Infrastructure, Energy and Construction SkillsPoint

Learner Resource
Unit code: CPCCBC4004A
Unit name: Identify and produce estimated costs for building and
construction projects

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TAFE NSW would like to pay our respect and acknowledge Aboriginal and Torres
Strait Islander Peoples as the Traditional Custodians of the Land, Rivers and Sea. We
acknowledge and pay our respect to the Elders, both past and present of all Nations.
Version: 04/03/2019
Date created: 02/08/2018
Date modified: 15/01/2020
For queries, please contact:
Infrastructure, Energy and Construction SkillsPoint
Mount Druitt
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This resource can be found in the TAFE NSW Learning Bank.
The content in this document is copyright © NSW TAFE Commission 2018, and should
not be reproduced without the permission of the TAFE NSW. Information contained in
this document is correct at time of printing: 15 January 2020. For current information
please refer to our website or your teacher as appropriate.

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Contents
Icon legends………………………………………………………………………………………………… 3
Contents …………………………………………………………………………………………………….. 4
Introduction………………………………………………………………………………………………… 9
1.1 Plans …………………………………………………………………………………………………… 11
1.1.1 Construction or Working Diagrams……………………………………………………… 11
1.2 Other Construction Documents………………………………………………………………… 14
1.2.1 Consultants’ drawings………………………………………………………………………. 14
1.2.2 Shop (workshop) drawings:……………………………………………………………….. 14
1.2.3 The footing and slab plan………………………………………………………………….. 14
1.2.4 Construction Certificate Drawings………………………………………………………. 15
1.2.5 Schedules………………………………………………………………………………………. 15
1.2.6 Drawings for Additions and Alterations to Buildings……………………………….. 16
1.2.7 Specification…………………………………………………………………………………… 16
1.2.8 Codes and Standards……………………………………………………………………….. 17
1.2.9 Activity………………………………………………………………………………………….. 18
1.3 What is estimating? ……………………………………………………………………………….. 19
1.3.1 Who is involved? …………………………………………………………………………….. 20
1.3.2 The estimator…………………………………………………………………………………. 22
1.4 Preliminary estimates …………………………………………………………………………….. 23
1.4.1 Squaring………………………………………………………………………………………… 23
1.4.2 Cubing…………………………………………………………………………………………… 23
1.5 Detailed estimates…………………………………………………………………………………. 25
1.5.1 Pricing a basic or standard structure plus variable items ………………………… 25
1.5.2 Preparing and pricing a builder’s bill …………………………………………………… 25
1.5.3 Pricing a bill of quantities………………………………………………………………….. 26
1.5.4 Pricing a schedule of rates ………………………………………………………………… 26
1.5.5 Preparation of tenders……………………………………………………………………… 27
1.6 Background to measurement…………………………………………………………………… 29
1.6.1 Introduction …………………………………………………………………………………… 29
1.7 Australian standard method of measurement of building works (ASMMBW)…….. 30
1.7.1 Purpose…………………………………………………………………………………………. 30
1.7.2 The Importance of Section No 1 : Introduction, General Rules and
Recommendations in the ASMMBW…………………………………………………………… 30
1.7.3 Some points to be observed when measuring in accordance with the
ASMMBW:…………………………………………………………………………………………….. 31
1.7.4 Abbreviated measurement and the Bill of Quantities……………………………… 31
1.7.5 Checklists………………………………………………………………………………………. 32
1.7.6 Abbreviated measurement for budget estimates, cost plans etc………………. 32

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1.8 The quantity surveyor…………………………………………………………………………….. 34
1.8.1 Detailed measurement – the Bill of Quantities ……………………………………… 34
1.9 The building estimator……………………………………………………………………………. 35
1.9.1 Measurement and the Building Estimator ……………………………………………. 35
1.9.2 Core measurement skills and process: the QS verses the BE……………………. 36
Introduction………………………………………………………………………………………………. 38
2.1 Composition of building costs ………………………………………………………………….. 39
2.2.1 Labour ………………………………………………………………………………………….. 41
2.3 Labour hours ………………………………………………………………………………………… 45
2.3.1 Labour constants…………………………………………………………………………….. 45
2.3.2 Crew size……………………………………………………………………………………….. 46
2.3.3 Published cost guides ………………………………………………………………………. 47
Other cost factors…………………………………………………………………………………… 49
2.3.4 Labour constants for pre-mixed concrete …………………………………………….. 50
2.3.5 Labour constants for formwork………………………………………………………….. 52
2.3.6 Labour constants for reinforcement……………………………………………………. 55
2.3.7 Labour constants for brickwork………………………………………………………….. 56
2.3.8 Labour constants for woodwork…………………………………………………………. 60
2.3.9 Labour constants for roofing……………………………………………………………… 64
3.1 The measurement process………………………………………………………………………. 68
3.1.1 Billing units ……………………………………………………………………………………. 68
3.1.2 Taking off ………………………………………………………………………………………. 69
3.1.3 Measurement paper and setting out…………………………………………………… 70
3.2 Describing measured work………………………………………………………………………. 73
3.3 Basic measurement techniques………………………………………………………………… 74
3.3.1 Linear Take off – In and out vs centreline……………………………………………… 74
3.3.2 Area Take Off………………………………………………………………………………….. 75
3.3.3 Inclined area Take off……………………………………………………………………….. 77
3.3.4 Volume Take Off ……………………………………………………………………………… 77
3.3.5 Number Take Off …………………………………………………………………………….. 79
3.3.6 Weight Take Off………………………………………………………………………………. 80
3.4 Finalising the measurements……………………………………………………………………. 81
3.4.1 Documentaion of measured items ……………………………………………………… 81
3.4.2 Suppliers of plant,materials and consumable items ……………………………….. 82
3.5 Measurement working example……………………………………………………………….. 84
3.5.1 Billing……………………………………………………………………………………………. 86
3.5.2 Describing the items of work to be measured……………………………………….. 88
3.6 Computer estimating software…………………………………………………………………. 90
3.6.1 Advantages and Benefits…………………………………………………………………… 90
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3.6.2 Must you still do the take-off? …………………………………………………………… 91
3.6.3 How much time saved?…………………………………………………………………….. 92
3.6.4 How will my bid accuracy be improved?………………………………………………. 92
3.6.5 Will estimates be as complete?………………………………………………………….. 92
3.6.6 Can I realistically expect to increase profits?…………………………………………. 92
3.6.7 How big must I be to derive any benefit? …………………………………………….. 92
3.6.8 How long will it take me to learn how to use a computer for estimating?…… 92
3.6.9 Software Selection…………………………………………………………………………… 93
4.1 Contract types associated with the tendering process…………………………………… 98
4.1.1 Lump Sum……………………………………………………………………………………… 98
4.1.2 Lump sum subject to rise and fall……………………………………………………….. 98
4.1.3 Design and construct or package deal …………………………………………………. 98
4.1.4 Schedule of rates…………………………………………………………………………….. 98
4.1.5 Cost Plus ……………………………………………………………………………………….. 99
4.2.1 Statutory requirments ……………………………………………………………………… 99
4.2.2 Decision to tender…………………………………………………………………………. 100
4.3 The tendering process…………………………………………………………………………… 101
4.3.1 WorkCover, Environmental Protection Agency (EPA) requirements, waste
management and other statutory…………………………………………………………….. 102
Preliminaries………………………………………………………………………………………… 102
4.3.2 Hand over ……………………………………………………………………………………. 105
4.3.3 Company overhead recovery and margins………………………………………….. 106
4.4 Anticipated profit…………………………………………………………………………………. 108
4.4.1 Importance of time………………………………………………………………………… 109
4.5.Project costs are calculated for tender or bill…………………………………………….. 110
4.5.1 Tender preparation and submission ………………………………………………….. 110
4.6 1 Preparing a site report……………………………………………………………………. 117
4.6.2 Determining construction methods…………………………………………………… 117
4.6.3 Estimating construction time …………………………………………………………… 118
4.7.1 Pricing a Bill of quantities or preeparing and pricing the Builder’s bill………….. 3
4.7.2 Extracting relevant documentation and obtaining quotations ……………………. 4
4.7.3 Evaluating prices ………………………………………………………………………………. 6
4.7.4 Calculating rates for labour and on-costs……………………………………………….. 6
4.7.5 Other costs………………………………………………………………………………………. 6
4.7.6 Monetary provisions………………………………………………………………………….. 6
4.7.7 Preliminaries……………………………………………………………………………………. 7
4.7.8 Builder’s overhead ……………………………………………………………………………. 8
4.7.9 Builder’s anticipated profit …………………………………………………………………. 8
4.7.10 Last cost item added………………………………………………………………………… 9
4.7.11 Complete tender documentation ……………………………………………………….. 9
4.7.12 Delivering the tender……………………………………………………………………… 11
4.7.13 Procedure if tender accepted…………………………………………………………… 11
4.7.14 Procedure if tender not accepted……………………………………………………… 12

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4.7.15 Final Check…………………………………………………………………………………… 13
4.8 Summary……………………………………………………………………………………………… 14
Image attribution ……………………………………………………………………………………….. 15

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Topic 1
Read and interpret
plans specifications

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Introduction
© Thinkstock (used under license)
This topic refers to the basics of plan reading. It will reinforce your knowledge and
skills to enable you to identify appropriate plans and drawings correctly. It will check
your understanding of reading and interpreting plans and specifications so that you
are able to correctly measure and take off quantities to standard industry practice.
Construction estimates are most often based on the traditional detailed quantity takeoff and unit price estimating method. Quantities of materials are calculated either
manually, or by computer via CAD software, from fully developed plans (blueprints)
and priced using a cost rate such as:
cost per square metre, (e.g., drywall or painting),
cost each (e.g., sink),
cost per lineal metre (e.g., moulding),
cost per square metre (e.g., carpet),
cost per square (e.g., roofing)
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This approach requires skill and expertise otherwise significant errors occur. The
builder/estimator must know specific labour rates, material costs, contractor overhead
mark-up and when labour increases for installation, as occurs with a steep roof of 35
degrees rather than a low sloping roof of say 17.5 degrees. As professional estimators
know, the judgment this method requires makes it more of an art than a science.
Most importantly, it can only be performed with completed detailed and scaled
drawings, notes and specifications since these are needed to allow the estimator to
calculate areas, quantities and to determine quality of materials. This method cannot
be used for early stage estimates/budgets since the design must be significantly
complete and drawn before the estimate can be performed. Any change to the design
results in drawings having to be redone and the take-off quantity estimates
recalculated; not at all dynamic.
The larger the development project, the more drawings are necessary to describe it.
The more drawings there are in any set, the greater the need to make it easy to interrelate them.
Once a builder, or anyone who needs the information, starts to read drawings, it is
important that they don’t get lost along the way. It is also important that, for any part
of the project or for the whole project, they can be sure that they have read all the
available information.
You will also become familiar with cross-referencing methods and a checking
procedure that can be used to either to check drawings for accuracy, or to check that
all available information on the drawings has been read.

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1.1 Plans
1.1.1 Construction or Working Diagrams
The purpose of Construction or Working Drawings is generally to communicate with
the builder, consultants and authorities the extent, details and information about the
building to be constructed.
Watch this video on the value of being able to read and interpret plans:
https://www.youtube.com/watch?v=dQ2lSj3AL3M
Drawings should be clear, easy to read and uncluttered. When producing drawings it is
better to prepare a second sheet rather than overlay two different sets of information
on one sheet and confuse and clutter the drawing. Architectural Working Drawings are
mainly in the form of orthographic projection.
The essence of construction drawings should be clarity, accuracy and completeness.

Construction or Working Drawings
CC drawings working drawings showing the information
required to obtain a Construction Certificate
(approval to construct)
construction details a part of working drawings showing detailed
information about the construction of building
elements
shop (workshop) drawings working drawings showing the detailed
information required to fabricate items eg.
furniture, joinery, fixtures
tender drawings working drawings showing the information
required to obtain quotes (tenders) for
construction work

The extent and nature of construction documentation depends on the complexity of
the work. Additional drawings other documentation is generally required for Tender
documentation.
Working drawings are a set of documents which show and explain the construction of
the finalised design of the house.

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These drawings not only have enough information required for council submissions,
but also to enable a builder to build the house exactly as designed:
show all the necessary set outs, dimensions and levels to construct the
building.
show the extent and location of materials involved in the work and form the
basis of all construction documentation
scale generally 1:100; site plans generally 1:200; location plans generally 1:500
The drawings must be self-explanatory. Although notes are added to drawings,
they
augment rather than take the place of drawn information.
The
Working Drawing – Plan gives necessary set out dimensions and shows the extent
and location of elements and materials to be used.
The
Working Drawing – Elevations and Sections give the levels and heights necessary
to construct the building, and the extent and location of elements and materials to be
used.
Architectural working drawings have traditionally been set out on A1 sheets and these
are still used for large buildings and for large or complex projects. However, for ease
use, and for photocopying and plotting drawings, A3 size sheets are more common,
especially for residential projects.
With the use of smaller sheet sizes the documentation is spread over several sheets
rather than set out on one large sheet. This means that cross-referencing between
sheets within a set of drawings is essential.
The following is a guide for the set of drawings for a residential project using A3
sheets:

Sheet 1 Site Plan, scale 1:200 or 1:500 (sometimes including a Block
or Locality Plan).
Sheet 2 Floor Plan, scale 1:100 (in two storey drawing you may need
two sheets, one for each level) with specific construction
notations.
Sheet 3 Elevations, scale 1:100 (as many as necessary to show the
whole project). If it is a large or complex building these may
be spread over more sheets.
Sheet 4 Sections 1:100, 1:20 or 1:50 (as many as necessary to show
the form and construction). If it is a large or complex
building these may be spread over more sheets.

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Sheet 5 Details (as required to show complex aspects of
construction), scales as appropriate 1:1, 1:5, 1:10, 1:20

The above is a normal way to organise your work. Some drafters also use a cover sheet
showing all the sheet numbers and drawing titles like a Table of Contents in a book.
1.1.1.1 Amendments
It is very important that amendments (changes to drawings) are identified so that all
involved in a project can be sure that they are referring to the most recent drawing.
The usual system is to add a letter A when the first revision is completed. This can then
be changed to a letter B when the second revision is completed and so on.
The drawing number should then include the revision letter. A complete drawing
number might therefore consist of something like this:
9023-CC-02-A:

9023 CC 02 A
This is the Job
No.
This means it is a drawing
for submission for
Construction Certificate
This means it is the
second drawing in
the series.
This means it
has been
revised once.

A schedule is usually added to a drawing to record the nature of the revisions.
Typically it might look like the following:

Amendments
Letter Date Items
A 10.1.06 Kitchen layout
revised.
B 2.2.06 Floor finishes added.
Door numbers
added.
C 12.2.06 Window W3 moved.
Door D7 deleted.

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1.2 Other Construction Documents
1.2.1 Consultants’ drawings
Prepared by specialist consultants for their specific work.
Could include drawings for structural steelwork, reinforced concrete, electrical
installation work, air conditioning installations, hydraulic, landscaping or interior
design details etc.
Are drawn to a full range of scales appropriate to the requirements.
Structural and Hydraulic drawings are generally submitted as part of Construction
Certificate documentation
1.2.2 Shop (workshop) drawings:
Prepared for the detailed instruction of tradespeople in the workshop for
fabrication of the structural steel, air conditioning ducting etc.
Give large scale detailed instructions on the location and diameter of holes, bolts,
studs etc.
Drafters are often employed by the specialised sub-contractors to prepare the
drawings.
These drawings are not submitted as part of the Construction Certificate
documentation
1.2.3 The footing and slab plan
Note: In small domestic work it is customary to combine the lower floor level and the
footing plan.
The footing plan should include:
The layout of all strip, isolated and pier footings.
The dimensions of all footings including the dimensions from set-out points.
This information is obtained from a site survey report.
The depth of all footings – the R.L. of the bottom of each footing may be
necessary in complicated situations ie close proximity of a sanitary sewer or
stormwater easement.
The type of footing and the reinforcing required.
Drainage lines and service lines running under the building and any core-holes
or bridging required through the footing for them.
Slab-on-ground layout including slab beams, piers, recesses and step-downs.
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Plumbing suspended under the lowest floor slab and drainage fittings where
appropriate.
Any basement floor slabs, retaining walls, and any associated waterproofing.
Any excavation work to be done which is not covered by concrete slabs etc.
Note: The details for the footing and slab should be in agreement with the site
investigation report and not in conflict so as to minimise possible errors during
building.
1.2.4 Construction Certificate Drawings
After a development application is approved, a Construction Certificate is needed
before building actually begins. A Construction Certificate is an approval that:
Makes sure that the detailed construction plans and specifications comply with
the Building Code of Australia (BCA) and any other relevant Australian
standard.
Certifies that the detailed construction plans and specifications are consistent
with the Development Consent.
Certifies that the relevant Conditions of Development Consent have been
complied with.
1.2.5 Schedules
Schedules are methods of communicating information by means of lists or charts. A
schedule might be on a drawing or in a written specification.
The sort of information that is usually on a schedule includes doors, windows,
hardware, plumbing fittings, finishes and plants.
The advantages of schedules are that you can include a lot of information without
cluttering up your drawings. A schedule is really an index that relates other pieces of
information together.
A basic window schedule for a small building might be similar to the one below:
Table 1: A typical window schedule

Window
No.
Location Type Glass Hardware Notes
W1 G.07 A Laminated Standard
W2 G.04 B 6mm clear float Standard
W3 G.04 B 6mm clear float Standard

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W4 G.01 C Frosted Remote
control
W5 G.02 D 6mm clear float Standard

1.2.6 Drawings for Additions and Alterations to Buildings
When altering or extending an existing building, it is necessary to show all or part of
that building as it existed before work started.
These kinds of drawings might show:
An accurate plan of every floor with accurate dimensions and wall thickness.
Elevations and Sections
In all cases the drawing should show only the necessary amount of detail. Depending
on the degree of detail required, the drawings may show windows, door swings,
fittings and fixtures.
Where a building is to be extended, the part of the existing building joining on to the
new building might be shown in more detail than the rest of the building.
In plans and sections, walls, floors, roofs and concealed construction should normally
be shown in outline only. Do not show the construction of hidden elements (eg wall
cavities, floor joists) unless it is really necessary and you are sure of the construction.
While a range of line thicknesses are set out in the Australian Standard AS1100.301,
these are recommendations not regulations, and in architectural drafting line types
and thicknesses should be chosen with clear communication in mind rather than
strictly adhering to the rules. With all these options available, a relatively complex
drawing can be made easy to read.
1.2.7 Specification
The specification is a written document which complements the drawings. If materials
and workmanship are fully covered in the specification, then notes on a drawing
should be kept to a minimum. It is quicker to include material information in the
specification than to letter it on drawings.

