Importance of Rate Analysis of Civil Works

Importance of Rate Analysis of Civil Works

The determination of the rate of a specific item of work per unit from the cost of amounts of materials, cost of labor & other various petty expenses required for the completion of the work is identified as ‘Rate Analysis. A reasonable profit of nearly 15 % for contractors is comprised in rate analysis. For the rate analysis of a construction project, If the materials are carried from a distant place, then the cost of transport is also added. Since rates of materials & labor differ from place to place, the rates of diverse items of work also differ from place to place. 

Every construction project is separated into several activities, and each activity consists of diverse types of civil or construction works. The rate analysis of building projects is calculated based on each work associated with each construction activity. Thus, it is vital to calculate the cost of every small work. The rate analysis of Civil Works is the determination of the cost of every construction work per unit amount. This cost includes the price of materials, labor, contractors’ profit & other petty expenses required for the specific work to be completed in unit quantity. The cost of resources in rate analysis is calculated as a mixture of the cost of material at origin, transport costs, and taxes. The rate of labor is grounded on the skill of the labor, such as expert labor, semi-skilled labor, and unskilled labor. 

The objective of the Rate Analysis:

With the help of rate analysis, the cost of construction project items can be determined by location.

• It also helps to cross-check the rates obtainable by the contractor.
• To find out the precise quantity of materials & labor required for precise work.
• To finalize the labor agreement rates.
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Factors Distressing Rate Analysis:

Item Specifications

The specification of the items for the costing of the building project indicates the number of materials, the process & the method of the work. If superior & higher quality material is issued then certainly the cost of the materials will be high.

Materials mandatory for Rate Analysis

Almost every type of construction material is the main part. About 50 % of the entire cost of any work is due to the materials. Hence it is much more significant that the cost of the materials should be precisely found. Market surveys should be shown to analyze the exact cost of every material obligatory for construction. The amount of the materials is more or less, and both effects the rate analysis. Hence it is necessary to maintain the proper number of materials on the site.

Tools needed

In each type of construction work, diverse types of tools and plants are obligatory. The estimator must choose whether buying tools and plants will be economical. It is decided on numerous factors such as period of work, number of laborers, budget, type of work, etc. If a special type of instrument is used in the implementation of work, then the cost of the construction will be higher.

Number of Labour

The number of laborers obligatory for the execution of the work should be correctly calculated. Selection of the laborers should be made rendering to their categories like skills, and the payment of the laborers should also be absolute according to their class.

Overhead Charge

The cost of materials in building projects mainly includes costs of an office, labor wellbeing, material testing, water source, electrification, depreciation quantity, etc. This is typically considered as 5 % of the total cost of the work.

Location of Work:

If the position of the site is in a remote area, then it will be difficult to execute the work. Transportation charges and cost of manpower rise as laborers have to be transported to the site, and the cost of labor also differs as the location is far away from their residence.

Elements of Rate Analysis

Elements that establish the rate analysis are: 

• Material cost comprehensive of wastage 
• Labor costs
• Plant and machinery owning 
• operating charges 
• Water charge
• Tax
• Insurance and risk coverage charge
• Contractor’s profit
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Why is Analysis of Rates Obligatory in Construction Projects?

The rate analysis may be obligatory in construction projects for subsequent purposes:

• For the determination of tendering. In the case of tendering, the contractor may compute the cost of unit work involved in every construction activity for quoting rates. The client also requires rate analysis to compute the cost of a construction project.
• To assess the necessities of quantities of labor, machinery, and capital to finish the project.
• To optimize the use of labor and machinery and to know the replacements to optimize the resources.
• To measure the rate of unit work from for payment increase in material or any deviations in work specifications.
• To compare the cost with the sanctioned capital of the project to take essential action of excess or less cost.
• To work out the budget of the building project and control the cash flows at numerous stages of construction work.