.
(c) Deduct the estimated salvage value at the end of anticipated useful life of the
machine.
(d) Divide the residual cost by the number of years of life expectancy to find the
annual cost.
(el Add all other annual costs, such as permits, storage, insurance, inflation, and the
like.
(f) Divitle the total annual cost by-the estimated number of hours of predicted
m u d use to find the hourly owning cost.
Note that inflation can be included in either item (a) or item (e). . -
_--
-
--,?
 Operating Costs Principles of
Estimating
The steps to calculate the hourly operating costs of a piece of construction
equipment are as follows :
(a) Find the annual costs of fuel, lubricants, grease, and other consumable items
using data provided by the manufacturer.
(b) Calculate the replacement cost of all replaceable items by dividing replacement
cost by anticipated annual life of the items.
(c) Include the manufacturer's recommendations for probable repairs, usually as a
percentage of cost.
(d) Divide the total annual operating cost by the estimated number of hours of
anticipated use to find the hourly cost.
Operator Costs
The steps to calculate the hourly operator costs of a piece of construction
equipment are as follows :
(a) Find the equipment operator's costs as already explained in the section dealing
with labour cost.
t (b) Similarly, find the costs of any support personnel, such as helpers, cleaners.
(c) If the operators do no work other than to operate the equipment, the total annual
labour costs are divided by the anticipated hours of use to find the hourly cost.
(d) If the operators do other work, besides operating the machine, only the hours
spent on operating the machine should be included in the calculation.
Mobilisation Costs
The steps to calculate the hourly equivalent cost of the intermittent mobilisation
process are as follows :
t (a) Find the number of hours to be used transporting the piece of equipment from
the storage to the site and back to storage.
(b) Find the hourly cost of transportation of the equipment together with any other
vehicles involved in the move.
(c) Find the number of hours the piece of equipment will be located at the site,
whether in use or not.
(d) Divide the cost of transportation by the number of hours at the site to find the
hourly mobilisation cost.
The hoLly costs, each calculated in the manner described above, can now be
added together to produce a price per unit of time for a given piece of equipment.
That price can now be converted to a price per unit of measurement, such as cubic
meters or other appropriate unit, by dividing the hourly cost by the equipment
productivitj rate. An allowance for overhead and profit still has to be added, either
to each individual unit price or to the estimate as a whole.
Example 5.2
Just as each piece of equipment has its own variables, each company accountant
has his or her own method for dealing with these variables, with the result that it is
not practical to give one definite way of calculating equipment costs which will
work in all cases. This example, based on a medium sized backhoe, does no more
than indicate the results that will be achieved by application of the methods
suggested in this section; other methods will produce other results, all of which can
be compared with each other. In the example, an assumption has been made that
the money to buy the machine will be borrowed from a lending institution, that the
rate of inflation is 8%, and the rate of 12% will provide for both interest and
income tax costs. Other assumptions are that the backhoe will have a life
expectancy of five years and an annnal predicted utilisation of 2000 hours.
Calculations are shown below (Method I). An alternative method (Method 11) is
also given, in a deliberately simplified form, to show its basic structure. It is
strongly recommended that any method adopted in actual practice be reviewed by
