The document discusses components that make up the total project cost for civil engineering projects. It identifies five main components: 1) professional engineering costs, 2) construction costs, 3) legal and land costs, 4) owner's costs such as administration and financing, and 5) contingency allowance for unknowns. It also discusses estimating indirect costs such as overhead expenses, contingencies, contractor's profit margin, and taxes. The total project cost is made up of direct costs, indirect costs, and taxes.
The document discusses components that make up the total project cost for civil engineering projects. It identifies five main components: 1) professional engineering costs, 2) construction costs, 3) legal and land costs, 4) owner's costs such as administration and financing, and 5) contingency allowance for unknowns. It also discusses estimating indirect costs such as overhead expenses, contingencies, contractor's profit margin, and taxes. The total project cost is made up of direct costs, indirect costs, and taxes.
The document discusses components that make up the total project cost for civil engineering projects. It identifies five main components: 1) professional engineering costs, 2) construction costs, 3) legal and land costs, 4) owner's costs such as administration and financing, and 5) contingency allowance for unknowns. It also discusses estimating indirect costs such as overhead expenses, contingencies, contractor's profit margin, and taxes. The total project cost is made up of direct costs, indirect costs, and taxes.
The document discusses components that make up the total project cost for civil engineering projects. It identifies five main components: 1) professional engineering costs, 2) construction costs, 3) legal and land costs, 4) owner's costs such as administration and financing, and 5) contingency allowance for unknowns. It also discusses estimating indirect costs such as overhead expenses, contingencies, contractor's profit margin, and taxes. The total project cost is made up of direct costs, indirect costs, and taxes.
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CE LAWS, CONTRACTS
AND SPECIFICATIONS TOTAL PROJECT COST: LEGAL, LAND, ADMINISTRATION, STAFFING AND FINANCIAL COSTS, AND CONTINGENCY ALLOWANCE. Total Project Cost • Direct cost- (material+labor+equipments) • Indirect cost- (contractor’s profit+OCM) • Taxes
[direct costs+indirect costs+taxes = Total project cost]
Total Project Cost Probable total cost is a major concern of the client throughout the planning design, and construction phases of a project. The probable total capital cost, often used to establish budgets for a typical project, is made up of: 1.Professional Engineering Costs 2.Construction Cost 3.Legal and land cost 4.Owner’s costs, including project administration, staffing, financing and other overhead 5. Contingency allowance for unknowns Legal, Land, Administration, Staffing and financial Costs • These costs, which includes audits, the cost of issuing bonds, land costs, and interest for borrowed money during construction, are part of the probable total project cost and can best be estimated in cooperation with the client because they are usually outside the knowledge and control of the Civil engineer. 3 kinds of Bonds 1. Performance Bonds 2. Surety Bonds *10% retention *15% advance payment 3. CARI Bonds Performance bonds
- A written guaranty from a third party guarantor(usually a bank or an
insurance company) submitted to a principal(client or customer) by a contractor on winning the bid. A performance bond ensures payment of a sum of money in case the contactor fails in the full performance of the contract. Performance bonds usually cover 100% of the contract price and replace the bid bonds on award of the contract. Example: -The performance bond essentially functioned as a loan as th exchange of money was implied and guaranteed in the arrangement.
-The large company decided that they would need a performance bond from us to ensure that they got their payment. Surety Bonds - A surety bond is simply the agreement between three parties: Principal, Surety and Obligee. It Is a promise by a surety or guarantor to pay one party (the obligee) a certain amount if a second party (the principal) fails to meet some obligation, such as fulfilling the terms of a contract. The surety bond protects the obligee against losses resulting from the principal's failure to meet the obligation.
Principal
Surety Obligee Contractor’s All Risk Insurance Bond (CARI) - Will cover projects from various risks during construction of a building, plant, warehouse, townhouse, resort, office or store renovation in a mall, house or any construction/ renovation projects. CARI covers all risk associated with all type of civil construction risks.
