In every construction project, there are typically civil and electrical works involved and occasionally mechanical works as well. However, these construction projects are subdivided into multiple activities, whether they pertain to civil or electrical work. Every activity of the construction project is a combination of smaller tasks that require the use of construction materials, the involvement of labourers, and the utilization of machinery.
To perform each task a specific cost is involved, and when aggregated, they form the overall project cost. To determine this cost a rate analysis for the task is a must. In this article, we will explore rate analysis in construction projects.
What is Rate Analysis in Construction?
The rate analysis is the procedure to determine the build-up rate to perform a particular task or a job at the construction site. This involves identifying the quantities of materials, labour (that is skilled and unskilled workers), and machinery required for each task of the project activities to complete. Then the rate for the task is determined by multiplying the coefficient of all required particulars/items with their respective prevailing rate. This calculated rate is known as the analysed rate or built-up rate and the phenomenon is known as rate analysis.
To prepare rate analysis, a detailed study is conducted to estimate the quantities of materials required, the cost of those materials, the number of workers (different types) and the equipment required to perform the given task of the construction project.
For example, the construction of a concrete bridge abutment requires excavation, dewatering, ground levelling, laying of stone soling, fixing of reinforcement bar, concreteing, and so on. Now, to perform one task from those activities, materials, labour and equipment/machinery are a must. For instance, concreting activities require labour to perform the work with all available materials (usually cement, aggregate and water) with the help of a mixture machine and pouring concrete to formwork. All these involve a certain amount of money which needs to be analysed at the project site.
Rate analysis must be done to avail current market rate as the rate for the materials changes frequently and differs from place to place. Rate analysis is used in construction projects to provide accurate cost estimates and to ensure that projects are completed within budget. It helps contractors estimate the costs of materials, labour, and equipment, and determine the productivity of their workers. The analysis can also help in identifying the most cost-effective methods of completing the project.
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Factor Affecting Rate Analysis
Project costs differ from place to place although the nature of the project is the same and performed at the same time. For example, the construction of an underground water tank having a capacity of 60000 litres will cost different in different locations. Thus, there are so many factors which affect the project cost. To determine the exact cost for the particular work a Rate analysis is carried out. The rate analysis is affected by the following factors:
- Specification of the Work: This is the primary factor contributing to the fluctuation of the rate for the same nature of work. For example, constructing a drain with concrete grades M15 and M20 will have a different rate as the quantities of materials differ.
- Materials Cost: The cost of materials differs from place to place. Even though the material is purchased from the main centre it will be higher when it reaches the work site. The distance covered to transfer the materials includes some courses as transportation charges. The term “lead” refers to the distance, typically measured in kilometres, between the construction site and the source from where materials are obtained.
- Cost of the Labour. Both skilled and unskilled labour have been employed to carry out the work, and their associated costs are included in the labour expenses. It is considered that labour works for 8 hours a day and is paid accordingly.
- Machinery and Equipment: Equipment such as a concrete vibrator, concrete mixture, etc. and machinery like an excavator, truck, etc. require operation costs, hiring costs and fuel charges shall be included.
- Location of the Project site: The analysis of rates can be influenced by the project’s location, where the cost of materials tends to increase as the project moves farther away from the central business hub.
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Overhead Cost
Overhead cost includes general office expenses, rent, taxes, supervision and other costs which are indirect expenses and not productive expenses on the job.
Task or Out Turn Work:
The capacity of doing work by an artisan or skilled labourer in the form of quantity of work per day is known as the task-work or out-turn of the labour.
Constant for Rate Analysis
For the purpose of preparing rate analysis following constants are added up to get the final rate for the particular task or job.
- 5% for hand tools & equipment on labour cost, lubrication & corrective maintenance on machinery cost and wastages & unaccounted on materials cost.
- 1 % for water charges. The water used for sanitation, mixing of mortar, drinking, curing, etc. should be included in water charges due to some costs incurred.