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The drawings and specification must accurately detail and describe the proposed
works for approval and construction. The drawings and specification become legal
documents as part of a Construction Certificate application and a construction
contract. Errors, inaccuracies and omissions may result in variations to a contract,
increased costs for the client and possibly legal action.
Drawings are a graphical description of the work to be completed.
The Specification is a written description of the materials to be used and the
standard of workmanship to be achieved and the extent of work.
They compliment each other and generally cannot be used separately.
An example of a specification for a residential building is available with Project 1 on
the OLS.
1.2.8 Codes and Standards
It is very important for the estimator and builder to be aware of the relevant codes
and standards that apply to the construction activities as they are priced. These
include the National Construction Code (NCC), Australian Standards that apply to the
material or installation quality, codes of practice and manufacturers’
recommendations and specifications.
Plans, specifications and other related contract documentation are produced adhering
to the relevant codes and standards, however the builder will always carry prime
responsibility to ensure the construction of a project complies with all legislation, NCC
and related standards. Without an awareness of this in the estimating process and
indeed during construction, the job can become a financial disaster either during or
after construction is completed.
The best and first point of reference when pricing a project is the current National
Construction Code (NCC). The NCC was developed to provide the minimum
requirements for the design and construction of buildings across a wide range of
classifications. The NCC is arranged in a way that the class and type of building being
priced, can be referenced directly within the relevant volume, that makes up the NCC
suite of documentation. NCC also includes a volume specifically related to plumbing.
It is beyond the scope of this resource to investigate the make-up of the NCC however
the advantage of using the NCC as the first point of reference is that it directs each
construction activity to a relevant Australian Standard where it applies and if an
Australian Standard does not exist for that particular construction activity, a
compliance solutions is described.

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1.2.9 Activity
a) Refer to the specification provided for a residential building and find out what
vapour barrier is required to be provided under the ground slab. The details of
its installation are also provided in the specification. This type of information is
better provided in a specification document than on the drawings.
b) Access the NCC Volume 2 and find the section that relates to the information
for the installation of the vapour barrier.
(Hint: Look at Section 3 – Acceptable
Construction)

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1.3 What is estimating?
Estimating is the process of determining how much a job will cost. It is not easy to do
this, given the nature of construction work and the many unknown factors that
contribute to the completion of a project.
For example, let’s say that you are asked to clear and level a building site in readiness
for footing excavation. You have already determined how many trees and how much
soil and/or rock must be removed to the ‘tip’ or stockpiled on site for future use.
However, in calculating these quantities, you have not considered; the type of plant you
will need, the ease of access to the site, how long you will need to employ the plant and
possibly an operator, how much it will cost to hire the plant, and how much it will cost
to remove the excavated material and dispose of it. There is a lot to consider, isn’t
there? And I’m sure there are things that we haven’t thought of, even on such a
relatively small task as this. Imagine trying to estimate the cost for multi-storey
construction projects!
To accurately predict the cost of a project we need to:
identify all the tasks and costs involved, and
Eliminate any unknowns (we cannot cost an unknown).
Estimators rely on subcontract prices, supplier prices and data obtained from previous
projects. Consistently good estimating ensures the continuing financial health of the
builder and the estimator occupies a key responsible position in the builder’s
organisation. Advice to management of predicted costs is a major factor in determining
whether the firm shows a profit or loss on each project undertaken.
Additionally, with competitive tenders, the estimator must guard against overpricing.
Submission of a grossly high tender is futile as it will not only result in losing the contract,
but will also waste the firm’s time, expense and effort in preparing the tender. The cost
of estimating is not inconsiderable and must be accounted for in the builder’s
overheads.
An estimator’s position in a building firm will depend on the firm’s size and structure. In
smaller firms the roles of builder, manager and estimator may be combined, whereas a
large firm may have a separate estimating section of several people headed by a chief
estimator directly responsible to management.

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1.3.1 Who is involved?
The person or organisation that undertakes a construction development project may
have no technical or construction knowledge at all. They may be government
department or from the private sector, a corporation or individual, and their intention
may be to build for investment, expansion, political or social reasons or for private use.
The person or organisation who undertakes and finances the development is the client.
The client will often use the services of a design team for the technical expertise that is
required. A design team is usually headed by an architect, project manager or building
designer, who translates the client’s ideas and needs initially into a design brief. Design
development must fulfil all requirements of functionality, appearance, suitability,
compliance with local and state authorities, and cost. In order to cover all of these, the
lead consultant will often employ a number of other professionals to contribute their
expertise to various aspects of the job. These might include structural, mechanical,
electrical and hydraulic engineers, landscape architects and a quantity surveyor.
Often a quantity surveyor (QS) is engaged to provide cost input to the client at various
design stages. These may include the development of an initial budget based on broad
cost measures such as functional unit rates, and subsequently as the design develops
the quantity surveyor may prepare several cost checks to confirm that the design is to
budget or to make recommendations to bring it back to budget.
Once the design is complete the quantity surveyor may prepare a Bill of Quantities
(BOQ) for the project. The cost of preparation is weighed against benefits, and only
some projects will have a Bill of Quantities prepared by the QS. Bills of quantities are
commonly developed by project home builders, but not on custom residential and other
projects under $1m in size. Where no BOQ is prepared by the clients design team, a
‘Builder’s Bill’ is prepared by the estimator.
An estimator is employed by the builder or contractor to complete an ‘estimate’ for a
tender. He or she will be experienced in construction costing. Practical knowledge and
experience are essential to be able to perform the tasks of an estimator. He or she may
have formal qualifications from a college or university, or have worked in another
capacity in the construction industry to obtain experience in the field. A quantity
surveyor can do the work of an estimator, but is not usually employed by a builder for
this process. The estimator can price a prepared BOQ from the QS or measure the job
himself (or herself) and produce what is called a ‘Builder’s Bill’. This is similar to the Bill
of Quantities prepared by the QS but does not necessarily follow the rules and format
set out by the Australian Standard Method of Measurement of Building Works
(ASMMBW).

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The builder or contractor has the task of undertaking the physical work of construction,
fulfilling the requirements of the client as they are specified in the construction contract.
The builder may be a small firm employing a few operatives or a large company with
diverse operations of work. A builder or contractor usually employs sub-contractors to
carry out construction work on site such as excavation, concrete work and so on.
The relationship between each of the parties involved in a construction project is shown
diagrammatically in the figure below.
Figure 1: ‘Traditional’ model of the relationship between the parties involved in a building contract.
Proposed building or construction projects are usually ‘put out to tender’. That is, they
are advertised, and/or selected contractors are invited to ‘put in a tender’, or make an
offer, to complete the project for a certain cost. In some cases, a builder may be asked
to consider accepting a job from a client, and the price and conditions may be
negotiated without competition from other builders.
To be able to put in a tender, or negotiate a construction contract, a builder or
contractor must be able to ascertain how much the job will cost. So depending on the
size of the contracting company, an estimator may be asked to prepare a cost estimate
for the builder. The estimator’s job in this case is to try to win the contract at a price
that will ensure a reasonable profit for the builder. Since tendering is a very competitive
process, the estimator must be careful not to overprice, since this could result in the
loss of the contract, as well as the loss of the cost of preparing the tender, which could
be considerable. The estimator then, has a large part of the responsibility of keeping the
builder’s business afloat. His or her ability to produce accurate and competitive
estimates for tenders will determine whether the builder wins or loses jobs. But winning
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and the size of the profit depends on the closeness of the estimated cost to the actual
cost.
Builders who do development work involving arranging land acquisition, design,
approvals, construction and subsequent sale; typically obtain an accurate project price
from a QS rather than from an in house estimator to satisfy their bank loan
requirements.
1.3.2 The estimator
Quantities measurement permits an accurate measure of the labour and materials
needed on a project to be determined. Estimating requires an extensive and up-to-date
knowledge of construction methods, job organisation and planning, labour and plant
capacities, wastage factors, materials, labour and plant availability and prices,
subcontractor’s ‘going’ rates, awards, on-costs and overheads, and more. An estimator
usually has extensive experience to be able to be good at his job; that is, to be able to
estimate the total cost of a job with good accuracy.
Although all this experience is vital, the estimator has access to a number of other ‘tools’
to assist in his/her job. These include:
Historical records; that is, cost records from previous projects.
Industrial awards rates, including regulations and by-laws relating to various
payments and licences.
Brochures and rates supplied by manufacturers.
published cost guides such as those produced by Cordell’s, Rawlinson’s, etc
Quotes supplied by contractors in response to requests from the builder.
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1.4 Preliminary estimates
A number of methods can be used to determine budgets and preliminary estimates.
‘Squaring’ or ‘cubing’ can be used to determine a ‘rough’ or preliminary project
estimate using cost rates (per m2 and per m3) derived from prior projects provided
these are adjust with a suitable cost index to allow for inflation impacts. Cost rates
provided in published cost guides may also be used where prior cost data is
unavailable. Similarly cost rates based on a functional unit and a functional area basis
are used by many QS for initial costing.
1.4.1 Squaring
The estimate is based on the pricing per square metre (m2) of the area of the building
measured overall, which is from external face to external face of external walls. This
method has certain limitations as it disregards differences in:
Storey heights,
Foundations, and
The overall length of walls on plans that have the same area.
1.4.2 Cubing
An estimate determined by cubing is based on the pricing per cubic metre (m3) of the
building, measured either:
for the overall wall height from the lowest typical floor to the upper ceiling level,
or
For the inside walls from the lowest typical floor to the upper ceiling level.
Non-typical floors such as floors for car parking or plant rooms would be considered
separately. This method is useful when comparing buildings of similar size, nature and
construction, but obviously a hospital could not be compared with a factory. The
method is successful for smaller residential work and to a lesser extent repetitive home
unit work, but is not widely used. If a rough estimate is required, then squaring is more
commonly used.

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Although the areas of the buildings are equal (120 m2), there are 46 metres of
enclosing wall to building A and 68 metres to building B.
The preliminary estimate determined by cubing or squaring, can be used to see if the
project is feasible given any monetary restrictions placed on the construction
programming or the financial planning. Management may be able to make a decision
to decline or proceed with a tender based on this preliminary estimate.
Example 2
Use Cordell’s Student Building Cost Guide to determine an approximate square metre
rate to build a standard specification 3 bedroom, single bathroom, double brick house
with timber floor and concrete tile roof.

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1.5 Detailed estimates
Once the builder and/or the client decide that the project is feasible a detailed
estimate for the project can be prepared by:
pricing a basic or standard structure plus variable items or
preparing and pricing a builder’s bill or
pricing a bill of quantities as prepared by independent quantity surveying
consultants or
pricing a schedule of rates or
A combination of these methods.
1.5.1 Pricing a basic or standard structure
plus variable items
‘Design and construct’ project home builders usually adopt this method. A house is
advertised at a basic cost for the house plus variable items such as bricks below floor
level and storm water drainage.
The basic or standard structure of floor walls and roof with standard surface finishes
and inclusions is costed by applying known rates per m2 to the dimensions specified.
Then variable costs such as footings and foundations site works plumbing and drainage
special finishes and the like are added.
1.5.2 Preparing and pricing a builder’s bill
A builder’s bill is not measured in accordance with the A.S.M.M.B.W but is a condensed
bill of quantities with no set rules for preparation being governed more by common
sense convenience and circumstances than by rigid rules.
Generally, it has the following features:
Billing is confined to brief descriptions without preamble.
Measuring is restricted to essential items.
o Where possible minor items are included with major items and the unit
rates are increased accordingly.
o Allowance is made for wastage in the quantities table
Subcontractor’s quotations are used where available.
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For example, consider the case of a reinforced concrete strip footing. If you measured
it in accordance with the A.S.M.M.B.W you would have separate descriptions for trench
excavation mesh reinforcement stirrups tie wire bar chairs formwork and concrete. In a
builder’s bill it is likely that only one short description would be billed with a’
subcontractors all-up rate used.
1.5.3 Pricing a bill of quantities
The pricing of a bill of quantities that has been prepared by specialist quantity surveyors
allows builders to complete on a common basis. A bill of quantities should contain a
complete description of all items materials and labours necessary to complete the work
thus enabling the builder to estimate the cost with a reasonable degree of accuracy.
The rates used in the pricing of the bill of quantities may under certain circumstances
be used as schedule rates for variations to the contract. Bills of quantities are presented
in the same order as the specification which is usually trade order’; that is in the general
sequence of participation of the various trades on a building project. In addition to
general or preamble items billed under their particular trade headings there are
numerous general items applicable to the job as a whole. These items are included as
“Preliminaries”.
The Preliminaries section is costed last since it cannot be done until you have a good
overall knowledge of the project. It includes such project overhead items as general
plant and supervision.
1.5.4 Pricing a schedule of rates
If the scope of parts of the project is unknown at the commencement of the project or
if there are uncertain or unknown features then the bill of quantities may be formatted
in part as a schedule of rates. The builder then calculates unit rates (i.e. cost rate per m
m2 or m3) for these items for inclusion in the bill. When the client and the builder agree
to these rates they are inserted in the schedule of rates in the contract. The work is then
measured and valued as the job proceeds.
Acceptance of such schedule rates during construction is dependent on the quantity
involved. Some variation is allowed but maximum and minimum limits are set.
Acceptance also depends on the nature of the work remaining unchanged.

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1.5.5 Preparation of tenders
Preparation of a tender can be divided into several parts one of which is estimating. A
typical procedure for tendering involves:
1.5.5.1 Determine suitability
Before tender preparation, a builder must consider many important aspects before
committing, both the time and expense required to produce a valid tender.
Some of the points that will influence your decision to tender are:
• Nature location and size of the project.
• Value of work currently in progress.
• Capacity to complete the work.
• Examination of present and future workloads.
• Time frame of proposed construction.
• Suitability of the work to be undertaken.
• Any special or unusual conditions.
• The availability of materials and plant.
• The financial status of the client.
• The availability of labour.
It may be advantageous to prepare a preliminary estimate, as this will give an indication
of the overall cost of the project. This price could then be used to see if the project is
feasible with any monetary restriction placed on the project by the client to be used in
a pre-tender construction programming financial planning and in management decision
to either decline or proceed with the tender.
1.5.5.2 Prepare the estimate
Once the decision by management is to proceed with a tender then the preparation of
the estimate should begin with all the necessary information being obtained and all of
the following points being taken into consideration:
Obtain all tender documents.
Obtain all plans engineers’ details etc. and note any discrepancies with any
original documentation. All information should be signed and dated on
receiving.
Visit site and prepare site report.
Determine construction methods.
Prepare pre-tender construction programme.
Obtain material list and prices.
Obtain plant availability and cost.
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Obtain labour availability and cost.
Send relevant details to sub-contractors and nominated sub-contractors for
pricing.
Check delivery and completion dates.
Obtain provisional contingency and PC sums.
Review quotation and select.
Price bill of quantities net.
Price preliminaries and project overheads.
Review estimate.
On completion of pricing with all of the above points taken into consideration the
estimator should submit net tender price along with a report (see below) to
management for consideration of decision. The report to management of the estimate
and project should be concise and include the following
Brief description of the project.
Method of construction.
Special condition of contract.
Unusual construction methods.
Plant requirements.
Management depending on the size of the project and structure of the firm may require
more information.
1.5.5.3 Management review
On receiving the report and estimate management would review and decide upon the
viability of the project determine general overheads costs determine the profit margin
that -they decide the project may warrant/can carry. When determining the profit
margin the following would be taken into consideration:
Risk involved.
Workload etc.
Capital required.
Plant investment.
Goodwill with client.
Future work possibilities.
1.5.5.4 Submit tender
On completion of the tender, the builder submits his tender price to the client for
consideration.

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1.6 Background to measurement
1.6.1 Introduction
1.6.1.1 Why measure building quantities?
Many activities in the life cycle of a building will require the measurement of building
quantities. Whether it is for feasibility purposes, setting budgets, tendering, ordering,
supplying, progress payments, variations, tax depreciation schedules, repairs,
maintenance etc. quantity measurement is an important skill.
For whatever reason, once a document containing a series of building quantities has
been compiled, prices can then be allocated and extended to arrive at a cost for the
measured works. Therefore, a methodical and reliable approach to the measurement
of building quantities can form the basis for accurate construction cost information.
It is also important to note that accurate measurement is only half the tasks – accurate
pricing is also required.
The purpose of these notes is to identify the fundamental processes required for the
accurate measurement and description of building quantities from drawings.
Measurement of building quantities can be undertaken and presented in a variety of
forms and detail depending on the intended purpose of the quantities and the
background of the measurer.
Generally, there are the two main groups in the construction industry who will
measure building quantities: the Quantity Surveyor and the Building Estimator.

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1.7 Australian standard method of
measurement of building works (ASMMBW)
1.7.1 Purpose
The Australian Standard Method of Measurement of Building Works is published to
provide a uniform basis for the measurement of building works and for the
presentation of units of measurement in bills of quantities. The methods of
measurement laid down therein apples to both the preparation of bills of quantities
before the works are commenced and for the measurement of finished works. The
ASMMBW is authorised by agreement between the Australian Institute of Quantity
Surveyors and the Master Builders Federation of Australia.
1.7.2 The Importance of Section No 1 : Introduction,
General Rules and Recommendations in the ASMMBW
Section 1 of the ASMMBW provides general rules and recommendations for
measurement and the preparation of a bill of quantities. The rules and guidelines
apply to all other sections of the ASMMBW.
Section 1 includes some of the important clauses/rules that are fundamental in the
measurement of building works and should be carefully studied and understood
before commencing measurement work. The following table shows abstracts of some
important clauses/rules that are relevant at this stage of study:

Clause Details
3.1 Net as fixed in position Measure only the finished product as designed and
specified (i.e. no allowances for waste or laps except
where noted otherwise)
3.2 Measurements before calculation
shall be taken to the next 0.01
metre
All dimensions before calculation shall be up to two
decimal places
3.4 No deduction shall be made from
items required to be measured by
area for voids less than 1m
2 and by
volume for voids less than 0.1m
3
Any opening less than 1m2 in area measures or 1m3 in
volume measures shall be ignored and no deduction shall
be made.
4.5 Items as indicated in this clause
shall be deemed to be measured
These work shall not be measured and Builder shall make
such allowances in their rates.
6.1 Billing units for metre, square
metres or cubic metres
All billing quantities shall be billed in whole numbers and
no decimal places be allowed e.g. 102.51m shall be billed
as 103m and 232.02m
2 shall be billed as 233m2.

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6.2 Billing unit for tonne All billing quantities by weight shall be in full in hundredths
of a unit e.g. 0.044t shall be billed as 0.05t.