a certified public accountant before being utilised in a business enterprise, to avoid
costly blunders of omission.
Estimating Method I .
To find the net hourly cost to own and operate a backhoe that costs Rs. 20 lakhs to
buy new today.
Owning Costs
(a) Total price
Purchase price = Rs. 20,00,000
Sales tax (5%) = Rs. 1,00,000
Preparation and delivery = Rs. 50,000
Investment costs (20%*) = Rs. 21,50,000 x 2.488**
= Rs. 53,50,000
(b) Deduct replacements
Set of tyres = Rs. 1,20,000
Bucket kit Rs. 1,00,000 = Rs. 2,20,000
(c) Deduct salvage value (say) Rs. 1,30,000 = Rs. 3,50@00
(d) Net costs
Residual cost (53,50,000 -- 3,50,000) = Rs. 50,00,000
Annual cost (Rs. 50,00,000/5 years) = Rs. 10,00,000
(e) Annual expenses
Pennits and fees 3%
Storage and other 3%
Total expensess 6% of Rs. 10,00,000 = Rs. 60,000
(0 Owning costs
Annual basis' = Rs. 10,60,000
Hourly costs Rs. 10,60,000/2000 hrs. = Rs. 5301hr
(*) 20% includes 12% for interest and taxes plus 8% inflation.
(* *) 2.488 is a factor taken from compound-interest tables.
(9;)Expense percentages are assumed here.
(#) Other methods will produce other results.
Operating Costs
(a) Consumables
Fuel (assume 75 hp engine x 2000 hr x 0.2) = Rs. 3,00,000
Taken as litreskplhr x Rs. 10 per litre
Grease and filters (say 25% of fuel cost) = Rs. 75,000
(b) Replacement pacts
Tyres (2 sets x 1,25,000 per set) = Rs. 2,50,000
, Bucket (2 kits x 1,00,000 per kit) = Rs. 2,00,000
Total cost over 5 years = Rs. 4,50,000
Annual cost (Rs. 4,50,000/5 years) = Rs. 90,000
(c) Repairs
Major (say 50% of depreciation : Rs. 10,00,000) = Rs. 5,00,000
Minor (say 3% of con?umables : 3,75,000) = Rs. 11,250
Parts (say 10% of tyres and buckets : 90,000) = Rs. 9,000
(d) Operating costs
Annual cost = Rs. 9,85,250
Hourly cost (Rs. 9,85,250/2000 hr) = Rs. 493lhr
 Operator Costs Principles of
Estimating
(a) Driverloperator 1 @ Rs. 2 5 0 h
(b) Labourerhelper 1 @ Rs. lOOlhr
Hourly cost (Rs. 250 + Rs. 100) = Rs. 350hr
Mobilisation Costs
(a) Cost to transport backhoe to and from site
(say, lhr each way @ Rs. 1000hr) = Rs. 2000
(b) Time to complete work at site (say 50 hr)
Hourly cost (Rs. 2000150 hr) = Rs. 4 0 h
Total hourly cost of Backhoe
Sum of Owning, Operating, Operator and Mobilisation Costs :
(Rs. 5 3 0 h + Rs. 4 9 3 h + Rs. 350hr + Rs. 40hr) = Rs. 1 4 1 3 h
Note : The extra Rs. 5000 included in the replacement cost of the tyres is to allow
for a price increase after 2 to 3 years.
Method I1
Chvning Costs
(a) Total price as before = Rs. 21,50,000
Deduct replacements and salvage = Rs. 3,50,000
Initial investment cost = Rs. 18,00,000
Annual investment cost (Rs. 18,00,000 x 60%)* = Rs. 10,80,000
(b) Depreciation over 5 years (Rs. 18,00,000x 20%) = Rs. 3,60,000
(c) Maintenance (50% of depreciation)** = Rs. 1,80,000
(d) Annual owning costs = Rs. 16,20,000
Hourly costs (Rs. 16,20,00012000hr) = Rs. 810hr
Operating Costs
(a) Consumables as before = Rs. 3,75,000
(b) Replacement parts as before = Rs. 90,000
(c) Minor repairs and parts as before = Rs. 20,250
(d) Annual operating costs = Rs. 4,85,250
Hourly costs (Rs. 4,85,25012000 hr) = Rs. 2 4 3 h
Notes :
(*) The worth of the investment can be shown to be 100% at the start of the first
year and to be 0% at the end of the fifth year, thus, giving an average annual
value of 60%.
(**) The amount set aside for major repairs is lower in this method than in the
preceding one.
The owning and operating costs given in Method I add up to Rs. 1023 (Rs. 530 + Rs.
493), compared to the Method 11, in which these two items add up to Rs. 1053 (Rs. 810 + ,
Rs. 243). Neither method is right or wrong; each gives different but nevertheless similar
results. The implication is that various methods can be employed to test the validity (and
the arithmetic) of any such costs for equipment.
The definitive test of unit prices thus, calculated for equipment is to compare these prices
with current market prices being charged by equipment rental companies operating in the
region where the work is to be done.

