What is Analysis of Rates or Rate Analysis of Civil Works?
In construction projects, various activities are carried out, each consisting of different types of civil or construction works. For instance, in the construction of a building, the activities can include excavation or earthwork, concrete work, masonry work, woodwork such as doors and windows, plumbing, flooring, waterproofing, and finishing work such as plastering, painting, and distempering.
The earthwork activity can be divided into different types based on the depth and type of soil. For instance, the excavation of 1.5 meters deep in soft soil and the excavation of 3 meters deep in hard soil are two different types of earthwork. Similarly, concrete work can be classified based on its mix proportions and placement. For example, M25 reinforced concrete work in foundation, M30 reinforced concrete work in columns, slabs, etc. There can be many small civil works associated with every construction project.
The cost of any construction project is calculated based on each work associated with every construction activity. Therefore, it is essential to calculate the cost of each small work. Rate analysis of civil or building works involves determining the cost of each construction work per unit quantity. This cost includes the cost of materials, labor, machinery, contractor’s profit, and other miscellaneous petty expenses required for the particular work to be completed in unit quantity.
For instance, the cost of 1 cubic meter of M20 RCC work in the slab, the cost of 1 cubic meter of excavation in soft soil of 1.5m depth, the cost of 1 square meter of plastering of 20mm, and the cost of 1 square meter of painting work with specified paint in 2 layers or 3 layers as required. The cost of materials in rate analysis is calculated as a combination of the cost of material at origin, its transportation costs, and taxes. The rate of labor is based on the skill of the labor, such as skilled labor, semi-skilled, and unskilled labor.
The cost of materials and labor varies from place to place. Therefore, the cost of each construction work varies from place to place.
What are the Factors Affecting Analysis of Rates of Civil Works?
The rate analysis of civil works is influenced by various factors. One of the primary factors is the specification of the civil work and materials. The quality of materials, the proportion of mortar or concrete, the thickness of plastering, the number of coats of painting, the depth of excavation, and the type of soil are some of the essential aspects that impact the rate analysis.
Another significant factor that affects the rate analysis of civil works is the location of the construction site. The distance of the construction site from the source of materials, the availability of labor, water, and machinery play a crucial role in determining the rate analysis.
Furthermore, the quantity of materials required, the number of different types of labors, and the rates of materials and labors also affect the rate analysis. The cost of each material and labor can impact the overall budget of the project.
Finally, the profit of the contractor, miscellaneous expenses, and other overheads also have a significant impact on the rate analysis. These factors determine the profit margin for the contractor and contribute to the overall cost of the project. Hence, they are crucial factors that influence the rate analysis of civil works.
What are the Elements of Rate Analysis of Civil Works?
Rate analysis is a process that helps in estimating the cost of a construction project. This analysis involves the identification and calculation of various factors that contribute to the overall cost of the project. These factors include material cost, labor cost, plant and machinery charges, water charges, taxes, insurance, risk coverage charges, and contractor’s overheads and profit.
The first element that is taken into consideration in rate analysis is the material cost, which includes the cost of materials and wastage. This is important as it forms a significant part of the total cost of the project.
The second element is the labor cost, which involves the cost of hiring skilled and unskilled labor for the construction work. This cost is calculated based on the amount of work done by each worker, their hourly wage, and the duration of the project.
The third element is the cost of plant and machinery owning and operating charges. This includes the cost of purchasing or renting the necessary equipment, as well as the cost of operating and maintaining it during the construction process.
The fourth element is water charges, which refer to the cost of obtaining and using water during the construction process.
The fifth element is taxes, which include any taxes that need to be paid during the construction process, such as sales tax, service tax, and value-added tax.
The sixth element is insurance and risk coverage charges, which involve the cost of insuring the construction project against any potential risks or damages.
Finally, the last element is the contractor’s overheads and profit, which include the cost of the contractor’s expenses and the profit they expect to make from the project.
Why Analysis of Rates is Required in Construction Projects?
In construction projects, rate analysis serves multiple purposes. One of these purposes is for tendering. Contractors need to calculate the cost of unit work involved in each construction activity to provide justified rates while bidding. Additionally, clients may also require rate analysis to determine the cost of the construction project.
Another reason to conduct rate analysis is to assess the requirements of quantities of labours, materials, machineries, and capital needed to complete the project. This analysis helps optimize the use of resources and determine alternatives for efficient resource management.
Rate analysis is also useful for assessing the rate of unit work from time to time. Contractors can use this information to request payment increases in case of material or labor cost changes or any deviations in work specifications. It also helps compare the cost of the project with the sanctioned capital to take necessary actions or regularization of excess or less cost.
Rate analysis is also helpful in working out the budget of the construction project and controlling cash flows at various stages of construction work. It can identify irrational rates quoted by contractors during the tendering process and serve as the basic data in case of a dispute between project owners and contractors.