Table 1 ASMMBW measurement rules
1.7.3 Some points to be observed when measuring in
accordance with the ASMMBW:
All items are labelled in alphabetical order with the first item on every page
prefixed as A.
All descriptions adequately cover the work being measured but
common methods of construction or stock sections need not be
described in detail.
With manual paper based systems the functions of the five sub columns in the
PARTICULARS column shall be strictly observed and carefully set out in
accordance with the general practice of a quantity surveyor.
All dimensions are recorded in metres and rounded to the next higher
0.01metre increment, i.e. in two decimal places (ASMMBW Section I Clause
3.2).
In the dimension column horizontal lines are used to signify the
differences between linear, area, volume, number and weight measures.
The measurement paper shall be spaced well apart to ensure clarity. Adequate
spacing also enables any items to be inserted in the appropriate place which may
have been overlooked.
The use of heading and sub-heading is recommended to clearly identify section
and sub-sections of a trade. All headings and sub-headings shall be underlined.
The billing unit shall be in accordance with ASMMBW requirements and any
departure from the ASMMBW rules shall be clearly identified and stated in
the appropriate trade (ASMMBW Section I Clause 2.2).
The billing unit shall be placed adjacent to the last line of the description,
followed by the extended measured quantity, in their appropriate
columns.
1.7.4 Abbreviated measurement and the Bill of
Quantities
The QS can work back from the ASMMBW level of detail if required and produce a bill
of quantities based on abbreviated rules for measurement.
Many QS firms have developed their own abbreviated rules for the measurement of
building work. Whilst still requiring measurement in trade order and grouped in
sections of work in a similar manner to the ASMMBW, many of the more intricate and
detailed rules found in the ASMMBW are eliminated and/or deemed to be included in
the measured item of work.

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Using abbreviated rules of measurement does not intend to reduce the quality of the
quantities produced. It basically enables the bill of quantities to be produced faster
and therefore at a lesser cost to the client.
The tenderer needs to be aware of the method of measurement used and the
associated rules. Why? Simply because the measured items are to be priced in
accordance with the quantities stated in the bill to arrive at the total project cost.
Items presented in the BOQ may be deemed to include for fixings, attachments,
cutting etc. Also BOQ quantities are measured net (as fixed in position), ie. without
allowance for waste. Therefore, the tenderer needs to be aware of exactly what items
include or exclude. A document outlining the rules of measurement should be made
available with the BOQ.
1.7.5 Checklists
The ASMMBW can be used to quickly create a checklist of items to be billed and priced
using the extensive category headings provided in each trade. This is useful to ensure
that the cost of all items have been included.
1.7.6 Abbreviated measurement for
budget estimates, cost plans etc.
The project design team needs to set and monitor costs as the project design
develops. During the design and pre-tender phase the QS will produce documents
such as a:
budget estimate
cost plan
detailed estimate
pre-tender estimate
These documents tend to contain brief, all inclusive descriptions of work, rather than
detailed individual components of work.

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The following table shows an example of these differences.

Type of measured
document
Example description for masonry trade
Bill of quantities in
accordance with the
ASMMBW or
abbreviated BOQ rules
Heading: Selected face brickwork equal to Geraldton
“Federation Peach”, laid in stretcher bond in cement and
sand (1:5) mortar with ironed joints.
Item description: 110mm skin of cavity wall (note: brick
work will be split into above and below ground floor level)
Budget estimate Skin of face brick external wall

Table 2
The level of detail and information provided in the description is quite different:
The bill of quantities description allows for accurate pricing as the name of the
product, the mortar mix and the type of joint is provided.
The budget estimate broadly states the type of wall. This allows a reasonable
cost range for a face brick wall to be included in the budget. Once the budget is
set, design and specification can develop with a target budget in mind.

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1.8 The quantity surveyor
The role of the Quantity Surveyor (QS) is quite varied in the realm of the construction
and property industry. One of the core skills possessed by the QS is the ability to
measure building and construction quantities in varying levels of detail. This core skill
can be adapted to suit a variety of tasks depending on the needs of the client.
1.8.1 Detailed measurement – the Bill of Quantities
A bill of quantities prepared by a trained quantity surveyor presents, in an itemised
and orderly manner, a complete description of the required materials and standard of
work. It should be in sufficient detail to enable estimators for competing tenderers to
arrive at an accurate and competitive price offer for a proposed building or
engineering project.
A bill of quantities is a list of numbered or coded items describing quantities and
materials required to carry out the contract work that is divided into sections
corresponding with their usual building trade and in accordance with the ASMMBW.
The purpose of a bill of quantities is to provide a common basis for tendering.
Description and quantities are set out in a standard format. Some advantages of
having a BOQ prepared for tendering are:
It saves the extra time and duplication of effort that would result if all tenderers
were to take off their own quantities.
It prevents differences of opinion in interpretation of the drawings and
specification and should result in a closer range of prices from the list of
tenderers.
It provides a thorough check of the drawings and specification, thereby
minimising unexpected variations during the construction. Many problems
note4d during the measurement process can be corrected by the building design
team (architect, engineer etc.) during the tender phase.
A bill of quantities measured in accordance with the ASMMBW is the most detailed
form of quantity of measurement and description of building and construction work.

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1.9 The building estimator
The term Builder Estimator (BE) can be used to describe someone who estimates the
price of building work, normally for tender purposes. They may be a residential builder
who estimates, tenders and constructs the entire project themselves, or be an estimator
in a building company whose primary role is to estimate project costs, while a labour
force of sub-contractors and administrative staff construct the project.
It would be rare for a BE to measure a bill of quantities in accordance with the
ASMMBW, however, they may be required to price a BOQ which has been measured in
this way by a QS. Building and construction projects controlled by the NSW Department
of Commerce (formally the NSW Department of Public Works) sometimes produce BQs
using the ASMMBW.
The BE is more likely to price a BOQ prepared by a QS who has used an abbreviated
method of measurement for tendering purposes.
1.9.1 Measurement and the Building Estimator
The BE will be required to measure quantities for a variety of reasons, for example:
No BOQ has been prepared and each tenderer is required to submit an itemised
price (or tender). To establish an itemised price, a measured document needs to
be prepared. When a Builder or BE does this it is called a “Builders Bill”.
The project may be tendered as a design and construction contract. The builder
is required to develop the project from and including the design or budget stage
through to construction.
The builder may be a preferred tenderer or the client a repeat customer who the
builder regularly builds for. Therefore the client will require an itemised price.
When ordering building materials for construction.
When costing variations, additions or deletions to the contract works.
Depending on the situation the BE must possess measurement skills.
Depending on the situation the BE must possess measurement skills.

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1.9.2 Core measurement skills and process:
the QS verses the BE
You may be wondering: “As a BE, do I need to have the same understanding about
measurement that a QS has”.
The answer to this would be: “Why not?”
Regardless of the measurement exercise, there are some general measurement
processes and basic rules which can ensure accuracy if follows. It is vital that the
measurer approaches any measurement exercise in a methodical manner. Following a
set of processes and rules (also referred to as “conventions”) helps to create habits
and process.
Therefore, these notes will outline the conventions used by a QS. The majority of these
conventions are derived from the ASMMBW. Whilst these notes will not be providing
extracts from the ASMMBW, they will present working examples and exercises based
on some general rules and principles.
The BE should attempt to adopt these conventions and develop their skills. Once a
base understanding is developed, the BE can then chose to alter or modify their
measurement method and approach should they so desire.

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Topic 2
Identify and
calculate labour
costs

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Introduction
© Thinkstock (used under license)
Once you are aware of the overall concepts of estimating, this topic will then focus on
identifying and calculating the labour costs for a construction project. Labour costs
include who needs to be on site for particular activities, how many need to be there
and how for long. Once this is known, the rates for labour can be combined with the
physical resources (materials) required for a particular trade.

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2.1 Composition of building costs
The cost estimate for each task in a building project can be broken down into three
main cost components:
1. materials and cartage
2. labour (direct, and/or subcontract)
3. plant
These three cost components must be considered when building up prices, whether
they are net rates for a particular item in a Bill of Quantities, or the pricing of the
whole job.
Once the cost of each task has been determined, then other costs associated with the
job are calculated and added including:
4. prime cost items and monetary allowances, eg. provisional and contingency
sums
5. preliminaries
6. overheads
7. anticipated profits
This approach is in line with estimating practice in a building firm where the sequence
for preparing a tender is:
the estimator applies the net rates (items 1 to 3) and item 4 to the quantities
to arrive at the net estimated total cost for the job;
the estimator prices item 5 (the preliminaries) separately once he has
established the net total cost of the project, and
the management, with advice from the estimator, decides percentages or
monetary amounts to be added to the net cost to cover items 6 (overheads)
and 7 (anticipated profit).
The gross or ‘all in’ amount obtained by the above process is the tender price.
A separate exercise that applies only to the successful tenderer, is the pricing of the
Bill of Quantities for submission to the architect. Unit rates are to be shown against
each item in this bill.
The estimator may need to obtain ‘break downs’ of subcontractor quotes to ensure
that each item is rated. The estimator also adds pro rata amounts to each net rate, to
spread overhead and profit allowances throughout the trades.

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In some cases, the documentation provided does not fully describe the project to be
built. A builder or estimator in compiling the tender may have to make decisions and
subsequently qualify the tender to eliminate any areas of risk or inconsistency. A
common note used by a builder to qualify a tender is: ‘no allowance for any work to
unknown underground services.’ This note removes the possibility of disputes should
the builder damage underground services during excavation or in any other
circumstances. Another common example is: ‘no allowance for excavation in rock’ or
‘all excavation in OTR’ (other than rock). If there hasn’t been a geotechnical survey (or
even if there has been), the existence of rock on some part of the site may not be
known. The inclusion of the clause above goes some way to eliminating possible future
disputes. The definition of ‘rock’ in itself can sometimes lead to disagreements.
Builders can also suggest and include alternative construction methods (and materials)
to those outlined in the design documentation. For example, a builder might be
familiar with a new technique that produces a superior product at a higher or even a
lower price. With consent from the client, he may be able to include this as an
alternative proposal in addition to his tender for the specified design.

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2.2. Types and numbers of appropriate on-site
personnel are identified and the time
required on site is estimated.
2.2.1 Labour
2.2.1.1 Direct labour
This is labour that is employed directly by the builder, as distinct from subcontract
labour. Direct labour is the hardest of all components to estimate, given the many
variables that must be considered. Some of these are:
Availability of personnel, worker experience and skills required.
Language problems.
Repetitive nature of the work.
Double handling of materials.
Location of the job and access.
Waiting at the hardware store or timber yard.
Waiting for and dealing with deliveries.
Working in with other trades.
Working off scaffolds.
Work incorrectly executed because of lack of clarity and understanding of
instructions (supervision).
Communication response times.
Interruptions.
Union requirements.
OH&S requirements (making the work area a safe environment).
Training requirements (on and off the job).
All of these factors can add up to much lost time on site. How much is reasonable will
depend on the view of each builder. An allowance of 5% for lost or unproductive time
per day may seem reasonable. However when supervising or troubleshooting,
employees will spend considerably more than this.
There are also Award and Statutory allowances that must be considered such as:
• Dirty work. • Height money.
• Zone or site. • confined spaces.
• Second hand timber • distance from home.
• Fares. • Meal allowance.

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• Morning tea. • First aid.
• EPT. • Weather conditions.
• Worker’s compensation. • Payroll tax.
• Superannuation. • Severance pay.
• Hazardous materials handling. • Compensa
An estimate of the productive time worked, together with the award wage, allowances,
on-costs and statutory requirements on direct labour, have to be determined to be able
to calculate realistic labour rates. A simple and universal way to do this is to calculate
the on-costs on direct labour applicable and apply this to the standard award rate per
hour from the award. On-costs are a very large component in the cost of construction
and are constantly changing. Example on-cost calculation for direct labour is provided
in the Appendix. Refer to the Appendix example now.
On-cost calculation steps are complex, and need to suit the wage profile and cost
structures for each builder. The examples in the Appendix show typical calculations that
might apply to a small builder and a larger builder, and the variations between each.
The calculations begin with the determination of the approximate number of actual
hours worked by an employee in one year. This figure is then reduced for unproductive
time – time on site due to personal phone calls, toilet breaks, talking to other people
generally, trying to sort out problems, having breaks other than those allowed for, etc.
It also needs to be reduced for morning smoko and an allowance for wet weather. As
can be seen unproductive time is a considerable component of cost for an employee.
Productive hours for a full time employee ignoring overtime are approximately 1500
hours per year. The total labour cost per hour can then be calculated. An allowance for
builders over heads and profit should then be added and a ‘charge out’ rate
calculated.
It is essential that the builder understand how it is compiled and calculate the total
labour cost per hour and the charge out rate for all employees. Once prepared, it can
easily be updated. This should be done for every change in award rates of pay.
Please note that the rates and figures in the Appendix example can change at any
time, especially with changing award requirements. Also, there may be other figures
that will come into the equation. Try to keep abreast of all the relevant information.
Seek advice from accountants within the industry to ensure that all your figures are
correct.

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2.2.1.2 Activity 1
Assume you are a small builder who does not need to allow for payroll tax as below
the relevant threshold. Determine the total labour cost per hour for a CW3 carpenter
under the Building and Construction General On-Site Award. To do this look up the
relevant award at http://www.fwa.gov.au/index.cfm?pagename=awardsfind#B and
find the relevant hourly rate in Clause 19, and input into calculations shown in the
appendix.
Note that payroll tax is a state tax, so the amount varies from state to
state. There is also a threshold, such that if the total payroll value of a
business is below a certain amount ($50,000 per month in NSW), then no
payroll tax is payable.
Remember that is it not normal for a builder to directly employ a tradesman on wages,
although some do. Instead it is more normal to engage the tradesman on quotation or
all in hourly rate. The exception to this is for onsite supervision and set out where a
builder may directly employ on wages.
When the builder decides to employ a subcontract carpenter on an hourly rate to
perform a specific part of the works, then the rate charged by the subcontractor then
will be something like $55.00 to $60.00 per hour, which will include the on-costs, with
an allowance for profit and overhead. So in this case, you are performing the
calculations that the subcontractor would have done to determine the charge-out
rate.
How are these calculations relevant to your proposed future job as a builder? Well, as
the owner of a building business, you will have to be able to calculate all of these costs
for your own business accounts records, to tender for jobs, and also to determine the
costs of employing any staff that you decide to take on.
2.2.1.3 Subcontract labour
Subcontractors may supply labour only, or supply both labour and materials and vary
from one person working on the job on a ‘subcontract hourly rate’ to a large company
who subcontract to the Head Contractor to do a particular section of the work for a predetermined sum of money, such as for lift installation.

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The advantages of subcontracting are:
the builder knows the cost from the onset of the job,
a reduction in administration, and
It reduces time spent by the builders and estimators in pricing a job.
Nonetheless, the subcontractor is still the responsibility of the Head Contractor or
Builder who should ensure that the subcontractor has all statutory insurance cover for
their employees. It is also the builder’s responsibility to ensure that the subcontractor
performs the work satisfactorily.
When obtaining quotations from subcontractors, it is important to ensure that each
receives the same details, plans and specifications, so that fair and accurate
comparisons of quotations can be obtained. Specify insurance requirements would also
be specified along with on-site storage availability and a schedule of when work can be
performed. It may not be in the best interest of the builder to accept the lowest
quotation. Investigate the reliability, capacity and financial ability of the subcontractor
to perform the work. Failure to finish a job could leave a builder with a liquidated
damages bill, or litigation and a bad reputation. Also, it is expensive to change
subcontractors during a project. If a subcontractor is asked to complete work
commenced by another, the cost will be substantially higher than the first estimate, and
depending on the contract conditions, the increase will not be able to be recovered from
the client.
Note: Supervision of direct and subcontract labour is allowed for either in the
preliminaries or in builder’s overheads depending on the job being estimated.

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2.3 Labour hours
Without experience in the building trade, it is sometimes difficult to make an
assessment of the amount of time required for various tasks to be completed, and
hence to be able to price these items. The use of labour and plant constants can help.
These can be found in various cost guides such as
Rawlinsons Australian Construction
Handbook
2.3.1 Labour constants
The definition of labour constant is the average estimated time for a unit of work to be
completed. It is calculated in terms of one average person completing the work under
normal conditions and is expressed in man or person hours.
Plant constant is the same concept but applies to the time taken for an item of plant to
complete a unit of work.
2.3.1.1 Example
Say that it takes you and your friend 4.5 hours to prepare and paint your bedroom
walls with 2 coats of low sheen acrylic paint. The wall area is 33 m
2.
The unit of work is to prepare and paint 2 coats of low sheen acrylic paint on 1 m
2 of
area. To find the labour constant for this unit of work:
It takes 2 people 4.5 hours to complete the 33 m2, so it would take 1 person 9
hours.
Therefore 1 person would be able to do 1 m2 in 9/33 = 0.27 hours.
The labour constant is expressed as 0.27 person hours per m2
It is important to note that the rate calculated above is based on two probably
inexperienced painters, and we don’t know what state the walls were in at the start,
how many detailed areas there are to paint (e.g. around windows, picture rails, etc.). It
is also important to no
te that this rate is based on 33 m2 of wall area. If an entire house
was to be painted and experienced painters were employed, the rate would probably
be less than 0.27 person hours/m
2 due to efficiencies of scale.
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Labour and plant constants are very useful to the estimator because they make
possible, and easy, an estimation of the time and resources to complete a job or task.
Labour and plant constants can be determined from the records of previous jobs. They
are also available in published form in some cost guides as mentioned. Often an
estimator is able to make an evaluation of the time to complete a job from his own
experience in the construction industry, or from familiarity with the figures.
The estimator may make adjustments to the labour and/or plant constants that are
available, to allow for the type of job, site conditions, location, skill of the labour force,
and other factors that may affect the stated value.
2.3.2 Crew size
Labour rates can also help to determine the number of personnel required for a
particular task if there are time constraints on the completion of the task.
Take the following example of laying brickwork.
Say the job involves building a brick wall, 50 metres long and to 1.2 metres high, on a
prepared footing.
The labour constant is 13.0 tradesman hours per 1000 bricks (note that a rough
calculation of bricks per sq. metre is 50), hence 13 tradesman hours per 20 sq. m. =
0.65 tradesman hours per m
2.
The wall has an area of 50 x 1.2 = 60 m
2
Hence it would take 1 bricklayer 0.65 x 60 = 39 hours to build this wall.
If the builder wants the wall built in 3 days (@7.5 hours/day), then he/she will need to
engage 0.65 x 60 / (3 x 7.5) = 1.7 bricklayers. Two bricklayers should be able to
complete the job in 39/2 = 19.5 hours or 2 days and 4.5 hours.