5.7.5 Overhead Costs

:or the contractor, overhead costs fall into two major categories: direct overhead costs,
tenerated by administrative items arising out of the work of a particular construction
ontract, and indirect overhead costs, generated by administrative items arising out of the
act of being in business as a contractor.
 --
Estimating Direct Overhead Costs
They generally include the cost of such things as temporary services, site offices,
hoarding and barricades, permits, fees, salaries of supervisors, and so on. They are
priced first by making a list of contract requirements and then making inquiries to
determine prices for various items. Some of these items, such as fences and
services, can be measured and priced like any other construction work. Other
items, such as the costs of field offices, may require quotations from suppliers or
rental agencies. There are several items, such as fist-aid costs and survey or layout
costs, for which an allowance or percentage must be determined by each individual
contracting firm, relative to its own requirements and standards. The costs of
supervision can be determined by establishing the superintendent's salary on a
monthly basis and then multiplying that salary by the estimated months it will take
to complete the project.
Indirect Overhead Costs
These costs reflect the general cost to the contractor of simply being in business as
an enterprise. They include such things as rent, light, phone, insurance, salaries,
fringe benefits for head-office personnel, publicity, legal fees, taxes, and all other
activities and expenses that it takes to run a successful company. These costs are
usually determined on an annual basis by the company accountant and are
expressed as a percentage of gross annual rupee volume of the company business.
The value of each project can then be expressed in proportion to that annual figure,
and the appropriate percentage of the annual overhead costs can thus be allocated
to each project to cover the total expenses for the year.
5.7.6 Profit
Profit is the residue left to the contractor after all costs hive been met and should
generally equate to about 20% to 25% of risk capital, before taxes, where risk capital is
defined as amount of money required to operate the construction company as a business.
Further, the topic of profit has been dealt with in sufficient detail in Section 5.6.4.

5.8 SUMMARISATION
The final step in the estimating process is the summarisation or preparation of an
abstract estimate. This process involves the application of unit prices arrived to the
measured quantities. The following example illustrates this process :
Let us consider a small project consisting of seven items of work. The description of the
.&evenitems of work are tabulated below along with the total quantities of each item, as
measured from relevant drawings, following the procedure explained in Section 5.5.
The rates h r the above mentioned seven items of work are ,arrived at'as explained in Principles of
Section 5.7. Let us assume that the rates respectively are as follows :

Item No. Rate (Rs)

1 100110 cu m
2 60011 cu m
3 65011 cu m
4 150110 sq m
5 200011 quintal
6 120011 cu m
7 400110 sq m

Now, finally the summarisation or preparation of abstract estimate above mentioned work
can be carried out in following manner :
- - - -~ -~-

No. Description of Work Quantity Rate Per Amount

(b.) (W
1 Earth work excavation in hard stiff clay, 1215 cu m 100 10 cu m 12,150
stiff black cotton soil, hard red earth,
shales, murrams, gravel, stony earth or
earth mixed with 50% fair sized
boulders - including depositing the
excavated earth within the initial lead of
10 metres and initial lift of Z'metres for
foundation excavation in buildings
2 Brick masonry in cement mortar 1 : 5 115cum 600 lcum 69,000
using standard metric bricks of size
19 x 9 x 9 cm of approved quality in
foundation and basement
3 Brick masonry in cement mortar 1 : 5 232cu m 650 1 cu m 1,50,800
using standard metric bricks of size 19
x 9 x 9 cm of approved quality in
superstructure
4 Plastering the walls with cement mortar 722 sq m 150 10 sq m 10,830
(1 : 4) and 12 mm thick
5 Cutting, bending, binding, and fixing in 22 quintals 2000 1 quintal 44,000
position (with necessary binding wires)
of Fe 415 rebars including cost of
rebars and binding wire
6 Providing and layin concrete M 20 for 27 cu m 1200 1 cu m 32,400
RCC works using 2 1 mm down broken
granite stone aggregates, machine
mixed including vibrating, curing
complete.
7 Centering and shuttering for receiving 425 sq m 400 10 sq m 17,000
concrete in RCC works as per standard
specification