- 10% for the Contractor’s profit and Overhead charges. A contractor’s profit refers to the amount of money that a contractor adds to the cost of a project as compensation for undertaking the work. It is the profit margin that the contractor expects to earn from the project. Overhead charges, also known as overhead costs or general conditions, are the indirect expenses incurred by a contractor in carrying out a construction project. These costs are necessary for the overall management and support of the project but are not directly tied to specific labour or materials.
Steps of Rate Analysis
The rate analysis process involves the following steps:
- Breaking Down the Project: The first step in rate analysis is to break down the project into smaller parts. This involves identifying all the components of the project and estimating the quantities of each component required.
- Identifying the Materials Required: The next step is to identify the materials required for each component. This involves listing all the materials required, including the quantity, the unit cost, and the total cost.
- Calculating Labor Costs: The next step is to calculate the labour costs for each component. This involves estimating the number of labour hours required and multiplying it by the hourly rate of the workers involved.
- Calculating Overhead Costs: Overhead costs, such as equipment rental, utilities, and other indirect costs, also need to be factored into the rate analysis.
- Combining the Costs: Finally, all the costs are combined to arrive at the total cost of each component. This helps to determine the total cost of the project.
Sample Rate Analysis
The sample presented below is from the Labour and Materials Coefficient 2022 civil, published by MoWHS, for the work “providing and laying in position reinforced cement concrete work in walls”.
| RC005-Providing & laying in position reinforced cement concrete work in walls (any thickness) including attached pilasters buttresses, piers, abutments etc. up to floor five level excluding the cost of centring, shuttering and reinforcement. | |||||
|---|---|---|---|---|---|
| Code | Description | Quantity | Unit | Rate | Amount |
| LB0036 | Mason Gd.1 | 0.0500 | day | 309.82 | 15.49 |
| LB0039 | Work Supervisor (Lajab) | 0.05000 | day | 309.82 | 15.49 |
| LB0051 | Mason Gd.2 | 0.05000 | day | 275.64 | 13.78 |
| LB0053 | Plant Operator Gd.3 | 0.07000 | day | 275.64 | 19.29 |
| LB0077 | Labourer | 1.67500 | day | 232.93 | 366.86 |
| MP0205 | Concrete Mixer(7/5 cu.ft) | 0.07000 | Unit | 1680.00 | 117.60 |
| MP0206 | Concrete Vibrator(M/C5) | 0.07000 | day | 1152.00 | 80.64 |
| MT0043 | Sand | 0.45000 | cum | 337.03 | 151.66 |
| MT0070 | Crushed Rock – 20mm | 0.67500 | cum | 1058.40 | 714.42 |
| MT0071 | Crushed Rock – 12.5mm – 6 mm | 0.22500 | cum | 1023.12 | 230.20 |
| MT0145 | Cement (OPC / PSC) | 0.61000 | ton | 5836.00 | 3559.96 |
| Total(A) | 5255.39 | ||||
| Add 5% to Total(A) | 262.77 | ||||
| Total(B) | 5518.16 | ||||
| Add 1% to Total(B) | 55.8 | ||||
| Total(C) | 5573.34 | ||||
| Add 10% to Total(C) | 557.33 | ||||
| Item Rate per unit Nu. | 6130.67 | ||||
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FAQs:
Q: What is Rate Analysis?
Ans: Rate analysis is the process of preparing the analysed rate of built-up rate for carrying out a specific task or work of the construction project.
Q: What are the constants added to the analysed rate?
Ans: The following constant is added to the analysed rate:
1. 5% for hand tools & equipment on labour cost, lubrication & corrective maintenance on machinery cost and wastages & unaccounted on materials cost.
2. 1% for water charges
3. 10% for the Contractor’s profit and Overhead charges.
Q: How do you calculate the labour cost in construction?
Ans: Labour cost is determined by assessing the number of hours worked by the labourers. As a result, the cost can be computed by multiplying the weekly rates of the labourers.