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2.3.3 Published cost guides
Cordell Building Information Services publishes several Cost Guides that can make the
estimator’s job much easier. There are also other publications available such as the
Institute of Quantity Surveyors
The Economist, and Building Estimates Periodicals from
the Building and Construction Council, NSW and from Australian Construction Services.
Cost Guides will vary according to the type of information they provide as well as in
the details of the costing. Some guides will provide comparative costs between the
capital cities, others will provide price indices, which relate prices in previous years to
the present. Statistical information may also be given, such as how the building price
index relates to the consumer price index over the last 20—30 years. Cordell produces
different publications for the Industrial/Commercial sector, the Housing industry and
another for Plumbing, Drainage and Hydraulic areas. You would obtain different
figures for the cost of a job if you were to use different cost guides, but the differences
should not be great.
There are also software products on the market that basically do the same thing as the
cost guides but are obviously much faster, as they will do the calculating for you.
If you use a cost guide, you should always refer to the
Explanatory notes or How to use
this guide
notes to ensure that your final estimate is a good one. For example, the
rates may include allowances for waste. They may also include hire of any plant or
equipment required for the job. You don’t want to be counting these twice.

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2.3.3.1 Examples of labour constants
Labour constants for manual excavation
The following tables provide typical values of labour constants for manual excavation.
Manual trench excavation

(a) Light soil Average 900 deep not exceeding
1,200 deep; throw out and form
bottom
1.67 hrs/m3 in-situ (solid)
(b) Ordinary soil ditto 2.33 hrs/m3 in-situ
(c) Stiff soil ditto 2.67 hrs/m3 in-situ
(d) Clay (dry) ditto 3.67 hrs/m3 in-situ
(e) Shale and part ditto 5.67 hrs/m3 in-situ
Add for back filling and spreading surplus spoil adjacent to
trench.
0.67 hrs/m3 bulked (loose)
Add for back filling and spreading surplus spoil on site with an
average wheel of 15 metres.
1.00 hrs/m3 bulked (loose)
Add for trimming to trenches that have been machine
excavated.
0.2 hrs/m3 in-situ

Manual pier hole excavation

(a) Ordinary soil Maximum size, say 600 × 600 × 900
deep; throw out and form bottom
4.00 hrs/m3 in-situ
(d) Clay ditto 8.66 hrs/m3 in-situ
(c) Shale and part ditto 8.66 hrs/m3 in-situ
Add for back filling and spreading surplus spoil adjacent to hole. 0.67 hrs/m3 bulked
Add for back filling and spreading surplus spoil on site with an
average wheel of 15 metres.
1.00 hrs/m3 bulked

Manual over site excavation

(a) Ordinary soil Average 450 deep not less than 200 and
exceeding 900 in depth
1.67 hrs/m3 in-situ
(d) Clay ditto 2.67 hrs/m3 in-situ
Add for short wheel, average 15 metres spread on site. 1.00 hrs/m3 bulked

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Using an ordinary barrow, with an average wheel of 15m, a person can wheel and
deposit only 6 to 8m
3 of ordinary earth in 8 hours. Assume 12 barrow loads equals
0.76m
3 (or 15 barrows to 1m3).
Other cost factors
Other factors influencing the cost of excavation may include:
planking and strutting
shoring
site access and limitations
provision of ‘temporary’ access to site
de-watering of excavations
protection barriers
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2.3.4 Labour constants for pre-mixed concrete
The labour constants below include setting up, placing in position, levelling, screeding
and cleaning up plant but not finishing. Finishing has its own constants further down
the table.
These constants are to be used as a guide only and must not be used for actual job
estimating for a real business. You must always build up your own constants and take
into consideration all the possible factors that come with each individual site.
Some of the variables include:

skill level
amount of labour available
access to the site
access around the site
condition of plant
class of finish required
time restrictions.



experience
location of the site
access to the site
plant available
weather conditions
quantity of material to be placed

Labour costs involved in the operation of equipment usually depend on the type of
equipment. It is normal for the cost of the operator to be included in the hire charge
for some heavy equipment. This is not the case for some special plant, however, and
each item should be carefully looked at in this regard to establish if the cost of the
operator is included in the hire charge.
Un-reinforced concrete

Details Unit Tradesman Labourer
Strip footings, pads and piers
Direct from truck m3 0.44 hours
20 m average wheel m3 1.20 hours
Pumped m3 0.20 hours
Blinding layers
50 mm thick direct from truck m2 0.20 hours
75 mm thick direct from truck m2 0.22 hours
50 mm thick 15 m average
wheel
m2 0.40 hours
75 mm thick 15 m average
wheel
m2 0.44 hours

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Reinforced concrete

Details Unit Tradesman Labourer
Strip footings, pads and piers
Direct from truck m3 0.55 hours
20m average wheel m3 1.40 hours
Pumped m3 0.25 hours
Slabs on ground and paving
Direct from truck m3 0.75 hours
20m average wheel m3 1.75 hours
Pumped m3 0.35 hours
Suspended slabs and attached
beams
Direct from truck m3 1.10 hours
Barrowed from either truck or
hoist
m3 1.85 hours
Pumped m3 0.40 hours
Crane m3 1.30 hours
Add extra for:
Grading to falls and cross-falls m2 0.05 hours
Walls
By hoist and barrow m3 2.50 hours
Pumped m3 1.75 hours
Crane m3 1.50 hours
Columns and Isolated Beams
By hoist and barrow m3 2.50 hours
Pumped m3 1.90 hours
Crane m3 1.50 hours
Stairs and Landings –
Suspended
Finished
Hand – narrow widths – stairs,
treads, copings etc.
Using a steel trowel m 0.04 hours
Using a wooden float m 0.03 hours
Large areas using a steel trowel m2 0.24 hours
Large areas using a wooden
float
m2 0.19 hours
Trowelling machine m2 0.06 hours
Using a bullfloat m2 0.05 hours
Using a broom m2 0.03 hours
Edging m2 0.04 hours

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Site mixed concrete from separate materials

Reinforced concrete Unit Tradesman Labourer
Strip footings, pads and piers
Mixed, wheeled and screeded m3 2.67 hours
Slabs on ground, approx. 100
thick
Mixed, wheeled and screeded m3 4.67 hours
Paving areas
Mixed, wheeled and screeded m3 5.33 hours

2.3.5 Labour constants for formwork
Labour constants can vary depending on:

experience of crew site limitations
size of crew location
type of work supervision
hours worked

Because of all the possible variables, builders and estimators should develop their own
rates when costing jobs.
The minimum stripping times for formwork are found in the formwork code (AS3610.1
Formwork for concrete Part 1 Specifications, Clause 4.4). The builder or estimator
should consider the notes that follow the table carefully.
The time for stripping can range from 9 hours to 24 days. Note the requirements for
back propping.
The labour constants listed below are based on class 3 formwork as set out in AS3610
and include for erection, release agents applied and for stripping.

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Details Unit Trade Hours Labourer
hours
Face of footings
Wholly in the ground m2 0.60 0.30
Partially above the ground 0.70 0.30
Soffit of slab
Horizontal 0.85 0.30
Slab > 200 thick add 2.5% to
above
Slabs > 3m high add 2% to above
Sloping < 15 degrees 0.90 0.30
Walls
Face of walls 1.00 0.40
Columns (square and
rectangular)
Isolated 1.50 0.40
Attached m2 1.20 0.40
Add 5% to the above for shapes
other
than square.
Columns (circular)
< 500mm diameter m2 0.80 0.35
> 500mm diameter 1.10 0.40
Beams and lintels
< 750mm deep m2 1.30 0.40
> 750mm deep 1.50 0.50
Stairs
Soffits (including mid landings) m2 1.65 0.50

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Details Unit Trade Hours Labourer
hours
Edges
Of slabs m2 1.00 0.40
Of slabs < 250mm wide m 0.25 0.10
Of walls m2 1.20 0.40
Of walls < 250 mm wide m2 0.35 0.20
Steps
In slabs m2 0.80 0.20
In slabs < 250mm wide m 0.20 0.10
In walls m2 1.00 0.40
In walls < 250mm wide m 0.30 0.10
Penetrations (to walls and slabs)
Square or rectangular
< 0.25 m2 No. 0.50 0.20
> 0.25 < 0.50 m2 No. 0.55 0.25
> 0.50 < 0.75 m2 No. 0.60 0.30
> 0.75 < 1.00 m2 No. 0.65 0.35
Circular
< 100mm diameter No. 0.20 0.10
> 100mm < 200mm diameter No. 0.25 0.10
> 200mm < 300mm diameter No. 0.30 0.15
> 300mm < 400mm diameter No. 0.40 0.15
Recesses
Up to 2.0m square x 0.20m deep No 1.60 0.50
Formation (grooves and rebates)
< 50mm in either dimension m 0.15 0.05
> 50mm in either dimension m 0.22 0.08

Labour constants for other classes of formwork can be obtained by multiplying the
labour constants given for class 3 formwork by the following factors:

Class 1 – 1.50 Class 2 – 1.20
Class 3 – 1.00 Class 4 – 0.90
Class 5 – 0.75

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For permanent formwork the given labour constants should be reduced to 30% of
what has been nominated.
2.3.6 Labour constants for reinforcement
The following labour constants are to be used as a guide for activities only. The builder
or estimator should always determine output rates for each job. Each job will vary
because of site conditions, weather conditions, delivery and storage position, labour
experience, clarity of documentation, complexity of the job, experience of supervision
and experience of the engineer. Tying in position curved, bent, hooked, cogged and
joggled work will always take longer to perform than straight work. Therefore
depending on the job at hand, labour output rates should always be checked to ensure
accuracy with each project.
All the following rates allow for tying in position of straight and bent steel and placing
in tie wire, spacers, chairs, discs and the like. They also cover cleaning out of forms.

Type Position Unit Output
Bars up to 10 mm dia. Footings tonne 20 hrs per tonne
Bars 12 mm to 16 mm Footings tonne 16 hrs per tonne
Bars 20 mm to 36 mm Footings tonne 10 hrs per tonne
Bars up to 10 mm dia. Slabs tonne 16 hrs per tonne
Bars 12 mm to 16 mm Slabs tonne 14 hrs per tonne
Bars 20 mm to 36 mm Slabs tonne 10 hrs per tonne
Bars 12 mm to 16 mm Columns and
beams
tonne 17 hrs per tonne
Bars 20 mm to 36 mm Columns and
beams
tonne 13 hrs per tonne
Bars 12 mm to 16 mm Walls tonne 18 hrs per tonne
Bars 20 mm to 36 mm Walls tonne 14 hrs per tonne
Bars 12 mm to 16 mm Stairs and
landings
tonne 16 hrs per tonne
Bars 20 mm to 36 mm Stairs and
landings
tonne 12 hrs per tonne
Fabric (wire up to 8 mm dia.) Slabs m2 0.10 hrs per m2
Fabric (wire up to 8 mm dia.) Walls m2 0.15 hrs per m2
Fabric (wire up to 8 mm dia.) Stairs and
landings
m2 0.18 hrs per m2
Fabric with wire over 9 mm m2 Add 10% to above
Trench mesh up to 3 bar Strip footings Lineal
metre
0.05 hrs per m

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Trench mesh 4 and 5 bar Strip footings Lineal
metre
0.08 hrs per m
Ligatures, fitments etc. Footings/beams tonne 35hr s per tonne

For hoisting reinforcement on the job site to above or below ground floor level, add
2.5% to labour times above.
An allowance for working above or below ground level should be made and added to
your output rates and increased the further from ground level the work is performed.
2.3.7 Labour constants for brickwork

Details Unit Trade Labourer
Footings
Mass brickwork laid in prepared
excavations 3:1 cement mortar.
Each course fully grouted.
20 m2
1000 bricks
0.70 hr.m2 0.32 hr/m2
Walls
From top of footings to ground floor
level built in stretcher bond:
110 thick solid walls 20 m2
1000 bricks
0.75 hr/m2 0.30 hr/m2
230 thick solid walls including ties 10 m2
1000 bricks
1.55 hr/m2 0.30 hr/m2
110 thick skin of cavity wall
including forming cavity
20 m2
1000 bricks
0.85 hr/m2 0.35 hr/m2
200 × 200 × 400 grey concrete
hollow blocks
40 m2
464 blocks
0.60 hr/m2 0.20 hr/m2
Above ground floor level to finish
built in stretcher bond
110 thick solid walls 20 m2
1000 bricks
0.90 hr/m2 0.30 hr/m2
230 thick solid walls including ties 10 m2
1000 bricks
1.85 hr/m2 0.65 hr/m2

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110 thick skin cavity wall
including forming cavity
20 m2
1000 bricks
1.00 hr/m2 0.35 hr/m2
Walls: Allow additional labour rate
to stretcher bonds above for English
or Flemish bonds
0.25 hr/m2
200 × 200 × 400 grey concrete
hollow blocks
40 m2
464 blocks
0.70 hr/m2 0.30 hr/m2
Hoisting
Hoisting bricks up to and above
1st floor
1000 bricks 2.00 hr
Partition walls
Brick on edge walls laid in
stretcher bond
28 m2
1000 bricks
0.60 hr/m2 0.30 hr/m2
Isolated piers
230 × 230 metres 0.50 hr/m 0.30 hr/m
350 × 350 metres 0.80 hr/m 0.50 hr/m
Attached piers
110 thick m2 0.95 hr/m2 0.30 hr/m2
230 thick m2 1.90 hr/m2 0.65 hr/m2
Projections
Corbelling two courses metres 0.30 hr/m2 0.10 hr/m2
Sills
Brick on edge laid and joined in
cement mortar. Usually cut as bats.
metre 0.60 hr/m 0.2 hr/m
Steps
Brick on flat laid and jointed in
cement mortar. One row high.
metre 0.35 hr/m 0.10 hr/m
Brick on edge laid and jointed in
cement mortar. One row high.
metre 0.50 hr/m 0.15 hr/m
Paving

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Brick paving to paths bedded on
sand base. Compacted, joints filled
and surface cleaned off on
completion.
m2 0.60 hr/m2 0.20 hr/m2
Copings and capping
Brick on edge. metre 0.50 hr/m 0.20 hr/m
Lintels
Precast lintels and steel lintels set
over openings up to 3.6 m long.
metre 0.10 hr/m
Arches
Rough: Single ring metres 0.9 hr/m 0.25 hr/m
Rough: Double ring metres 1.5 hr/m 0.40 hr/m
Gauged: Single ring metres 1.8 hr/m 0.33 hr/m
Gauged: Double ring metres 3.4 hr/m 0.70 hr/m
Movement joints
Control and expansion joints metres 0.10 hr/m
Wall ties
Cavity wall ties to 280 mm walls m2 0.2 hr/m2
Concrete filling
Concrete to bottom of cavity wall
splayed to the outer skin
m3 3.0 hr/m3
Finish top of concrete to splay m2 1.5 hr/m2
Hollow blocks in walls up to 200 mm
thick
m2
Columns up to 300 mm in diameter m3
Bed and perp joints
Flush joints m2 nil
Struck, weather struck or ironed
(concave) joints
m2 0.25 hr/m2
Raked or Vee joints m2 0.33 hr/m2

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Flush pointed m2 1.0 hr/m2 0.3 hr/m2
Tuck pointed m2 2.4 hr/m2 0.3 hr/m2
DPC and flashing
Horizontal DPC up to 250 mm wide m 0.05 hr/m
Flashing to heads and sills up to 250
mm wide
m 0.10 hr/m
Ant caps
Isolated piers ea. 0.03 hr
Attached piers with soldered joints ea. 0.12 hr
Continuous with soldered joints metres 0.10 hr/m
Bagging
Bagging to walls m2 0.15 hr/m2 0.15 hr/m2
Cleaning down on completion
Face work cleaned down with mild
acid high pressure wash
Composition mortar m2 0.08 hr/m2
Cement mortar m2 0.14 hr/m2
Wall straps
Tie down straps bedded low down
into walls and fixed to top plates
ea. 0.1 hr
Other labour constants

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2.3.8 Labour constants for woodwork

Details Unit Average
trade
hrs
Nails required
No. Size Kg.
Floor framing
Ground floor – Hardwood
Bearers @ 1800 cts 100 x 75 100 m 13.4 44 75 x
3.75
0.3
Joists @ 450 cts 110 x 50 100 m 8.6 222 75 x
3.75
1.5
@ 600 cts 100 x 50 100 m 8.6 222 75 x
3.75
1.5
Upper floor – Softwood (add 5% for
hwd)
Deep floor joists include trimming
175 to 300 deep x 50 thick 100 m 15.2 222 75 x
3.75
1.5
Solid strutting to suit above 100 m 16.6 1200 75 x
3.75
8.27
Herringbone strutting
38 x 38, 50 x 50 measured nett O/A
joists
100 m 20.2 800 65 x 2.8 2.66
Wall framing – Softwood (add 5%
for hwd)
Plates – housed
75 x 50, 100 x 50, 75 x 75 100 m 18.6 100 100 x
3.75
1.0
thicknesses not housed 100 75 x
3.75
75 x 50, 100 x 50, 75 x 75 100 m 17.0 As
above
0.68

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Details Unit Average
trade
hrs
Nails required
No. Size Kg.
Studs @ 450 or 600 100 m 12.0 200 100 x
3.75
2.0
75 x 50, 100 x 38, 100 x 50 200 75 x
3.75
1.44
Noggings measured nett
O/A Frame
75 x 5, 100 x 38, 100 x 50 100 m 13.2 800 75 x
3.75
5.5
Door heads and window sills
75 x 50, 100 x 50 100 m 12.0 100 75 x
3.75
0.68
Window heads
150 – 300 x 50 x 75 100 m 14.6 100 75 x
3.75
0.68
Wall bracing
timber 100 m 6.9 200 75 x
3.15
1.00
metal 100 m 4.6 200 50 x 2.8 0.5
Ceiling and roof framing using
softwood.
(add 5% if hwd used)
Wall plates – bedded in cement to
masonry walls – assist bricklayer
100 x 38, 100 x 50, 100 x 75 100 m 9.75 44 75 x 3.75 0.3
Ceiling joists – fixed to timber wall
plates
100 x 38, 100 x 50, @ 450 or 600 cts 100 m 7.5 100 75 x 3.75 0.68
Trimmers – either nailed between
ceiling joists or fixed to ceiling joist
and wall plate.