Total Cost of Work Rs. 3,36,180

To this total cost, the required overheads and profit margins are to be added.
In a similar manner, abstracts showing total cost of work can be prepared for works
containing any number of items.
5 '3%t,:&4
,: r
.-
( I!,,,*: tJkk f-!> 1 ;,1=, b, , ,l{..$y ):,:qt. ,' . \;1,;rt:, t l ( i ~LG
, .*?
Estimating
5.9 APPROXIMATE ESTIMATES
It will be a waste of time and money, if we are to prepare detailed plans and estimates for
all contemplated works. Architects and designers, generally prepare only approximate
estimates whereas the contractors have to prepare detailed estimates.
Approximate estimates are accompanied by brief reports - detailing out how the
approximate estimate was arrived at, i.e. the basis and possibly with a site plan or a
layout plan. A contingency provision of around 5% to 10% is added to take care of certain
items that could not be foreseen.

5.9.1 Purpose of Approximate Estimates

Approximate estimates for all types of construction may be needed for one or more of the
following purposes :
(a) To get an idea of the cost of a project in a preliminary study.
(b) To determine the suitability of taking up the project, from the point of view of
investment involved and the likely return on the investment.
(c) To work out the tax on the property, and
(d) To obtain a valuation of the property for mbrtgage, insurance, and other
transactions.
5.9.2 General Principle Used
Different methods are used for working out approximate estimate of structures. But the
general principle used is the same; it consists of multiplying the number of items or units
in the structure by the known (rates) cosrof a similar item or unit in a similar structure.
The reliability of the estimate will depend exclusively upon the applicability and
accuracy of the "known cost" to the project under consideration.

5.9.3 Methods for Obtaining Approximate Estimates

The following methods can be used for obtaining approximate costs of buildings. These
are arranged in ascending order of accuracy and computation time :
Service unit method
Area method
Volume method
Typical bay method
Approximate quantities method
Service Unit Method
The most important functional unit of a structure is termed the service unit. A few
examples of service unit are given below :

Structure Service Unit

School Building Class room 1
I Hospital
- I Bed unit 1
1 Starred Hotels 1 Room unit 1
Auditorium, theatre Seat unit
Water tank Volume capacity (litres)
Standard Roads and Rail tracks Linear unit

The cost is obtained from the relation :

Approximate cost of structure
= (No. of service units in the structure)x (cost of corresponding service unit in
- a similar existing structure)
Note : Current price levels should be taken into account in arriving at the cost of
similar existing structure.
 -
Area Method Principles of
Estimating
In this method, the cost is obtained as follows :
Approximate cost of structure
= (Total area of all floors in the building) x (cost per unit area of a similar
existmg building in the locality)

I The accuracy of the area method can be vitiated by changes in the following
factors : Price level, locality of building, ceiling height (as for example in
churches, public malls etc.), type of construction and finish, shape of building
(rectangular shape less economical than square shape), spacing of columns (owing
to changes in structural floor system) and large openings in floors. The Area
Method was first proposed for use in obtaining rough estimates for standard
buildings like schools, and public housing where ceiling heights are constant.
In calculating the area of floors, usually what is known as plinth area is computed.
Rules for computing plinth area can be referred from "Hand book for Building
I Engineers, National Buildings Orgariization, New Delhi", and these can be utilized
for computation. Sometimes an alternative method is used based on 'useful floor
I area' instead of plinth area especially when computations are cumbersome, as in
multi-storeyed buildings.
This method ii briefly outlined below :
Plinth area = Useful floor area + Area occupied by walls.
This can be rewritten as
Plinth area = Useful floor area + correction factor (depending on wall area).
As the thickness of walls increase with the number of storeys, the correction factor -
increases for lower storeys. Thus, the correction factor can be taken as follows :
t
Number of Storeys Correction Factor
(Plinth ArealUseful Floor Area)
Single storey building 1.1
Multi-storeyed buildings
(say Cstoreyed)
Top 2 storeys 1.1
. (4th and 3rd storeys)
2nd storey 1.15
1st storey 1.20

