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 known 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 determination to establish the corrector and complete labour cost for any specific trade in any specific  region 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 : 

• Use of a variety of equipment in construction industry. 
• Variety of ways in which the use of such can be procured - such as by purchase, rental, or lease. 
• Large number of variables that enter into the calculation of costs such as depreciation, investment, salvage value, tax benefits and so on. 
• 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 viz. owning costs and operating casts. Owning costs include investment, maintenance and depreciation. Operating costs include rung costs (fuel etc.), repairs and wages/expenses of operator. 

Overhead 

Overhead can be conveniently 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 intermittent sets of (possibly variable) direct costs, arising out of a number of construction contracts. 

Direct costs consists of administrative items such as building pen nit 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 business.  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.