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100 x 38, 100 x 50, @ 450 or 600 cts 100 m 9.2 800 75 x 3.75 5.5
Hangers – fixed to ceiling joists
150 x 38, 175 x 38, 200 x 50 100 m 12.0 400 75 x 3.75 2.75
225 x 50, 250 x 8 100 m 15.0 400 75 x 3.75 2.75
Rafters – gable hip or hip and valley
100 x 38, 100 x 50 @ 450 or 600 cts 100 m 14.3 100 75 x 3.75 0.68
Rafters – Skillion or flat roof
100 – 175 x 50 @ 450, 600 or 900 cts 100 m 9.7 100 75 x 3.75 0.68
200 – 300 x 50 @ 450, 600 or 900 cts 100 m 14.7 100 75 x 3.75 0.68
Purlins – ave. spacing 2100
50 x 75, 150 x 75 100 m 22.0 400 75 x 3.75 2.75
Struts plumb and vertical struts
75 x 75, 100 x 75 100 m 34.0 300 75 x 3.75 2.00

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Details Unit Average
trade
hrs
Nails required
No. Size Kg.
Hips, ridges & valleys measured nett
150 x 25, 150 x 31 100 m 18.0 44 75 ×
3.75
0.3
Strutting beams
200 – 300 x 100 100 m 15.0 44 75 ×
3.75
0.3
Pre-fabricated standard roof trusses
gang nail
Erection only of softwood trusses
including fixing of bracing and metal
fastened. But does not include crane
up to 6,000 ea 1.0
up to 9,000 ea 1.2
up to 12,000 ea 1.5
Fascia and barge boards fixed to
timber framing
150 – 250 x 25 100 m 25.0 300 75 x
3.15
1.5
150 – 250 x 38 300 65 x
3.15
1.25
Eaves framing – fixed at wall at fascia
to support eaves
75 x 38 100 m 24.0 500 75 x
3.75
3.44
100 x 50 100 m 27.0 500 75 x
3.75
3.44
Soffit linings – fixed to above 4.5 mm
cellulose fibre cement including joint
strips
100
m
2
23.50 400 75 x
3.75
0.3

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Eaves quad – 25 x 25 quad or similar 100 m 6.0 200 50 x 2.5 0.3
Flooring
T and G strip flooring (cut down and
fixed to timber framing)
100 mm Cypress/Radiata Pine 100
m
2
26.0 5250 50 x 2.8 13.0
100 mm hardwood as last. 100
m
2
33.0 5250 50 x 2.8 13.0
T and G sheet flooring
17 mm plywood 100
m
2
18.0 1805 65 × 2.8 6.0
20 mm particle board 100
m
2
18.0 1805 65 × 2.8 6.0
Wet Areas
15 mm compressed FC 100
m
2
28

2.3.9 Labour constants for roofing
Tiled roof

Item Details Unit Hours
Roof tiles Concrete or terracotta tiles fixed with gal.
clouts to and including battens in the
following situations
eaves height up to 3.0 m, ≤22.5º roof pitch
eaves height up to 3.0 m, ≥22.5º ≤30ºroof
pitch
eaves height up to 3.0 m, ≥30º ≤35ºroof
pitch
eaves height up to 3.0 m, ≥35º ≤40ºroof
pitch
m2
m2
m2
m2
m2
m2
0.25
0.30
0.36
0.40
0.45
0.50

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eaves height up to 3.0 m, ≥40º ≤45ºroof
pitch
eaves height up to 3.0 m, ≥45º roof pitch
for eaves up to 6 m add 2% to the above
for eaves up to 9 m add 5% to the above
Sarking Place sarking over rafters and under
battens
m2 0.03
Cutting Cutting tiles to hips and valleys
Cutting closed mitres
m m 0.08
1.50
Capping Bed and point ridge and hips
Bed and point barge capping
m m 0.28
0.20
Verge Form, bed and point including F.C. strip m 0.25

Sheet roof

Details Unit Average
trade hours
Down pipes
100 x 75 and 100 x 50 galvanised or zincalume steel;
measure, set out and fix into position including astragals and
joints to straight lengths – excluding offsets, shoes and
nozzles
m 0.25
offsets, shoes and nozzles to cut form and solder or pop rivet
and seal each joint
ea 0.25
connect down pipes to storm water line, cement joint or
adapter
ea 0.15
Gutters
eaves gutters – 113 or 125 galvanised or zincalume steel
quadrant eaves gutters; allow to assemble and fix, including
gutter brackets at 900 ctc and joints to straight lengths,
excluding internal and external mitres and stop ends
m 0.25
mitre and stop ends to cut, form and solder or pop rivet and
seal each joint
ea 0.30

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valley; gutters galvanised or zincalume steel 450 wide,
fabricate and fix
m 0.30
Metal roofing (sheet steel metal deck roofing)
fixed with concealed metal clips to timber supports m2 0.12
fixing to steel; add extra labour m2 0.05
turn up: add extra labour to turn pans up as required m 0.03
turn down; add extra labour to turn pans down as required m 0.02
end stops; allow to fit end stops to sheeting ea 0.006
fascia, barge or ridge capping; not dressed down into pans or
corrugations
m 0.08
fascia, barge or ridge capping; dressed down into pans or
corrugations
m 0.24
Metal roofing (sheet steel roofing)
fixed with face piecing screws into timber battens m2 0.02
fixing to steel; add extra labour m2 0.04
sarking with insulation attached (building blanket) m2 0.03

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Topic 3
Physical resource
requirements

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3.1 The measurement process
3.1.1 Billing units
The materials, components and tasks required for construction need to be quantified in
a uniform manner that is understood and accepted across the industry.
A measured quantity is expressed by a “billing unit” or “unit of measurement”. The
following table shows the accepted billing units along with some examples of the
construction materials they represent. The correct use of upper or lower case is also
important, for example, m not M for measurement in metres.

Billing Unit Name Examples
m metre skirting, cornice, guttering, flashing
m2 square metres carpet, ceiling lining, brickwork, roof tiling
m3 cubic metres concrete, excavation
No number fixtures, trees
t tonne reinforcing bar, structural steelwork
Item Generally for materials or tasks that cannot be
quantified by another billing unit, e.g. Provisional
Sums, PC Items or “allow for shop drawings”
Note Note to the reader

Table 1 Common billing units
It is important to note that whilst the standard billing units in the Table above are
applicable for
measurement purposes, there may be differences when some materials
are actually
ordered from the supplier. For example, brickwork is noted as being
measured in m
2, whilst bricks are purchased from the supplier by the thousand.
Another example is carpet which is measured in m
2 and ordered by the broadloom
metre.
This does not cause any particular problem as a conversion factor can be used, for
example:
There are 50 standard bricks per square meter of brickwork.
A roll of carpet is 3.66 meters in width so there are 3.66 square meters of
carpet per broadloom meter.

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Why measure a quantity with a different billing unit to the way it is ordered and
supplied?
When a tenderer (such as a builder or subcontractor) comes to price the measured
building quantities they must allow for more than just the material in their price. For
example, in a brick wall item, the total cost for the works would include the supply price
of the bricks, the labour to lay the bricks, the mortar mix, the labourer to mix the mortar,
the costs of running the cement mixer etc.
Therefore, someone pricing a brick wall item of work will “build-up” a rate based on all
of the contributing costs and convert it back to a square meter basis.
Alternatively, the estimator may price a trade calculating separate costs for materials,
labour and plant and not use an “all in” rate. In this case the estimator may use the unit
the materials are purchased in.
3.1.2 Taking off
“Taking-off” is the process of physically determining a dimension from a drawing. This
is done by either using a scale rule and measuring the dimension at the appropriate
scale or reading the dimension as noted on the drawing, or with some computer
estimating applications selecting and measuring the various objects on an embedded
drawing.
Dimensions on an architectural plan are given in millimetres (mm). When you take
dimensions off the plan you will need to convert them into metres (m). This is done by
dividing the dimension by 1000.
For example:

Plan dimension (mm) Dimension in (metres) “Take-off” figure (m)
7000 7.000 7.00
6950 6.950 6.95
6955 6.955 6.96
6954 6.954 6.95
6995 6.995 7.00

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3.1.3 Measurement paper and setting out
Once you have taken off quantities from a drawing you need to record them and
calculate totals. Your take-offs will eventually form part of document containing other
measured items of work, and can be on paper or in a computer file. We will discuss the
different types of documents and their purposes later in this unit.
Figure 1 below is an example of the measurement paper used with paper based
systems, when taking off and recording quantities. It is often referred to as “take-off”,
“measurement” or “P10” paper and is in A4 portrait form.

ITEM PARTICULARS UNIT QUANTITY RATE $ c
TRADE: ________________________ PAGE: ____TO
COLLECTION/SUMMARY

Figure 1 Standard quantity measurement format – P10 Style
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Each column of the measurement paper has a specific purpose. The following Figure
indicates the name of each column and the following table indicates their purpose.

ITE
M
PARTICULARS UNIT QUANTITY RATE $ ¢
Item reference Factors Dimensions Extensions Location Sidecasts Billing unit Total measured
quantity
Price per unit Total $ Total ¢

Figure 2 P10 style column names

Column/ Section Explanation
Item Each measured item is given an alphabetical reference A, B, C, D, etc. The
first item on each page starts with A.
Particulars Factors: Some items may occur several times during taking off and in order
to avoid re-writing the items again appropriate measurements may be
multiplied. The figure is written in the ‘factor’ column of a measurement
paper and separated from the measurement by a diagonal stroke.
Dimensions: Dimensions (take-offs) from the drawings are transferred to the
measurement papers. The unit of measurement in this column is expressed
in metres and in two decimal places. The order of stating dimensions shall be
consistent and are generally in the sequence of length, width and height.
Extensions: After take-offs are entered into the dimensions column, the
dimensions are the extended (multiplied) and totalled to arrive at the final
quantities for a particular item. In this column figures are still in two decimal
places.
Location: This column is used to identify the location of taking off from the
drawings. This usually is noted as room numbers, door numbers, drawing
gridlines etc. anything that helps the measurer note the location of a take
off.
Sidecasts: Sidecasts are waste calculations that are involved in the
determination of the dimensions and any related explanatory comments
should be written clearly in this column. These calculations form a backup to
the take-offs in the dimension column. They are very useful to the measurer
when checking quantities.

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Column/ Section Explanation
Unit The ‘Billing unit’: m, m2, m3, No., t, Item and Note.
Quantity This is the total final quantity for the measured item of work, rounded to the
next whole number except for:
t (tons). Tons is billed to 2 decimal places
measure items of work or notes where Item or Note are used
Rate The dollar price for the item of work per unit of measure. There are 2 types
of rates:
1. Net rate: a rate which includes material, labour (including on-costs)
and builder’s plant, but excluding the builders’ overheads and profit.
2. Unit rate: Net rate from above + builders overheads, profit and
attendance
$ Total of the quantity column x rate column

Table 2 P10 style column explanation
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3.2 Describing measured work
The ‘particulars’ column/section on the measurement paper has another function to
those listed in the table above. The particulars or details of an item are written in this
column, along with trade headings, materials sub-headings etc. An example is shown
for concrete items in Figure 3 below. We will look at describing measured work in
further detail in the next section entitled ‘Compiling and formatting measured items’.

ITEM PARTICULARS UNIT QUANTITY RATE $ ¢
A B C CONCRETE
20MPa reinforced
concrete edge beam
m3 15
25 MPa reinforced concrete
footing
m3 32
Class 4 formwork to
soffit of suspended slab
m2 22

Figure 1 Billing descriptions
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3.3 Basic measurement techniques
There are five different ways of measuring quantities from drawings the following
examples are not based on any specific set of drawings. They are provided to
demonstrate the set-out and format of take-offs. Note that all take off dimensions and
extensions are written to 2 decimal places (except when using No., as this is simply
counted).
It is important to note at this point that the Quantity Surveyor will measure quantities
with
NO ALLOWANCE FOR WASTE. Quantities are measured as final finished quantities
– fixed in position. Waste can be allowed for in the pricing. Also note, therefore, that
these are not order quantities. We will discuss the measurement of quantities that
include waste in the section “The Builders Bill”. Remember, the aim of this section is to
gain an understanding of the fundamental process of accurate measurement. Once this
is done, modifications and short-cuts can be developed to suit the purpose of the
measured document.
3.3.1 Linear Take off – In and out vs centreline
This is usually measuring the length or perimeter from the drawing such as skirting,
pipework, wall studs, etc. the unit of measurement will be in metres. Horizontal lines
are used after every measurement in the dimension column to signify linear take off.
Deduction of measurement is bracketed to indicate omission during extensions.
An example is shown in Figure 4.
Often the most accurate and quickest method to measure linear items that have
substantial width, such as brickwork, footings and beams is to use the centreline
measurement method. This involves measuring the length of the centreline of the wall,
footing or beam being measured. This may initially sound difficult however you simply
add all external dimensions and subtract the ‘net corner number’ times the items width.
The ‘net corner number’ is the number of external corners less the number of internal
corners. An example is provided in the Activity answers that follow.
The alternate to the centreline measurement method is to use the in and out method
shown in Figure 9 following. The calculations are more detailed and time consuming and
so this method is not recommended.

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3.3.2 Area Take Off
This is usually the measurement of surface areas such as wall painting, formwork,
plasterboard lining, etc and the unit of measurement is square metres. Surface area is
obtained by multiplying length with width and as such measurements are billed in the
sequence of length and width accordingly. Therefore horizontal lines are used after
every second measurement in the dimension column to signify area take off. The
location of a horizontal line is important in this respect to identify area measure.
Deductions are also bracketed to indicate omission during extension.

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An example is shown in Figure 5.
Figure 5
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3.3.3 Inclined area Take off
There is a simple method to calculate the inclined area of a roof or similar
item. Simply calculate the plan area and divide this by cos of the roof pitch
in degrees. So for example if the plan area of a roof including eaves is
125m2 and the roof pitch is 35 degrees, then the inclined area of the roof
is
= 125m2 / Cos 35 = 152.6m2
Practice this to make sure you get this answer on your calculator as well.
3.3.4 Volume Take Off
The unit of measurement is cubic metres, that is, length multiplied by
width and depth or height such as concrete, excavation, etc. Horizontal
lines are used for every third measurement as the volume is derived from
multiplying length, width and depth or height. The first measurement
represents length whilst the second one is width and the third one is depth
or height. The location of a horizontal line is important in this respect to
clarify volume measure. Deductions are also bracketed to indicate
omission during extension.
An example is shown in Figure 6.

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3.3.5 Number Take Off
The unit of measurement is by number (abbreviated to No.), and this involves counting
of items shown on the drawings such as doors, windows, door frames, etc. The figures
in the dimension column are in whole numbers which represent the total quantities
and no decimal places are allowed. Horizontal lines are also used for each
measurement to signify number take off.
Deductions may also be bracketed to indicate omissions during extension. An example
is shown in Figure 7.

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3.3.6 Weight Take Off
The unit of measurement is tonne (abbreviated to t), and this involves the
measurement of total length and converted into weight such as reinforcement bars,
structural steels, etc. The measurement in the dimension column is in metres and
horizontal lines are also used to signify linear take off.
Deductions may also be bracketed in the same manner as before described.
In the extension column the length of reinforcement is totaled and multiplied by a
weight factor appropriate to the diameter of bar reinforcement or size of structural
steel to convert total length into kilogram. The total kilogram will finally be converted
into tonne by dividing by 1000 (as there are 1000kg per tonne). It is then rounded and
billed to 2 decimal places.
An example is shown in Figure 8.

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3.4 Finalising the measurements
3.4.1 Documentaion of measured items
Determine the purpose of the document
There are many different uses for a document containing measured items of work. The
common goal for all documents is to enable, for whatever reason, the costing and
eventual ordering of building work. The following table contains the different types of
measurement documents and their use.

Document Type Purpose
Bill of Quantities: can be measured in accordance
with the ASMMBW or an abbreviated method of
measurement. No allowance for waste is made in
the quantities (all items are measured net fixed
in position).
Produced by a Quantity Surveyor and used for
tendering purposes. Each party tendering on a
project prices the same items of work (creates a
level playing field). When pricing, the builder will
allow for waste, overheads and profit.
Builders Bill: Not measured in accordance with
the ASMMBW. Measured using ordering and
trade quantities, which include waste
allowances. Will also include subcontractor
quotations.
Produced by a Builder for the purposes of
tendering when no BOQ is provided by the client.
Often a Builder will still produce a Builders bill
even though a formal bill of quantities has been
produced for a proposed project. This will be
used for checking subcontractor tender
quotations, as a check of the QS’s BOQ, ordering
and cost control (post-contract) purposes.
Detailed Estimate and/or Pre-Tender Estimate:
quantities measured with a reasonable degree of
accuracy. Smaller items of work may be grouped
and priced with larger significant cost items. For
example, a reinforced concrete slab on ground
would be measured and priced “all- up” in m
2
including concrete (slab & thickenings),
reinforcement, membrane, sand blinding and
finish.
To arrive at an anticipated cost for the proposed
works prior to tendering. Also useful for checking
that the design development prior to tender has
progressed within the original budget.
Budget Estimate, Cost Plan, Feasibility Study etc.:
generally compiled using “all-in” items of work.
The major building components/elements are
measured.
To set and monitor the project budget. Enables
design and specification to be developed with
cost in mind.

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Contract Administration: Variations and progress
claims.
During the construction of the project,
measurement may be required for alterations to
the contract works (variations) and for costing
purposes such as progress claim assessments.
Procurement Documents: Purchase Orders and
Request for Tender for the supply of plant,
equipment and materials.
Before, during and after the estimation process a
builder will use a range of procurement
documents to obtain quotes, order materials and
pant for delivery to site.

3.4.2 Suppliers of plant,materials and consumable items
The quality of your construction project not only depends on the workmanship of the
trades and organisational employees such as labourers and supervisors, but also on
the quality of the plant and materials.
Finding a supplier who takes an interest in your quality management and assurance is
an important aspect of a successful building business, without their commitment to
your quality management principles, it will more often than not , lead to extra work in
checking of materials when they arrive on site. Poor material quality costs money,
tradesman quality relies largely on using quality plant and materials, but also increases
productivity on the installation of those materials.
Construction physical resources are generally broken into three broad categories,
plant and equipment, construction materials and consumable items. Consumable
items are those items that are used to assist in the installation of the actual building
materials used to complete the structure.
Sourcing suppliers
It’s useful to develop a process or policy for your building business to select the range
of suppliers you will need to construct your projects. Here are some tips:
Make phone contact with new suppliers – often that first impression on the
phone will give you an indication of their customer service and attitudes
Visit their premises and watch how they operate, do their employees care
about the materials they are handling, are their materials undercover and
stored correctly
Ask other builders or tradesman for recommendations or check with them on
those you are considering

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Shortlist the suppliers based on your initial research and then make contact
with a sales representative to discuss trading terms such as account payment
periods, discounts and return policy
Remember to find a number of suppliers for your consumable and other
materials because you will need options if your main supplier can’t get what
you need.
Negotiating prices and ordering
The supply of your consumable items such as fixings, hand tools and smaller one off
items will generally be based on the supplier’s ticket price, less a discount for account
customers or other negotiated terms of trade. These items represent a reasonably
small day to day expenditure and do not warrant the time and energy trying to get
better prices by continually shopping around. It is suggested though, that you vary
your purchases of consumables across different suppliers so you can form an idea of
what the range in pricing is between suppliers.
Your construction plant and materials are best priced by sending out a ‘request to
quote’ or other pre purchase document. This document could be a step before a
purchase order is sent to the supplier or may even be part of the purchase order
document. It is always advisable to get more than one quote for your materials and
ensure you include delivery costs and any offloading requirements.
Many building companies will often put out ‘request for tender’ of plant and
equipment and materials for large quantities, usually derived from the bill of
quantities and then be used to determine the final estimates for the project.
Alternatively the materials can be supplied by the subcontractor as a ‘supply and
install’ tender or quote.
Communicating with your supppliers
As is the case with all construction relationships, the art of good communication will
always increase the opportunity for your project to run smoothly and to budget.
Another way to look at this is, good communication means a good profit!
Being able to relay information either verbally or in writing is an essential skill that that
builders must possess, this will include developing processes that support your
communication. As with most things in business, putting things in writing greatly
reduces the risks of mistakes being made in the pricing, ordering and delivery of plant
and materials. The use of technology also is an essential part of business practices in
today’s building environment and its use not only increases productivity but can also
assist in maintain open and transparent relationships with suppliers.

