Rate Analysis

Rate analysis or pricing refers to the process of arriving at the price per unit item 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 be determined separately, e.g. plastering as distinct from reinforcing grill work in RCC. 

The principles involved in pricing any item of work was dealt with in detail in Unit. The four elements of pricing any item of work are as follows : 

1. Materials 
2. Labour   
3. Equipment 
4. Overheads

An item of work may involve some or all these four elements. A contractor while quoting his bid to any project adds up the profit margin to the rate arrived at considering the above four elements. 

Consider the following two examples with the pricing data : 

On a cursory observation of the pricing data relating to the above two items, the following points can be noted : 

(a)  The items to be priced are described with reference to their salient specifications. 

(b)  The unit of measurement, i.e. 1 cu m or 10 cu m as the case may be is mentioned. 

(c)  The quantities of material/labour/equipment time are given. 

(d)  The quantities of material/labour/equipment time are not necessarily in full numbers. 

(e)  Overheads are not mentioned. 

(f)  Profit margin is not specified. 

(g)  While in Example (A), three elements (materials, labour and equipment) are involved, in Example (B), only two elements (materials and labour) are involved. 

It is to be further noted that the tabulated quantity of materials required for the unit of work will remain unchanged whoever carries out the work. But the labour/equipment requirements can change either way (increase or decrease) depending upon the productivity levels. Similarly, overheads and profit margins also can be significantly different with different contractors. 

The data books available with the Central Public Works Department and Public Works Departments of different States give average labour/equipment requirements, which can be used for preparation of estimates. The equipment usage can be arrived at based on the principles given in Unit 5. Arriving at labour requirements for a given unit of work is a difficult exercise. A large number of factors are involved in deciding on the crew size and its productivity for each and every item of work. Observations taken from a large number of sites are averaged out and used as labour data for rate analysis. Major contractors have their own data based on the productivity of their own labour force or on their subcontractors' rates. These are made available in a "Standard Data Book" which includes a large number of items of work covering most Civil Engineering works. 

The exercise of rate analysis is to associate costs to the listed quantum of materials, labour, equipment for different items of work. While associating costs to materials, the estimator has to work out the cost of various materials to be used at site of work. 

Cost of materials at site = Cost of materials at source + Transportation cost 

In a particular locality, though the cost of a material may be same at the source of availability, the distance of different work sites in the locality from that source may be different and hence, the landed cost per unit of material may be different. General guidelines are given below for working out transportation costs of materials. In working out transportation costs, the principle of "Time is money" is used. 

The following data are needed : 

• Mode of conveyance - lorry, cart etc. 
• Capacity of conveying vehicle for different materials. 
• Distance of site from source of availability of material. 
• Speed limits, if any. 
• Hire charges per day of the conveying vehicle. 
• Loading and unloading time of material. 
• Loading and unloading charges of material per trip.