Coverage: Fire, lightning, flood, inundation, tsunami, windstorm of any kind, earthquake, subsidence, landslide rockslide burglary, bad workmanship lack of skill, negligence, malicious acts, and human error. Also includes bodily injury&/or property damage aggregate limit. To get covered one must provide the following information:
- Name of contractor, complete business contact number and TIN
- Project description and exact location including unit, floor, building name, and complete address or lot number. - Project duration (start and end date) - Project amount (Bill of Materials BOM) or copy of contract • These costs, which includes audits, the cost of issuing bonds, land costs, and interest for borrowed money during construction, are part of the probable total project cost and can best be estimated in cooperation with the client because they are usually outside the knowledge and control of the Civil engineer. Contingency Allowance
As the project moves forward from the study and report phase through the final design phase and finally to construction award, more becomes known about project details and costs, until at the completion of the project, the final project cost becomes a known quantity. To provide for intangible costs, contingencies should routinely be added to the basic cost estimate. It is common practice to add 20% or more to the estimate probable total project cost at the completion of the study end report phase, reducing this to perhaps 10% at the completion of the final design and perhaps to 5% when the construction bids become known. Larger or more complex projects may require higher contingencies. The ABC shall be composed of the Direct Cost and the Indirect Cost.
A. The direct cost shall consist of the following:
A.1 Cost of materials to be used in doing the work item called for, which shall include, inter alia, the following: A.1.1 Cost at source, including processing, crushing, stockpiling, loading, royalties, local taxes, construction and/or maintenance of haul \roads, etc. A.1.2 Expenses for hauling to project site. A.1.3 Handling expenses. A.1.4 Storage expenses. A.1.5 Allowance for waste and /or losses, not to exceed 5% of materials requirements. A.2 Cost of labor: A.2.1 Salaries and wages, as authorized by the Department of Labor and Employment. A.2.2 Fringe beefits, such as vacation and sick leaves, benefits under the Workmen’s Compensation Act, GSIS and/or SSS contributions, Allowances, 13th month pay, bonuses, etc.
A.3 Equipment Expenses
A.3.1 Rental of equipment shall be based on the prevailing “Associated Construction Equipment Lessors, Inc.” (ACEL) rental rates apprroved for use by the DPWH (Presently it is the 2009 ACEL Rates). Rental rates of equipment not indicated in the ACEL booklet shall be taken from the rental rates prepared by the Bureau of Equipment. For simplicity computation, the operated rental rates are prefferd over the bare rental rates as the former includes operator’s wages, fringe benefits, fuel, oil, lubricants and equipment maintenance. The make, model and capacity of the equipment should be indicated in the detailed unit cost analysis. A.3.2 Mobilization and demobilization shall be treated as a separate pay item. It shall be computed based on the equipment requirements of the project stipulated in the proposal and contract booklet. In no case shall mobilization and demobilization exceed 1% of the Estimated Direct Cost (EDC) of the civil works items.
B. The Indirect Cost shall consist of the following:
B.1 Overhead Expenses- ranges from 5-8% of the EDC, which includes the following: B.1.1 Engineering and Administrative Supervision. B.1.2 Transportation allowances. B.1.3 Office Expenses, e.g., for offices equipment and supplies, power and water consumption, communication and maintenance. B.1.4 Premium on Contractor’s All Risk Insurance (CARI). B.1.5 Financing cost (a) Premium on bid Security (b) Premium on Performance Security ( c) Premium on Surety for Advance Payment (d) Premium on warranty Bond (one year)
B.2 Contingencies – ranges from 0.5-3% of the EDC. These include expenses for meetings, coordination with other stakeholders, billboards( excluding project billboards which s pay item under the General Requirements), stages during ground breaking & inauguration ceremonies, and other unforeseen events.
B.3 Miscellaneous Expenses - ranges from 0.5-1% of the EDC. These include laboratory tests for quality control and plan preparation. B.4 Contractor’s Profit Margin – shall be 8% of the EDC for projects above P5million and 10% for Projects P10million and below.
B.5 VAT Component – shall be 5% of the sum of the EDC, OCM and profit. B.6 The following items shall not be subjected to OCM and Profit mark-up: B.6.1 Mobilization and demobilization B.6.2 Provision of Service Vehicle
B.7 The following non-civil works items shall not be subjected to OCM mark-up: B.7.1 Field/Laboratory offices & living quarters (Rental Basis) B.7.2 Furnishing of furnitures, laboratory equipment, survey Equipment and Consumables B.7.3 Assistance to the Engineers B.7.4 Photographs B.7.5 Health and safety B.7.6 Traffic Management B.7.7 Environmental Compliance B.7.8 Communication Equipment, etc.
INDIRECT COST % FOR OCM AND PROFIT TOTAL INDIRECT
ESTIMATED COST DIRECT COST (EDC) OCM PROFIT %FOR OCM AND (% OF EDC) (% OF EDC) PROFIT Up to P5million 12 10 22 Above P5M – P50M 9 8 17 Above P50M- P150M 7 8 15 Above P150M 6 8 14 THANK YA!