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3.5 Measurement working example
Based on the drawing in Figure 9 of a floor plan and the following notes bill, measure
and extend:
a) Timber skirting to wall
b) Carpet to floor
c) 100mm Reinforced concrete slab in 20MPa.
Notes:
All walls to be 110mm brickwork.
Door to be 900 x 2100mm high.
Figure 9
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a) Linear Take Off – Timber Skirting
b) Area Take Off – Carpet Flooring

ITEM PARTICULARS UNIT QUANTITY RATE $ ¢
A Carpet to floor m2 15
5.28 1.00
3.98 21.01 2/0.11
2/ (2.00) 1.22
(1.20) (4.80)
(1.22)
(1.50) (1.83)
14.38

 

ITEM PARTICULARS UNIT QUANTITY RATE $ ¢
A 100mm Hardwood Skirting m 21
2/ 5.2
8
10.
56
5.5
0
2/ 3.9
8
7.9
6
(2/
0.1
1)
2/ 1.5
0
3.0
0
5.2
8
(0.9
0)
(0.9
0)
Dr
20.
52
4.2
0
(2/
0.1
1)
3.9
8

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(c) Volume Take Off – Reinforced Concrete Slab
3.5.1 Billing
Metres, square metres or cubic metres shall be billed to the full unit, with any part of a
unit being regarded as a full unit (ASMMBW Section 1
Clause 6.1). This rule differs only when the billing unit is the tonne. When the billing
unit is the tonne, quantities shall be billed to the full one hundredth of a unit
(ASMMBW Section 1 Clause 6.2).

Total measured quantities Billing quantities
175.44m 176m
32.02m 33m
25.56m2 26m2
201.12m2 202m2
1.05m3 2m3
32.32m3 33m3
125kg 0.13t
22.44kg 0.03t

 

ITEM PARTICULARS UNIT QUANTITY RATE $ ¢
A 20MPa reinforced concrete to 100mm slab m3 2
5.50
4.20
0.10 2.31
2/ (2.00)
(1.20)
(0.10) (0.48)
(1.00)
(1.50)
(0.10) (0.15)
1.68

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3.5.1.1 Student exercise 1
Based on the drawing in Figure 10 of a floor plan and the following note, bill, measure
and extend:
a) Timber skirting;
b) Timber flooring and
c) 120mm Reinforced concrete slab in 25MPa.
Notes:
All walls to be 230mm brickwork.
Doors to be 900
× 2100mm high.
Figure 10
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d) Bill the following total measured quantities:

Total measured qualities Billing quantities
154.98m
366.01m
21.45m
35.11m2
18.98m2
107.33m2
89.91m3
201.22m3
1024.00kg
201.50kg
38.02kg

3.5.2 Describing the items of work to be measured
Depending on the intended purpose of the document, the level of detail and
information provided in the item description needs to be considered.
There are generally two ways to describe items of work. The descriptive method sets
out the full description in paragraph format. This is the way that students generally
begin billing. An alternate method uses cascading headings to describe the work. This is
a quicker method used by those with more experience. The specification trade order is
generally followed in a BOQ. The ASMMBW work category order general drives how
each trade is further classified.

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3.5.2.1 Descriptive billing method
The basic aspects that a billing should cover include everything needed to adequately
describe the measured item of work. Namely:

Name:
Size:
What is it?
What are the dimensions? How big is it?
Description: What is the specification? What is the type of product?
Fixing: How is it fixed into the construction?

Architectural drawings alone are not sufficient to adequately describe and measure
building quantities. Reference to the specification is also required. A specification is
written to accompany a set of drawings and provides information and further detail
required for construction.
Much of this detail covers details such as the exact type of material or component, the
manufacturer, installation and storage requirements, expected tolerances, guidelines
for the quality of workmanship required etc. All these things are required to adequately
price an item of work.
3.5.2.2 Using common headings and groupings
Group similar items together and separate them from other items by using subheadings.
For example, if you are measuring timber items in the trade of Woodwork (or
‘Carpenter’) and the type of timber specified for the wall framing (studs, noggings, top
and bottom plates etc) is F5 Oregon, then it is logical to group all of these items together
under a heading of ‘F5 Oregan’.
The example below shows some headings that would help group and classify wall
framing items, for example:
WOODWORK
Structural Timber Wall Framing
F5 Oregon
A. 100 x 50mm stud m
B. 100 x 50mm wall plate m
C. 100 x 50mm nogging m
D. 100 x 50mm jack stud m
E. 100 x 50mm head trimmer m
By placing common information in headings, the length of each item description can
be shortened as the same information is not repeated.

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3.6 Computer estimating software
OTEN students enrolled in this unit can obtain free or reduced price computer
estimating software by emailing [email protected] and requesting
software application details. CostX makes their software available to our students for
free, and Buildsoft offer a student version for a small charge to cover materials and
handling. Industry users tend to specialize rather gain proficiency in multiple systems
and this is the recommended approach for students. Research each online and
become familiar with these products. We suggest that you learn one only initially.
Today’s computers can be used for many building related activities including estimating,
billing, word processing, accounting, and a wide variety of other purposes. Advances in
personal computer design and software has improved the estimating process to permit
increased bid accuracy, improved project management and the bottom line.
3.6.1 Advantages and Benefits
A computer assisted estimate is more complete, more accurate, and quicker than
manual estimating. This translates into additional time for other activities such as,
more time with the family, more time to better organize and manage your company,
or time to estimate additional jobs for business expansion.
Computer estimating benefits include:
Very quick mathematical calculations.
Looks up price lists and updates items automatically from amended price lists.
Subtotals and totals listed items automatically after any change.
Can use standard cost calculation, templates and macros to minimise input and
simplify the estimating process.
Produces verifiable and uniform estimates.
Rarely makes an error.
Never gets tired or careless, and
Never forgets or loses stored information.
Computer estimating will reduce your estimating time and cost because you no longer
need to price labour, extend, or total material or labour.
3.6.1.1 Reduce Material Cost
Once the take-off is completed and the take-off quantities have been entered into the
computer, a report of all the materials required for the job can be printed and broken
down by job phase. This list can be submitted to multiple suppliers in order to get
competitive prices and fixed delivery dates. In addition you can reduce the storage
requirements for material, waste and theft.

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3.6.1.2 Cost control
Estimate costs can be resorted to standard accounting or cost groupings for job cost
reporting and control purposes. This is essential for the proper management of
successful building businesses.
3.6.1.3 Labour Savings
A computer estimate permits the contractors on the job to have a labour budget to
ensure that the job gets completed on time. Material will be on the job when needed
and idle time and inventory handling will be reduced.
3.6.1.4 Reduces Overhead
Overhead will be decreased because of reduced estimating costs, inventory storage
space cost, and reduces financing costs. You’ll also improve billing, expedite collections
and increase cash flow.
3.6.1.5 Other Benefits
The saving in estimating time will permit you to estimate more jobs to expand your
business volume.
A computer estimate provides you with increased confidence and security that your bid
price is correct, and you’ll communicate a higher level of professionalism. This all adds
up to improved competitiveness with increased profit margins.
3.6.2 Must you still do the take-off?
Yes, however, with a computer estimating system, you have alternate methods of
performing the take-off. The manual method or the direct input method.
3.6.2.1 Manual Take-off
This method requires take-off from paper based plans directly into computer quantity
sheets.
3.6.2.2 Direct Take-off
This method involves reading electronic versions of plans into the estimating software
and then using alternate methods to quickly calculate and record measured quantities.
Building designers generally provided pdf files to tenderers and software generally
accepts these. On occasion dwg or 3D BIM files may be available and these can
substantially increase take off speed and accuracy.

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3.6.3 How much time saved?
It depends on the software, the estimator, and the complexity of the job. As the
estimator becomes more familiar with the system, less time is required. The more
complicated the job, the more time saved. As a general rule, you should be able to
complete the estimate in a 1/4 the time it would take you to estimate the job manually.
3.6.4 How will my bid accuracy be improved?
A computer rarely makes mistakes. It doesn’t forget the data it has stored. It doesn’t
omit steps in calculation and it doesn’t make errors in overlooking taxes, overhead,
and profit.
3.6.5 Will estimates be as complete?
Yes, with more information to increase your efficiency and impress your customers. As
well as improved profit margins.
3.6.6 Can I realistically expect to increase profits?
Without question. You won’t lose a job because of an error, nor will your bid be too low
through error or omission. Getting more jobs, reducing estimating time and financing
costs, and improved project management translate into a brighter profit picture.
3.6.7 How big must I be to derive any benefit?
Size doesn’t matter. Any contractor who estimates, needs to have a computer to
increase business efficiency. Many small companies, where the owner or manager does
the estimating, can use computerized estimating to free more time for administration,
selling, and project management. The professional appearance of a computerized
estimate gives the impression of significance in size and standing, and will help increase
the percentage of successful bids.
3.6.8 How long will it take me to learn how to use a
computer for estimating?
It depends on your experience with computers and estimating. Those that have lots of
experience will be estimating in a matter of days and even hours, without attending a
training class! Those with less experience require a training class and a few weeks to get
comfortable with the process.

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Even the most carefully designed software requires training, service, support and
technical assistance. These requirements are even more important when the software
is highly specialized, and requires special skills, experience, and background in the field
for which the software was designed. Specialized software systems should be purchased
directly from the software developer, who is equipped to explain the product, provide
the training and support if you run into difficulty.
Note If you attempt to use your software without proper training, you may never learn
all of the valuable features that are designed within the program.
3.6.9 Software Selection
Don’t expect a computer estimating software program to fit all of your needs. However,
a quality estimating system should not require you to make any major adjustments in
your estimate style. As a matter of fact the computer assisted estimate should
considerably improve your estimating technique. Regardless of how well an estimating
system is designed, don’t expect optimum results without complete training. Along the
same lines, find out what kind of technical support is available and the annual technical
support cost. Also determine the cost of new versions and upgrades.
Some things to consider before purchasing:
3.6.9.1 Simple to Use
The software should be logical, intuitive, simple to use and easy to understand.
The commands must be precise and there should not be any danger of losing
data. There should be an on screen audit trail so that you can review and modify
the take-off at any time.
3.6.9.2 Portability
Estimating software must have the capability to be use at the office, at home, or
even in your car with a laptop or possibly a palmtop computer. The software
should have the ability to factor labour or material cost for every line of the takeoff to reflect the diverse installation conditions. You should be able to view or
change anything in the estimate at any point without a printer.
3.6.9.3 Reports
The software should print a wide variety of reports that furnish information to
the client, as well information for project management decisions.

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3.6.9.4 Cost
The cost of computerizing a business is dependent upon whether or not you
already have a computer. Make your decision on the value you receive for your
investment. Be sure you can count on long-range service and close personal
attention. A quality estimating and management software system generally
costs between $4,000 and $8,000.
3.6.9.5 Who Sells Estimating Software?
Computerized estimating software is available through stores and on the
Internet. Find out about as much as you can about the software vendor. How
long have they been in the business of selling software? How many customers
do they have? What other software products do they sell? Don’t get too excited,
take your time to investigate the different vendors and make a selection based
on facts, not opinions. If possible, see if you can have a trial period to try the
software. Naturally this will cost you a few hundred dollars.
Many builders use a computer spread sheet program for
estimating. Some of the other main estimating applications
(in alphabetical order) are:
Buildsoft – Offsider and Global – BTOS (Building Take Off System) option
recommended www.buildsoft.com.au
Cordel – Estimator www.reedconstructiondata.com.au
CostX – Good Take-off from electronic drawings www.exactal.com
CSSP Cheops/Everest – used by bigger construction companies
www.cssp.com.au
DataBuild www.databuild.com.au
QuoteFast – quick fast estimating and popular with small builders
www.quotefast.com.au
Timberline www.sagecre.com
Most come with digitiser and accounting options. Digitisers are
seldom used. Only a few come with a built in cost data base.

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Topic 4
Develop estimated
project costs

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Introduction
© Thinkstock (used under license)
There are many factors that will influence your overall construction costs, these costs
together with your company overheads and the final margin you put on your price, can
then be submitted for tender.

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4.1 Contract types associated with the
tendering process
The type of contract to be used should be noted in the tendering documentation. Not
all contracts are the same and the conditions contained in a contract can impact on the
final cost of the tender. Accordingly, it is essential that the person preparing the
estimate or tender is fully conversant with the form of contract that is to be used. If this
isn’t the case, then a copy of the contract needs to be obtained and assessed. If there is
no contract form stipulated in the documentation, then the builder may nominate one
in the tender. Since there are many different forms of contract, the one chosen must be
suitable for the circumstances of the project. For example, you would not opt to use a
contract which includes an architect if there is none supervising the project. Similarly,
to specify a contract subject to ‘rise and fall’ may scare the client and result in the award
of the project to another builder.
Let’s see how the costing process may differ due to the nature of the contract.
4.1.1 Lump Sum
The builder agrees to construct the works according to the plan and specification and
any conditions stated in the agreement and general conditions of the contract for a fixed
sum.
4.1.2 Lump sum subject to rise and fall
Similar to lump sum contract but includes provision for rise and fall of prices.
4.1.3 Design and construct or package deal
The client invites tenders from various builders giving them certain guidelines on
building design, purpose, requirement and monetary limitation. The builders then
design and prepare all the documentation and, if successful, arrange for the supervision
and construction of the building for a fixed sum of money.
4.1.4 Schedule of rates
The builder submits a tender based on unit rates as requested, and is paid accordingly
on performance of the work.

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4.1.5 Cost Plus
The builder does the work and the client pays for all cost incurred plus a profit to the
builder. This profit is agreed upon in the contract in the form of a fixed sum.
4.1.5.1 Cost plus percentage
Similar to cost plus, but the agreed profit is a percentage of the total value of the
works.
A
rise and fall clause provides for an allowance for the increase, or less commonly
decrease, in the cost of materials, plant and/or labour that can occur during the
progress of a job. A builder bases his tender price on the cost of items at the time of
tendering. If an increase in any costs occurs subsequently, then he is able to add this
to his tender price. Clients are not always comfortable with this type of contract as
delays in the works may lead to unprecedented costs due to price rises. A builder will
usually allow for the possibility of price rises in his tender price under a normal
contract.
4.2.1 Statutory requirments
On all projects, statutory requirements will affect the costing. The estimator should
understand regulations, by-laws, rules and payments for licenses, fees, and so on.
Payments would normally be included in preliminaries unless they are peculiar to a
particular element of construction. The regulations, by-laws and rules will affect
worker’s payments and conditions and work methods, so will have a direct impact on
costs. Some areas to consider in the cost structure include:
a) Worker’s Compensation premiums,
b) Long Service Leave entitlements,
c) Safety regulations, which are regularly updated,
d) Machine use may become obsolete,
e) Scaffolding may be limited in its use.
There are several others. The good estimator will be familiar with all the relevant
legislation and statutory requirements and will keep abreast of any changes that
occur.

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4.2.2 Decision to tender
Given the number of factors that affect the cost of building works and the risks
involved (in both the job itself, and in obtaining an accurate estimate), the decision to
submit a tender requires careful consideration.
We have discussed above several factors that affect the cost of construction. All of
these will be in the mind of the builder when he is considering submitting a tender.
There will also be other issues that will influence the final decision such as:
o The time limit on the tender period; can the tender be completed in the
time allocated?
o Is this project likely to produce a healthy profit? Are the economic
conditions such that the job should be tendered with a lean profit margin
just to keep the business going?
o Is the construction industry booming? Can we afford to take on more
employees in order to be able to take on this project, with the expectation
of a healthy profit?
The commencement and completion dates for the project; do they fit in with
the business’s other commitments?
The builder’s qualifications, expertise, experience and contacts against the
requirements of the project.
the builder’s short and long term commitments in terms of staff and finance,
o the background and financial status of the client
o the background of the administrators, and
o Special or unusual conditions in the contract documents; thoroughness of
the contract documents.
It may be useful to prepare a rough preliminary estimate to indicate the cost of a
project. This can be used to see if the project is feasible given any monetary restriction
placed on the construction programming and financial planning. The proposal can then
be placed before the management to make the final decision to either decline or
proceed with the tender. One method of obtaining such a ‘rough’ estimate, is to use
historical records. Alternatively, pricing publications have current rates per m2 or per
m3 for different types of jobs. So an estimate for a residential building with an area of
say 130 m2 can be obtained using these rates. There are additional factors that can be
applied for special alterations, additions or extras such as an additional garage or using
high quality finishes in the bathroom. The technique is called squaring (or cubing if the
rate per m3 is used). The estimate obtained will always be approximate of course, as
each job will be site specific and unique and so have variable cost factors. However, for
a preliminary assessment, this technique can be useful. We will look in more detail at
the figures provided in pricing publications for this method of costing in the next
Section.

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4.3 The tendering process
The preparation and submission of a tender involves multiple activities that must be coordinated to achieve the permitted timeframe. Typically the following steps are
involved, although the sequence may vary and in some case some steps may be omitted:
A request is received to submit a tender (may also appear in a newspaper).
The tender documents are received and examined for completeness and to
obtain an idea of the proposed works.
A decision is made to prepare a tender, or to reject the offer (this may occur
after a preliminary estimate has been made).
A time line is prepared to see how it fits in with the current workload.
The trades that have to be estimated are identified and a list of subcontractors
and suppliers is compiled.
The documentation for each subcontractor and supplier is copied and packages
sent off inviting quotes (the submission date is included).
Rates are applied to the quantities and work items in the Bill of Quantities or
obtained from the drawings.
Subcontractors and suppliers progress should be monitored to ensure that
quotes are obtained in time for submission.
All prices are compiled and the preliminaries section of the tender completed.
The net cost of the project is determined and a report is prepared for
consideration by management.
Overheads and profit are added.
The information is compiled into a complete tender submission document. A
check should be made to ensure that all the required information is included.
The documents are delivered and submitted (placed in the tender box) at the
correct location by the appointed time of closing.

