Wednesday, September 28, 2016

Estimating construction rate per unit of work

Competitive tendered price is one of the greatest factor to win a construction project. However in any business, one of the main factor is to make money. This is true and also applied to construction industry. Therefore winning a project is just a small portion of construction business but be able to secure and deliver projects within the budget is the main agenda of construction business.


The answer is knowing how to estimate and doing the breakdown of the BUILT-UP RATE PER UNIT OF WORK.

Building the rate is in theoretically knowing the cost of every single item or component that involved in order to deliver the end product. In general these are some of the item that need to be include while estimating rate per unit work or product.

(1). Cost of the construction material
(2). Cost of the Logistic or transportation
(3). Labor cost
(4). Machinery cost
(5). Allow cost for wastage of material

Each of the item, from item no. (1) to item no. (5) need some simple calculation and have to be present into "per unit rate". It is then sum-up to create the cost of construction of a unit product.The next procedure is to apply item no.(6) into the sum-up cost.

For example if the cost of construction of a unit product is "W" and targeted profit margin is "Y%", the profit will be "W" X "Y%". let say that the outcome of this calculation is "Z". Hence the built-Up rate is the sum of "W" + "Z"

Item (1) + (2) + (3) + (4) + (5) = W
Profit Margin = Y %
Profit = W x Y% =  Z
Built-Up rate per unit product = W + Z

Built-up rate offered MUST inclusive of PROFIT and Construction Cost.