In order to improve accuracy, useful floor area of each floor may be categorised, as
follows and relevant rates of unit cost applied to each category :
(a) All functional rooms
(b) Staircase room
(c) Closed verandah or balcony
Typical rates for unit cost of each of these categories for buildings of similar type
have to be ascertained for the estimation.
The staircase room generally costs 15% more and the closed verandah or balcony
costs 40% less than that of the main functional rooms. Again the unit rates are to
be applied floor-wise, as intermediate and top floors usually cost less than the
+, ground floor. Usually the unit rates for intermediate and top floors are taken as
80% and 90% respectively of the unit area cost for ground floor.
The approximate cost of the building = (Useful floor area) x (Correction factor) x
(Unit rate for category of rooms of each floor).
Volume Method
In this method, cost per unit volume is taken as the criterion for rough estimate.
Approximate cost of proposed building
= Total cubical contents of buildings x Cost per unit volume of similar structure
In arriving at the cubical contents, no hard and fast rules are followed, as to
(a) whether the spaces of open verandah, porch, etc. should be taken into account,
Estimating (b) how to measure the heights of the buildings, and
(c) whether to take into account the basement and the foundations, and parapets
above ceiling.
The RIBA (Royal Institute of British Architects) rules that are generally followed
gives the following procedure :
Cubical contents = Plan area measured over the external walls x height from top of
concrete foundation footing to half-way up the roof if pitched, or to 60 cm above
the roof if flat.
Generally, the volume method can be expected to give a more accurate estimate for
single storey buildings than the area method, as it takes into account the ceiling
height. But the volume method is very unreliable unless two very similar buildings
are compared. For example, comparison of geometrically proportionate buildings
can give a very wide fluctuation and lead to an unreal estimate. For, as all the
dimensions (size) of the building increase or decrease proportionately, the cubical
contents fluctuate far widely than the areas of the component structure. Also the
volume method does not take into account the number of floors or storeys. Also,
such items, as lifts are generally, included as lump-sum, since their costs do not
bear any relation to their volume.
Typical Bay Method
This method is useful for application to framed structures consisting of a number
of similar bays, as for example, industrial buildings. A typical interior bay
(between two successive columns) is selected and its total cost worked out.
Then, the approximate cost of building = Number of bays in the building x cost of
one bay.
Suitable correction factors may have to be used to take into account the
dissimilarities in end-bay (and in different floors, if applied to multistoreyed
construction).
Approximate Quantities Method
In this method, the main items are taken into account using short-cuts in the
approximate calculation of quantities of main items such as walls, roofs, doors and
windows, and finishes, and the cost is computed by adopting current unit costs for
these items.. The grouping of items and fixing their approximate cost requires good
judgement and experience. This method though time-consuming, is more accurate
than any of the above approximate methods.
SAQ 6
(a) What are reflcctcci dimemions '' GIvc c'xi~rripli.~
(b) What is tilt. b a s ~ cprinciple i~~volvcti
in approxlrnatc cst~tr~rte
"

5.10 SUMMARY
Architects, designers and contractors require preparation of estimates of projects in which
they are involved. The estimate may be approximate or detailed as required and form a
prerequisite for several construction decisions. The job of preparation of estimates
involves careful collection of information (data) and its orderly presentation to arrive at
the total cost of the project in hand. The estimating process consists of two major
components, viz. measurement and pricing. The accuracy of the estimate will depend
upon the extent to which the available information on both these aspects are analysed and
synthesised. 1

ANSWERS TO SAOs
Refer the relevant preceding text in the unit or other useful books on the topic listed in
the section "Further Reading" at the end of the block to get the answers of the SAQs.