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4.3.1 WorkCover, Environmental Protection Agency
(
EPA) requirements, waste management and other
statutory
Preliminaries
Preliminaries are a major cost associated with any job, but cannot be costed until the
total net cost of the job has been calculated. Preliminaries may be set out in a Bill of
Quantities, or a builder may have a standard checklist. A guide is also given in the
ASMMBW. A typical checklist for building up the items covered in Preliminaries follows:
4.3.1.1 Notices, fees, permits and security deposits
Local authority
o CC PCA fees.
o Development fee.
o OC fee.
o Damage inspection fee.
o Use of plant application fee.
o Hoarding application fee.
o Loading zones.
Sydney Water or local water and sewerage authority
o Building fee.
o Sewer diagram.
o Water main connection fee.
o Special inspection (permit for connection of sewer when available).
Office of Fair Trading
o License fee.
Gas Company.
Telstra.
4.3.1.2 Insurances required by the contract documents
Loss or damage to the work (contract works).
Public liability.
Worker’s compensation’.
Office of Fair Trading insurance requirements (Home Owners Warranty).
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4.3.1.3 Monetary sums
Contingency sum.
Liquidated damages.
Retention.
Security bonds and guarantees.
4.3.1.4 Hoarding and fences
Allows for:
Cartage of material both ways.
Fees, damage to footpaths etc.
Labour (fixing and removal).
Lighting (if required).
4.3.1.5 Plant
Allow for cartage on all plant and gear to be used. This item varies with the nature,
location and size of the job. The subcontractor in some instances may supply plant:
Major plant (if not included in trade).
o Cranes
o Hoists
o Pumps
o electrical generators
Minor plant (to be consumed by this job only)
o Barrows shovels, spades, picks.
o Small tools.
o Ladders.
o Trestles.
o Toolboxes.
The erection and dismantling is charged direct or fairly apportioned to the
trades or units concerned. Depreciation where applicable is included in the
overhead charge.

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4.3.1.6 Scaffolding and gantries
Erection, maintaining and dismantling.
External scaffolding.
Internal scaffolding.
Guard rails.
Barriers.
Warning notices.
Night lighting.
4.3.1.7 Temporary services
Telephone.
Electricity.
Water.
Sanitary.
Access roads and tracks.
Reinstatement of paving & kerbs.
Temporary roads.
Crossings and planked footways.
4.3.1.8 Site accommodation
This includes site sheds, toilets, change rooms, offices and so on, plus all necessary
furniture, equipment, lighting and heating.
4.3.1.9
Plumbing.
Protection and temporary.
Drainage and de-watering.
4.3.1.10 Site staff
Site manager.
Foreperson.
Materials clerk.
Quantity surveyor.
Safety officer.
Security staff.
Leading hands.
Tradespeople e.g. carpenter.
Labourers.
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4.3.1.11 Cleaning and rubbish removal
These cost items form are a considerable expense
Clearing surplus material.
Cleaning out after trades.
Cleaning on completion.
Note: Some local government areas require fees for the placement of bins on public
areas.
4.3.2 Hand over
Duties of the builder on completion include such matters as cleaning and leaving all in
good order, labelling and handing over keys, handing over certificates, as-built
drawings, guarantees and the like.
4.3.2.1 Defects, liability period and maintenance
These comprise the liability of the builder for making good defects after practical
completion.
4.3.2.2 Miscellaneous costs
Advertising.
Protective clothing.
Financing of job.
Scheduling.
Reports – condition of adjoining properties.
Protection of adjoining buildings.
Drawings.
Programming costs.
Security services.
Setting out the works.
Attendance on other trade.
Expenses incurred in complying with the Occupational Health and Safety
Legislation e.g. p.p.e., first aid.
Licensed surveyor’s fees.
Site notice board.
Protection against wet weather, and building operations including covers and
screens.
Photographs.
Cost adjustments – rise and fall.
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4.3.2.3 Additional expenses
Can be incurred due to special conditions and site award requirements such as:
Remote or country work.
Board and lodgings for workmen.
Height allowances.
Dirty work.
Of course, many of these items apply only to major building projects such as large
office blocks, but the list can still serve as a general guide. Notice that there is no
provision for award on-costs such as annual leave, holidays, sick pay, wet weather
allowances or long service leave, as these costs are normally included in the rates
when estimating labour costs.
4.3.3 Company overhead recovery and margins.
4.3.3.1 Overheads
Overhead is the general administration cost of a builder’s business. It is usually added
as a percentage to the net estimated cost of the job after all estimating work is
complete. Items included in overheads are:
Office expenses (rent, equipment, furnishing, rates, electricity, telephone,
cleaning, stationery, postage, interest on borrowings etc.).
Office staff salaries including estimators and supervisors (except the general
foreman who is usually charged to preliminaries for each job).
Personal salary of self-employed
Bank charges.
Accounting fees.
Motor vehicle expenses.
Plant maintenance and depreciation.
Builder’s license fees.
Insurances on offices, yards, workshops, vehicles, plant, staff (job insurances
are charged to preliminaries and labour insurances are charged to direct labour
for each job).
Depending on the particular builder’s organisation the list may vary. For example, the
smaller builder will probably do all the estimating work himself probably work from
home and so save on staff salaries and office expenses. It may also be more
convenient to charge some of the above items directly to particular jobs.

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The usual method of establishing the percentage for overheads is to relate total
overhead expenses to total turnover for a particular period. This is done by using
information from the firm’s financial records for the previous year.
Example

Turnover for Jan 2011
Overhead for Jan 2011
Overheads markup percentage
= $1,920,000
= $146,000
= $146,000 ÷ ($1,920,000-$146,000)
= 8.2%

This percentage should be added to the ‘total labour cost’ rate.
This step is taken to help build up the actual charge out rate. See the section on ‘Profit’
for the final step in determining the final ‘Charge out rate’.
Note: That the overhead percentage obtained by the above method is an
average for all jobs. Should sales turnover or expenses change
dramatically during the year, then critically review the percentage at
more frequent intervals
.
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4.4 Anticipated profit
The object of all building businesses is to make a profit. However, we can only call it
‘anticipated profit’ at the tendering stage, because the profit margin will depend on the
closeness of the estimator’s cost calculations to the actual costs. The builder will
determine the profit margin, or the percentage that is applied to the final net costs in
the tender. He or she will assess what risks are involved, whether high levels of expertise
are required, or whether there are any other factors not accounted for elsewhere in the
tender, which may affect the final cost estimate.
The term ‘anticipated profit’ is appropriate because at the time of tendering, the
amount included in the estimate for profit (i.e. estimated excess of income over
expenditure) can only be a forecast of the final outcome. The conduct of the job material
availability, industrial relations, performance of tradesmen and subcontractors and
weather, are some of the many factors that can influence the final cost.
Anticipated profit is usually added as a monetary amount or as a percentage to the
various components of the net estimated cost. Since overheads and preliminaries are
definite expenses to the builder and are not ‘profit’ items, management may decide to
add anticipated profit to these components as well.
Since risk varies from one component to another, anticipated profit could be added at
differing percentages to the various components. The least risky component is
‘monetary sums’ because the amount included in the contract is fully adjustable against
actual expenditure. Subcontract work and materials (so long as the contract includes a
rise and fall clause) carry greater risk to the builder, and they are in the ‘middle’ risk
category. Direct labour could be regarded as the most risky component cost-wise to the
builder.
Other factors to be considered when deciding profit margins include competition levels,
the builder’s own work situation, continuity of work, maximum utilisation of plant and
the state of the tender market. In slump conditions, a builder (yourself or any of the
other tenderers) may be so keen for work to keep the organisation operational till times
improve, that little or no profit will be added. Also studies show that the degree of
competitiveness in tender prices is in direct proportion to the number of tenderers for
the job.

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4.4.1 Importance of time
Time is the essence of any building contract. The proprietor requires a completed
building as soon as possible to allow him and to minimise his interest and holding
charges. The importance of time and its relationship to cost permeates the whole of the
building industry.
The estimator’s work is affected by time in various ways, including the following:
The time for tendering is set by the architect, and the estimator must have his
figures ready for a management decision well ahead of tender closing. Late
tenders are ruled invalid without exception.
Contract documents may include a ‘rise and fall’ clause. Such a clause allows
for the adjustment of the contract sum to compensate for variations in wage
rates and/or material prices during the contract period. The rise and fall
allowance is usually based on a formula tied to a cost index. The estimator is
expected to report to management on the type and the effect of the particular
rise and fall clause included in the contract. When a contract (‘firm price’
contract) does not include a rise and fall clause, management expects the
estimator to report, on items where price rises might be expected so that some
allowance can be made.
The Estimator needs to examine and take appropriate action on
subcontractor’s quotes to establish whether they are firm (and for how long) or
subject to rise and fall (and on what basis).
When using rates and prices from previous jobs to prepare a current estimate,
the estimator must adjust for cost rises that have occurred in the interim.

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4.5.Project costs are calculated for tender or
bill.
4.5.1 Tender preparation and submission
4.5.1.1 Why tender?
The building industry is a ‘contracting’ industry. It is very competitive by nature and is
thus subject to many external forces. The winning of projects is crucial for the survival
of a building organisation, and since the process of submitting a tender is for the most
part unpaid, the cost of tendering is borne by the overhead margin built into the jobs
that are won.
Builders would like to win every job that they tender on, but this is rarely the case, and
there are many instances where the cost of tendering is very high. Therefore, we should
take the estimating process very seriously. The consequences of over-pricing are an
unsuccessful tender and an increase in overheads. The consequence of under-pricing a
project is something we don’t even want to consider! No matter which way you look at
it, the estimator’s and builder’s task is a ‘risky’ business and it is no wonder that the
industry has a higher than average business failure rate.
4.5.1.2 Decision to tender
There may be several factors, unrelated to the nature of the tender itself, that need to
be considered before committing the time and effort towards producing a valid tender.
You may recall a brief discussion of these in Section 2. Let’s recall them again here (and
please be aware that this is not an all-inclusive list).
• What is the current state of the construction industry? Is it booming or stagnant?
• Can we handle a job of this size at the time that it is proposed? Can the business
afford to take on more employees? Will we have to let them go again once the
job is finished?
• Do the commencement and completion dates for the project fit in with the
business’s other commitments?
• Is the location convenient? Will extra travelling time be necessary?
• Do we have the qualifications, expertise, experience and contacts needed
according to the requirements of the project?
• What are our short and long term commitments in terms of staff and finance?

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• What is the reputation and financial status of the client?
• What type of background do the administrators (that is, the architect, the
quantity surveyor) have?
• Are there any special or unusual conditions in the contract documents? Are the
contract documents complete and comprehensive? Have the specification and
drawings been professionally prepared? What is the risk of work or dimensions
being incorrect or missed out?
• What are the contract conditions for insurance, retention, penalties, progress
payments and maintenance period?
• Is the project likely to produce a healthy profit? Are the economic conditions
such that the job should be tendered with a lean profit margin just to keep the
business going?
Should we decide not to tender, we should notify the proprietor as soon as possible
and return the documents?
4.5.1.3 Who is involved in a tender?
Before looking at the steps involved in the preparation of a tender, we should revisit
the ‘traditional’ model of the people involved in the tender process:
Figure 1: Traditional model of the relationship between the parties
involved in the tender process for a building contract
CLIENT
BUILDER
ARCHITECT
ESTIMATOR
QUANTITY
SURVEYOR
SUPPLIER
SUBCONTRACTOR OTHER
CONSULTANTS

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4.5.1.4 Preparation of a tender
The process used by individual builders to prepare a tender
submission will vary but generally follows the approach outlined in the
following flow chart:

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4.5.1.5 Assessing the tender documents
As soon as the tender documents are received, they should be checked for
completeness. Included in the documentation, there should be:
• a contract form with the articles of agreement and conditions, notice to
tenderers, annexures, etc,
• a specification,
• drawings, and
• A bill of quantities (not always, and rarely on residential projects).
Each of these should be checked to see that all the required information is included.
In addition, the documentation should be examined to get an idea of the nature of the
job, and to check again the feasibility of the business taking it on. It may be useful to
prepare a rough preliminary estimate to indicate the cost of the project. This can be
done to see if the project is feasible given any restrictions placed on the construction
programming and financial planning. The proposal can then be placed before the
management to make the decision to either decline the offer or return the documents,
or accept and proceed with the tender.

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If the tender is accepted, any onerous or unusual conditions contained in the contract
should be noted and sorted out between the parties. Any discrepancies between the
documents should be brought to the attention of the proprietor, and resolved without
delay. If there are unresolved items at the time of the tender submission, then a note
for each should be added to the tender form or letter. The tender offer is thereby made
conditional upon these notes. When resolution is reached, it may be accepted as a
variation to the tender sum.
4.5.1.6 Contract form with articles of agreement and conditions
The builder and the proprietor will each have a contract form for the other to sign.
This constitutes a legal document, so it is important that all of the conditions and
clauses are understood and agreed.
The contract will contain, for example:
Names and details of the parties to the contract,
Brief description of the job,
Commencement and completion dates,
Proposed payments to the builder during and on completion of the job,
Rise and fall conditions, if any,
The defects liability period and retention amounts,
Any default procedures,
Provisional sums and PC items.
Variations.
4.5.1.7 Specification
The specification outlines in detail all information relevant to the construction of the
building. It is closely linked to the architect’s drawings (and engineer’s drawings if any).
An opening section called ‘Preliminaries and General’ or ‘Preamble’ provides relevant
information and instructions to the builder, and is followed by a ‘Trades’ section which
gives instructions on how the work is to be done, and to what standard.
The main objects of a specification are:
• to supplement the working drawings,
• to inform and convey the intention of the job to the quantity surveyor and/or
the builder,
• to specify the standard of workmanship required,
• to detail specific materials and finishes,
• to advise prospective tenderers of conditions,
• To inform public authorities of details not shown on the drawings.

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It is important that all pages of the specification are received. The tenderer should
carefully check the continuity of page numbers. The Master Builders’ Association and
the Housing Industry Association Ltd both produce a Standard Specification for use in
the housing sector of the building industry in New South Wales. They also can supply
every document required to enter into a normal residential (or other construction)
contract, as well as useful stationery such as estimating sheets and Job Cost Record
booklets. For a copy of a standard specification, contact one or both of these
organisations, or have a look at their web sites at www.mbansw.asn.au and
www.hia.asn.au
4.5.1.8 Drawings
Drawings show the detail of the job in a pictorial format. Together with the
specification, they describe in detail the entirety of the project.
Each tenderer receives a complete set of drawings for the project. This will include:
• all floor plans, elevations and sections,
• footing drawings,
• construction details,
• engineer’s drawings of any concrete and/or steel works,
• Services drawings including plumbing, electrical and mechanical services
(although these would not be common on residential projects).
It is a good idea to check that all drawings have been received. When all the documents
are examined, any discrepancies between the drawings and the specification should be
noted and brought to the attention of the architect. If any drawings have not been
received or there is an inconsistency, this should be noted on the tender form or
referred to the architect.
4.5.1.9 Bill of quantities
The Bill of Quantities is a detailed list of all of the labour and materials necessary to
complete the job. Under each trade, every item or expense will be listed, with either a
measured quantity or an extent of work next to each item. This is prepared by a quantity
surveyor.
If it is not a large job, a bill of quantities might not form part of the tender documents.
In these cases, the specification and drawings will provide the information required by
the builder. From these documents, the builder will need to measure the extent of the
works and produce a bill of quantities from which the total tender price is determined.

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4.5.1.10 The builder’s bill
When the builder has to produce his or her own bill of quantities because one hasn’t
been provided by a QS, then the builder has to measure the work him (or her) self. Will
the builder produce a bill in accordance with the ASMMBW? Not likely! The bill of
quantities that is prepared by the builder, in other words by you, is called a builder’s bill.
So how do we go about producing a builder’s bill? There is no specific rulebook for
builder’s bill preparation.
What are our concerns? Firstly, we need to measure and price everything necessary to
complete the works, accurately. Secondly, we need to have some format, which will
allow the document to be used by others in the organisation and one that will be useful
should we be successful. Therefore it would be useful to carry some of the concepts of
the ASMMBW quantities measurement methods over to our ‘builder’s bill’ eg the trade
order sequence. But it is up to the individual.
So, although the builder’s bill has no set rules for its preparation, it generally has the
following features:
the billing is confined to brief descriptions,
measuring is restricted to essential items,
minor items are often included with larger items and the unit rates increased
accordingly,
allowance for wastage is usually made in the measured quantity and not in the
unit rate,
Sub-contractors work is not measured in the bill and a quotation is used where
available.
As we have said, a builder’s bill is similar to a Bill of Quantities but does not comply with
the rules set down by the ASMMBW in terms of the setting out of the take-offs and the
detail provided in the preamble. In addition, measurements can differ because a builder
measures according to available sizes of product, thus incorporating waste into the
calculations. A quantity surveyor takes precise measurements and then makes an
allowance for wastage later in the unit rates.
In summary, a builder’s bill is a compilation of prices for a job to arrive at an estimate of
the full cost of a project. It is produced on the same paper as the quantity surveyor uses
to produce the Bill of Quantities. It is likely that the jobs that you will be involved in will
not have a Bill of Quantities provided and you will have to produce your own bill.
However, it is important for you to know how the measurements on a Bill of Quantities
are derived and how this billing differs from that of the builder’s bill. On the following
pages are sample excerpts from a builder’s bill. Note that the builder’s bill still generally

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follows the same setting out and trade order as specified in the ASMMBW. It is
important that the builder’s bill be set out in a logical order and that it be clear and
legible. You or someone else may need to refer to it many times during the duration of
the job.
4.6 1 Preparing a site report
A visit to the site is a very important step in the process of preparing a tender. It may
reveal conditions or characteristics of the site or project that are not obvious from an
examination of the tender documents. Some builders leave the site visit until after they
have billed and measured the job, because any unusual items in the specification or on
the drawings, may not be readily identified until the billing and measuring is done and
they are thoroughly familiar with the job. Unusual conditions can then easily be allowed
for, by amending the bill or by adding items to the Preliminaries. A brief written report
can be prepared after the visit, or the builder may simply take notes during the visit, or
use a proforma, and keep these as a record.
4.6.2 Determining construction methods
Location, access restrictions, parking restrictions, clearways, soil or site conditions,
proximity to other structures, proximity to structures that might be affected by vibration
– any number of issues, can dictate the method/s that may be needed for a particular
construction project. The method of construction may have a significant bearing on the
cost of the job.
Some construction projects may be able to be completed by any of a number of different
methods. ‘Method’ might relate to the sequence of construction, the actual techniques
to be used or both. For example, a deep basement for a medium-sized commercial
development on a large, open block, might be constructed by boring and then pouring
concrete piers all around the perimeter, and then excavating down to the required level,
using the piers to support the sides of the excavation.
Alternatively, an open excavation could be used whereby the footings and basement
walls are constructed from the excavated basement level up, and then the soil is
replaced against the basement walls.
Special techniques might be required that the builder will need to be aware of when
he/she prepares the tender price. For example, deep footings for the walls of a
residential dwelling that is to be located close to a boundary might interfere with the
footings of an adjacent building. The builder needs to be aware of the possible problems
associated with this sort of job, and to know that serious consequences could result
from incorrect technique. Apart from the possibility of being sued for damage to the

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adjacent property, the builder could lose a significant amount of money if the job is
priced on the assumption that no special techniques are required.
The method of construction for a particular job or part of a job might be specified in the
documentation. Alternatively, the builder might be expected to nominate one or more
techniques and the costs associated with each.
The importance of the site visit is clear when conditions exist which require particular
construction methods that are not specified in the documentation.
Often the estimator will get input from construction managers at this stage, and a
preliminary construction program for the project is prepared.
4.6.3 Estimating construction time
Both the tender form and the contract usually require the builder to state the duration
and the starting and finishing dates for the job.
The construction time will not be the same for all builders. The time calculated will
depend on many factors such as:
Whether a 5 or 6 day work week is chosen.
Manpower allocations. Typically this means work gang size.
The time delay between consecutive activates.
the amount of work the builder has already taken on,
How the builder operates; does he or she take part in the physical work or only
supervise the work? Does he or she do only one job at a time, or take on
several at once?
the economic climate and how it is affecting a builder’s operation,
the ability of sub-contractors to perform,
Does the builder plan for a holiday break during the job?
While the construction time is an important consideration for proprietors, they will
generally consider the builder’s ability in terms of quality and workmanship (and the
price of the job) first. Thus, a builder’s construction plan should reflect the ‘real’ time
necessary to complete the project without incurring any penalties for late completion
or at the least ending up in dispute. Generally it does not need to include wet weather
delay time as this is generally a permitted extension of time in most contracts.

