Estimating and Costing

Types of Estimates and Their Uses

An estimate is the calculated anticipation of the probable cost of a construction work, prepared from drawings, specifications and rates before the work is actually executed. The main types are:

1. Approximate (Rough) Estimate Prepared quickly, usually on the basis of plinth area, cubic content or unit rate per km/per km of line, without detailed measurements. Used for preliminary sanction, budget provision and comparative study of alternatives. Accuracy is low (±10–15%).

2. Detailed Estimate Prepared by measuring each item of work accurately from detailed drawings and multiplying by the item rate. It consists of the quantity estimate (measurement of all items) and the abstract of cost (quantities × rates, plus contingencies and work-charged establishment). Used for obtaining administrative approval, calling tenders and executing the work. Accuracy is high (±3–5%).

3. Revised Estimate Prepared when the original sanctioned estimate is likely to be exceeded by more than the permissible limit (usually 5%) due to changes in scope, rates or design. It is submitted with reasons for the excess for fresh technical sanction.

4. Supplementary Estimate Prepared when additional work, not included in the original estimate, becomes necessary during execution (e.g. extra foundation, additional tower footing). It is a fresh detailed estimate for the extra items only.

5. Annual Repair (Maintenance) Estimate Prepared every year for the upkeep of existing structures — ordinary repairs, special repairs and petty works — based on the previous year's expenditure and present condition.

6. Extension and Improvement Estimate Prepared for extending or upgrading an existing facility (e.g. augmentation of a substation or addition of a bay).

7. Quantity Estimate / Bill of Quantities (BOQ) A statement of quantities of all items without rates; used for tendering so that all bidders quote on the same quantities.

8. Revised and Supplementary combined is also used when both revision and addition occur together.

Requirements of a Good Estimate

1. Accuracy — quantities must be measured correctly from complete, approved drawings and specifications.
2. Completeness — no item of work should be omitted; all ancillary items must be included.
3. Correct rates — rates must be based on current market rates of materials, labour and plant, or on the latest district rate (DSR).
4. Clear specifications — each item must be supported by a definite specification of materials and workmanship.
5. Proper units — standard units of measurement (m³, m², m, kg, quintal, number, litre) as per the standard method of measurement.
6. Contingencies and overheads — provision for contingencies (3–5%), work-charged establishment (1–1.5%), tools and plant, and supervision charges.
7. Simplicity and clarity — the estimate should be easily understood, checked and audited.
8. Basis of sanction — it must be prepared on the approved design, drawings and specification so that it can be technically sanctioned.
9. Reasonableness — the cost should be economical and comparable with similar works in the region.

Basic Components of Rate Analysis

Rate analysis is the process of determining the unit rate of an item of work by working out the cost of its constituent materials, labour, plant and overheads. Its basic components are:

(a) Quantity of Materials The net quantity of each material required per unit of work, computed from the design mix or standard norms, plus wastage (usually 2–5%). For example, for 1 m³ of M20 concrete: cement, sand, aggregate and water.

(b) Cost of Materials Quantity × current market rate at site, including lead (transport) and lift, loading, unloading and storage charges. Basic rate + carriage + taxes.

(c) Labour Cost Number of labourers (skilled, semi-skilled, unskilled) required per unit of work as per standard norms, multiplied by their daily wages. Output per gang per day is used to derive labour hours.

(d) Plant and Machinery Cost Ownership or hire charges of mixers, vibrators, pumps, cranes, etc., including fuel, lubricants, repairs, depreciation and operator's wages, divided by the output per hour/day.

(e) Overheads and Profit

• Direct cost = materials + labour + plant.
• Indirect/overhead cost — general establishment, office, supervision, insurance, taxes, contingencies.
• Contractor's profit — usually 10–15% of the total cost.

(f) Water and Sundries Cost of water for construction and curing, and miscellaneous small items.

(g) Rate per Unit

$$\text{Rate} = \frac{\text{Total cost of materials} + \text{Labour} + \text{Plant} + \text{Overheads} + \text{Profit}}{\text{Quantity of work}}$$

The final rate is expressed per standard unit (e.g. Rs per m³, per m², per metre, per kg) and forms the basis of the BOQ and the detailed estimate.