Construction Industry in year 2014

Year 2013 is a year that full of challenges to all of the construction industry players. Some might have it as a nice Year but for some it is not a prosperous year. Whatever it is, soon the year of 2013 will become history.

As we are approaching the new year, 2014, let we start equip our self with fresh strategy to tackle new challenges in this construction field. Embrace the technology and  increase our knowledge in construction. We might need to refurbish our machinery, plant and Equipment for 2014. We might need to increase our manpower to fulfils the next year commitment. We might need to start looking for new strategy to secure more contract.

The bottom line is, how good have we done in year 2013 in solving any issue that we facing with regards to this construction work. It will always be good to look back on what we had done and learn from there for betterment. For the year to come let us refresh our knowledge in this industry. Here, in this blog, There are articles that are useful for next year planning. Just take a look at the archive and you will find it useful.

HAPPY NEW YEAR, 2014.

Estimating construction works

Estimating construction cost is always a tedious task to do. No how it is, this process is the most important part of the work before contractor even decide to take the work or not. However it is always a good practice to do the estimation before commitment is make to any of the construction work.

Normally there is two type of conventional contract. The two type are Contract with Bill of Quantities and Lump Sum Contract. Regardless what type of contract that contractor are dealing with, the different is Lump Sum contract normally do not include the quantity in their document because regardless of the quantity, the price that contractor offered is count. This type of contract normally do not entertained any type of claim that involve the increase in any quantity unless it increment is substantially affecting the cost. Some country have their own set of rules that need to be adhere to in order t make such claims.

Referring to the topic today, Estimating Construction Works. In general I would like to say that the overall work cost consist of three(3) major structure. The structure is The Actual cost for the physical works, The Preliminaries and general and the third structure is profit margin.

The Actual cost. What does it meant? The Actual cost is the estimation on the cost that needed to build and complete the major scope of works. Lets say it is to build a guard house. To build the guard house what are the things that involve that without those item contractor will never be able to complete the works. There are four(4) major item that must be include in this estimation. The four(4) major items are Construction Materials, Plants and Machineries, Man powers and wastage. However, for the Plants and machineries and manpower it is always tied up to the duration that needed to construct the guard house. Apart from these, the materials is always govern by the quantity and the unit price. For a Lump sum Contract, contractor have to do their own Quantity take off exercise.

The second structure is The Preliminaries and General. Among the item that always fall under this category are:-
1. Insurances
2. Performance bond
3. Site office, transport provision for the superintending Officer and site store.
4. Electricity, Water and Telecommunication,
5. Cost for compliance to Local Authorities Regulations
6. Mobilisation and demobilisation
7. As-built drawings
8. Relocation of existing Services or properties
9. Reporting and meeting expenses
10. Any other item that is not necessary required to complete the works but needed to ensure the smooth flow of the whole works.

Normally under Lump sum Contract this structure is only describe as preliminaries and general as one item. Hence contractor need to do their own breakdown item in order to have a build up cost for this Preliminaries and general total cost.

The third Structure is The profit margin.This profit margin is depend on how much contractor want to make. out from the project.

There is lots of software out there that can expedite this cost estimation work.