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To make a reasonable estimate of the time that it will take to complete the job, builders
usually rely on one or more of the following:
Past experience,
Bar chart, network or precedence diagram preparation using duration
calculations from measured material quantities and known productivity
constants and typical gang sizes.
Since you will need to develop the first method yourself, we will just take a look at the
second.
4.6.3.1 Programming using a bar chart
The logical way to prepare a bar chart is to follow these steps:
1. List the activities to be carried out, in trade order and construction sequence.
2. Establish reasonable times for the completion of each of these activities, given
the quantity of work, a suitable productivity constant and the size of the work
team. ie measured quantity of work divided by labour productivity constant
divided by gang size. For example if the quantity of brickwork is 20,000 bricks,
one brick layer can lay 500 per day, and the gang size is 2 bricklayers and 1
brickies labourer then the duration required is 10,000 bricks in job /500 bricks
laid per day per bricklayer /2 bricklayers per gang = 10 working days on site.
3. Consider what activities can be performed simultaneously with others without
hindrance to their completion.
When these steps have been performed, it is a straightforward task to plot the activities
onto a chart, indicating the start and finish time of each activity, and showing where
activities must start at the completion of the previous activity or can proceed
simultaneously or overlap with another activity. A sample bar chart and program
calculation sheet shown on the following pages.
Although the main purpose of the bar chart is to determine a completion date for the
job, it also has other uses:
The chart can be used to monitor the progress of a job as it happens, thereby
keeping a close eye on the works as well as creating a record of completion
times for future use.
The chart can be used to remind the builder when materials should be ordered
and when subcontractors need to be contacted.

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By including the value of each of the trades, the bar chart can also be used to
monitor the value of work completed, and can therefore be used for progress
payment purposes, cost control and cash flow.

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4.7.1 Pricing a Bill of quantities or preeparing and pricing
the Builder’s bill
The Bill of Quantities is priced item by item using the drawings and the specification to
ensure that every item has been included and all details relating to the quality of the
work and the materials is taken into account in the pricing. Any discrepancies between
the Bill of Quantities and the specification and/or drawings should be noted and brought
to the attention of the client or the architect.
Let us examine the process required to prepare a Builder’s Bill. Each trade section is
billed and measured, starting with demolition (if there is to be any), or excavation. Note,
‘billing’ is not ‘pricing’. ‘Billing’ is the process of ‘listing’ every item that has firstly to be
identified, then measured, and then, finally, priced. The items are generally not priced
until the whole of the Builder’s Bill is complete.
Each trade section is normally billed by working from the specification, marking off each
clause after it is billed and colouring in, or marking off, on the drawing as each element
is measured. This is done as a checking mechanism and the drawing should be fully
coloured or every item marked, when the Builder’s Bill is completed. Any part not
coloured or marked is either not specified, or you have failed to bill it, or both.
It is critical that any discrepancy, omission or peculiarity is noted as soon as it is detected
in the specification or plans. Your tender is the tender sum you give, and is only
contingent upon the conditions and provisions noted in your tender letter. So if you omit
something that is unclear or ambiguous in the contract, it may cost you.
Before costing each section of the bill, the builder will need to make decisions about the
type of labour that will be employed; sub-contract (S/C), direct (D/L), or maybe the
builder’s own labour. There are some trade sections where subcontractors and/or
suppliers quotations will be used. There is no need to bill and measure these trades,
rather just to list the quotations. Naturally, any subcontractor and supplier quotes would
need to be checked before including in the tender so that any items not included may
be priced and added to the tender price, including any allowance for attendance by the
builder.
In some cases a subcontract rate will include materials and labour, for example, a subcontract quote to supply and fix a garage door. In other cases, a quote will be for labour
only; for example, a quote for bricklaying.

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4.7.2 Extracting relevant documentation and obtaining
quotations
Typically several parts of the work is subcontracted. In addition other materials need to
be measured and priced. These may be provided to labour only subcontractors or for
the builders on use. Finally necessary plant will need to be priced. These could include:
• Plumbing and drainage works, to be done by a licensed plumber.
• Electrical installations to be performed by a licensed electrician.
• Painting.
• Concrete.
• Bricks and bricklaying.
• Scaffolding.
• cost of steelwork.
• cost of roof trusses including delivery to site, and crane hire for placement of
trusses.
There may be several other items depending on the job and depending on the building
company’s normal operations and procedures.
The organised builder will prepare a spread sheet or file that lists all his/her preferred
subcontractors and suppliers. In this list, the builder can note which sections or pages of
the specification and/or drawings are required by each of the subcontractors or
suppliers, in order for them to be able to prepare quotes. A record might be kept of
when these packages are sent out and when the quote was received, and then what
price has been quoted. Any omissions or variations between quotes can be recorded
and then the tender based on this.
The package that you send out to the subcontractor or supplier, should include details
of the proposed contract and any special conditions of contract, the proposed
construction program for the works, all relevant drawings and parts of the specification
(and the parts of the Bill of Quantities, if there is one) needed for the work to be properly
quoted, and a covering letter. A sample letter requesting a quotation follows.

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4.7.3 Evaluating prices
Prices for materials and subcontract works are analysed for completeness and then
incorporated into the bill, net of GST. Typically the estimator’s price for each item of
work is replaced by the real prices obtained from subcontractors and suppliers as they
are received.
4.7.4 Calculating rates for labour and on-costs
On-costs on direct labour including allowances and insurances, superannuation
contributions and worker’s compensation payments are included in the bill.
4.7.5 Other costs
Components of the job that are not covered by subcontractor’s and supplier’s quotes or
provisional sums, but that still fall into the trade sections will need to be priced by the
builder as unit rates.
Unit rates are calculated and used to complete the pricing of all remaining items in the
trade sections of the bill of quantities or the builder’s bill. Although you may need to
compile these unit rates from first principles, you may also be able to use rates from
previous jobs (adjusted for special conditions particular to this job, and for inflation). On
occasion, you might resort to consulting estimating cost guides.
4.7.6 Monetary provisions
Some items in a Bill of Quantities require a monetary provision.
These monetary provisions may be specified as:
Provisional sums or rates.
Provisional quantities.
prime cost (PC) sums or rates, or
Contingency sums.
A provisional sum or rate generally includes labour and materials, for example, $5 000
for the complete electrical installation. It is an amount of money or a monetary rate for
a specific item of work or material in the contract and will be adjusted if the actual cost
of the item differs from that specified.
A PC sum or rate generally includes only the supply and delivery of an item, for example
$350 for a WC suite. This amount will also be adjusted if the actual cost of the item
differs from that specified. A contingency sum is an amount that the builder is directed
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which is necessary for the proper completion of the project. Any unspent part of it at
the end of the works is deducted from the contract sum and any over-expenditure is
added to the contract sum. A builder will not normally include a contingency sum unless
directed to do so.
Normally, the contract documents define any monetary provisions included in the
documents and describe the method of adjustment.
Therefore, PC and provisional items should afford no risk to the builder as the actual
cost of these items will be adjusted. There is, however, a requirement that the builders
PC allowances are sufficient to cover the minimum cost to buy economy/budget makes
and models of these items.
Special care is needed with monetary provisions to ensure GST and builders margins for
overheads and profit is not included twice on these items. Check contract clauses to
verify correct treatment.
4.7.7 Preliminaries
Apart from items contained in trade sections, there will be items which have a cost
associated with them but which do not fall under a particular trade and which still need
to be priced. These items will generally be included in Preliminaries. In spite of its name,
this section is usually priced last, when the builder has a good understanding of the job
requirements.
Care should be taken in putting together this section. While every builder’s preliminary
section costs will vary depending on whether some items are included in the
preliminaries or in the trades section throughout the bill, every item should be carefully
considered and priced. Builders tendering for the same job may receive the same subcontractor’s quotes, so their trade section prices would be expected to be similar. The
preliminaries and project overheads and the adjudication (the process of finalizing your
tender figure from the estimate) could win or lose you the job. With this in mind, a
builder will need to obtain the most competitive prices available for shed hire, hoarding
hire, crane hire, etc.
Some of the items that will need to be covered in the Preliminaries section will include:
Site staff, for example, for supervision.
Setting out and survey work.
Cleaning the site.
Mechanical and hoisting plant.
Scaffolding, hoarding and signs.
Site accommodation.
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Small plant and tools.
Temporary services and reinstatement; for example, electricity, water and
phone.
Fees.
OH & S provisions.
Abnormal overtime.
Unusual allowances.
Waste removal.
There could be several more items depending on the project. Not all of these items will
necessarily be separately listed in a Bill of Quantities, so the builder preparing a tender
from a Bill of Quantities will need to be careful to ensure that all items are covered.
4.7.8 Builder’s overhead
In the early stages of a business, overhead costs seem incredibly high. This is because of
all the expense in setting up the processes and systems necessary to run the business;
for example, purchase or lease of one or more business vehicles, setting up the office,
office equipment and possibly taking on office staff. In the second year of a business,
the annual overhead cost is known (from the first year) and it can be allowed for more
accurately in all tenders.
The builder’s overhead mark-up is calculated using information from the Profit and Loss
Statement for the business as follows:
This percentage is then applied to the total cost that you have determined for the
proposed project.
4.7.9 Builder’s anticipated profit
Profit can be added as a lump sum amount or as a percentage of the job’s total estimated
cost. It may be grouped with builder’s overhead or separate. The amount or percentage
is set by you or management, and will be determined in the light of current economic
and financial conditions. Note that the profit margin can and does vary enormously
between jobs.

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4.7.10 Last cost item added
GST is the last cost item added. All prices to this point need to exclude GST. 10% GST is
now added.
4.7.11 Complete tender documentation
Tender documentation must be completed. If prices for components of work need to
identified separately in the tender, then an allowance for builder’s margins and GST
must be spread through such items. The final package to be submitted will include a
covering letter, the tender form and your tender letter. The covering letter indicates the
project that is being tendered for specifies the documents that are enclosed with it in
the package. The tender form is a pro forma letter with the job title, the tender price
and the construction duration noted whereas the tender letter includes all the notes
that the builder wishes to include as conditional in the tender.
In all cases with these documents, it is essential to know who the recipient of your
tender documents is, as this will influence your written language in a way that ensures
when your tender is received it is understood. It is always a good idea to organise a
meeting with the client or principle that will be assessing the tender documents.
Sometimes that tender process has the documents passing through a number of people,
so the more you can find out the better the chances of success. Remember, tenders are
not won on price alone, the client will want to feel comfortable and respected by their
selected builder and submission of the tender letter plays a big role in achieving this.
Tender processes generally allow a site visit with a question and answer opportunity
with the client or their principle, this is a good time to introduce yourself and
demonstrate your understanding of culture, expectations and personality. It is
important to understand that the client or principle receiving your tender will also want
to get to know who may be doing the job, there needs to be confidence and respect in
the builder as well. A good way to earn this confidence is by ensuring good, two way
communication exists and this is best achieved by asking informed questions, listening
skills and seeking feedback. This practice sets up a good basis for a future working
relationship.
A sample tender form and a sample tender letter provided on the following pages
demonstrates the very formal and objective language used in a formal submission, its
worth remembering the points above, that the client will want to get to know you
personally as well.

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4.7.12 Delivering the tender
Once the management has set the final tender price, a tender letter is prepared which
includes the tender price, time for completion and any alterations or special allowances.
A tender letter should be typed on the company letterhead and signed by the chief
executive of the company (which could be you).
The tender form if supplied by the architect must be completed and enclosed with the
tender. Note that there is no allowance for any notes or conditions to be added on the
tender form, hence the need for a tender letter.
The tender must be delivered on time to the appointed place. Late tenders and excuses
are not accepted.
If the tender is successful or unsuccessful, you will be advised. If you are unsuccessful,
you should return all the tender documents, and advise all the sub-contractors and
suppliers of the outcome. It would be useful for future projects to compare your tender
with that of the successful tenderer if possible.
4.7.13 Procedure if tender accepted
Should your tender be successful, you will receive notification from the proprietor, and
be invited to sign the contract. Before entering into a formal and legally binding
relationship by signing the contract documents, the following should be checked:
that general and special conditions of contract and associated schedules are the
same as in the tender documents, and
that the drawings and specifications are the same as those tendered on and no
additional information has been added. This usually involves checking that the
issue and date of issue for each drawing is the same as was tendered.
4.7.13.1 Priced bill of quantities
Where a quantity surveyor’s bill of quantities is included in the documentation, it is
usually required that the successful tenderer submit his/her own priced bill of
quantities, fully rated and extended, and which totals the contract sum, after being
awarded the job.
A reasonable amount of time should be given, usually seven days after the signing of the
contract. This priced bill of quantities is submitted to the architect for checking and is
used for validating rates for variations and for verification of progress payments.
The builder can spread the overhead and profit that has been allowed for, evenly over
all items or as a lump sum on the summary page. It is completely flexible as long as the

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priced bill is the same as the contract figure. However, how this is done should be
carefully considered for every project independently to allow for adequate cash flow,
etc.
4.7.14 Procedure if tender not accepted
If your tender was not accepted do your throw it away and hope for better luck next
time? Losing a tender is not a good outcome but it is all a learning process, and who
knows, the builder who won the job may have underestimated the cost and may struggle
to complete the job at cost, let alone with a profit. If you have missed out for this reason,
you have not lost, you have avoided a mistake! So, make some enquiries about the
reasons your tender was rejected, go back to your tender and analyse it. You may have
missed out for all sorts of reasons such as:
Your price was the highest of ten tenders – you didn’t really want the job, or you
have overestimated on one or several items. Do some research and refine your
costs for next time.
The lowest price came in significantly less than the others. This is usually due to
a builder having made an error or desperately wanting the job, perhaps to keep
his workforce employed and to keep the business going. Unless you are in this
situation yourself, you don’t want this job, you need to make some profit! File
your documents – you may find them useful for a future tender.
You had by far the lowest tender price but you were rejected because the client
believed that you had under-priced due to your misunderstanding the
complexities of the job. Go back to the tender documentation and find what you
have missed. Perhaps you could discuss this with the client so that you don’t
make this error again.
Several tenders came in at around the same price and you just happened to miss
out. Review your estimates and see if you could have cut costs further. Be
encouraged that you are on the right track!
In addition to analysing the reasons for failing to win this job, you should
Advise your sub-contractors and suppliers that you have not been successful on
this occasion.
Return the documents to the architect/client.
File your reports and Builder’s Bill, as they may be useful in pricing a future
tender.

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4.7.15 Final Check
The ability to produce an accurate and competitive tender is an essential skill that must
be learned and applied if a builder is to maintain a business. The steps are
straightforward and logical, but the production of a tender submission is a process
requiring quite a lot of time and effort on the part of the builder. Each step of the process
should be carried out with care to ensure that the tender price arrived at reflects a
complete and accurate estimate of the cost of the job.
The steps that will need to be followed will include:
Checking and assessing the tender documents for completeness and to obtain a
thorough understanding of the nature and extent of the works.
Visiting the site, to ensure that no unforeseen problems or impediments exist.
Preparing packages to be sent out for the procurement of quotations for
various parts of the works, and for supply of materials.
Preparing a list of preferred subcontractors and suppliers, and sending out the
relevant packages with requests for quotations.
Pricing the Bill of Quantities or preparing a Builder’s Bill,
Compiling the net project cost.
Reviewing the estimate, making adjustments, then adding overheads, profit
margin and GST.
Determining the project duration.
Compiling the tender submission, including a covering letter, the tender letter
and tender form.
Submitting the tender to the nominated location before the specified time.
Late tenders, no matter how competitive their price, are not considered.

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4.8 Summary
The accuracy of an estimate will depend on the knowledge gained from past experience,
historical records, and the accuracy of any information gained from people with more
experience or knowledge in certain specialised fields.
Many variables have to be considered when estimating. A quick inspection of a cost
guide may suggest there is only one cost to hang a door; however when pricing
estimators and experienced tradesmen will evaluate all relevant details including:
Who is to supply the material?
Is the jamb supplied?
What type of door is it?
What type of lock?
What type of hinges,
How many hinges?
And if this is not enough, they may ask:
Who is to do the painting?
Where is the job?
Is it on the top floor of a 30 storey building?
Is it located in the country?
Is there more than one door to be hung? etc., etc.
The pricing can only begin once all of the details are known. The information must be
both accurate and up-to-date. Marginal differences in rates when multiplied through
the quantities in a job may make the difference between winning and losing a contract.

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Image attribution

Image Attribution
All the images throughout
this document
Reproduced by NSW Technical and Further Education
Commission under the Licence Agreement with
Learning Resources Group. 2018