Quantity surveying & Costing (CE-503 (C)) - Unit 3 Short Notes

UNIT 3: QUANTITY SURVEYING & COSTING

A. FUNDAMENTALS OF ESTIMATION & COSTING

Purpose & Principles of Estimation

• Definition: Estimation is the process of calculating the probable cost of a construction project before commencement.

• Importance: Foundation for financial planning, budget approval, contract documentation, and project control.

• Purposes:

  1. To ascertain the financial requirement.

  2. To serve as a basis for contract and tender documents.

  3. To enable sanction of funds from financial institutions/governments.

  4. To check the work executed by the contractor (payment certification).

  5. To decide the economic feasibility of the project.

• Principle of Units: Standardized units ensure uniformity and comparability.

  • Length: meter (m)

  • Area: square meter (m²)

  • Volume: cubic meter (m³)

  • Number: each (e.g., doors, windows)

  • Weight: tonne (t) or kilogram (kg)

  • Running meter: m (for pipes, cables)

[!TIP] Exam Focus: Be prepared to explain why estimation is crucial for each project stage (planning, execution, control).

Types of Estimates

Key Difference: A Revised Estimate is a recalculation of the original estimate due to cost escalation/design change. A Supplementary Estimate is for additional/new work.

Data Required for Estimates

• For Detailed Estimate:

  1. Drawings: Plans, sections, elevations, detailed drawings.

  2. Specifications: Detailed description of materials, workmanship, and standards.

  3. Rates: Prevailing schedule of rates (SOR) or market rates for materials & labor.

  4. Standards: IS codes, standard formulas.

  5. Bye-laws: Local municipal regulations.

• For Approximate Estimates:

  1. Plinth area of similar existing buildings.

  2. Cubic content of similar buildings.

  3. Cost per unit (e.g., per student for school, per bed for hospital).

B. METHODS OF ESTIMATION & MEASUREMENT

Building Estimation Methods

1. Long Wall & Short Wall Method (Out-to-Out & In-to-In):

   • Long Wall: Walls running parallel to the room's length. Measured outer-to-outer faces.

   • Short Wall: Walls running perpendicular to the room's length. Measured inner-to-inner faces.

   • Length Calculation:

     • Long Wall Length = Center-to-Center Length + ½ Thickness of one wall on each side.

     • Short Wall Length = Center-to-Center Length - ½ Thickness of one wall on each side.

   • Volume = Length × Height × Thickness.

2. Centre Line Method:

   • All walls are measured center-to-center.

   • Volume = (Total Centre Line Length) × Height × Thickness.

   • Adjustment: Deductions are made at junctions for overlapping volumes.

[!TIP] Common Pitfall: In Long Wall/Short Wall method, forgetting to add/subtract half wall thickness leads to quantity errors. Long wall = +thickness, Short wall = -thickness.

Rules for Deduction in Masonry & Plastering

• No Deduction for:

  • Openings < 0.1 m².

  • Ends of beams, posts, etc., up to 100 sq.cm (0.01 m²) in section.

  • Bedding, damp-proof course (DPC).

• Deduction 50% for:

  • Openings 0.1 to 0.5 m².

  • Ends of beams, posts, etc., > 100 sq.cm but < 500 sq.cm (0.05 m²).

• Full Deduction for:

  • Openings > 0.5 m².

  • Ends of beams, posts, etc., > 500 sq.cm (0.05 m²).

  • Chajjas, canopies, lintels (if measured separately).

Earthwork Estimation (Roads & Embankments)

1. Mid-Sectional Area Method:

   • Volume = Area of Mid-section × Distance between sections.

   • Mid-section Area = (Area at start + Area at end) / 2.

   • Used for cuttings and embankments with uniform cross-section over the length.

   • \boxed{V = \frac{A_1 + A_2}{2} \times L}

2. Mean Sectional Area Method:

   • Volume = Mean Area × Length.

   • Mean Area = (Area of first section + Area of last section + 4 × Sum of even areas + 2 × Sum of odd areas) / (3 × Number of sections).

   • (Similar to Simpson's rule for volume calculation).

   • \boxed{V = \frac{L}{3 \times n} \left[ A_1 + A_n + 4(A_2 + A_4 + ...) + 2(A_3 + A_5 + ...) \right]}

For Embankment with Slopes: Cross-sectional area must account for side slopes.

$$A = \left( B + \frac{S \cdot H}{2} \right) \times H$$

Where, $B$ = Top width, $H$ = Depth, $S$ = Slope (e.g., 1.5:1 means $$\displaystyle S=1.5 $$).

Specialized Estimations

• Culvert: Estimate includes earthwork, masonry (in foundation, walls, bed), concrete (for bed, wings), and reinforcement if RCC.

• Drainage & Electrification: Usually estimated as a percentage of the structured cost (e.g., 5-8% for drainage, 6-8% for electrification).

• R.C.C. Works: Requires a material statement for the specified grade (e.g., M20 = 1:1.5:3).

Preparation of Detailed Estimate: Step-by-Step

1. Study Drawings & Specs: Understand all dimensions, materials, and finishes.

2. Prepare Measurement Sheet (Bills of Quantities - BOQ): Item-wise measurement from drawings (length, breadth, height). Use standard formats.

3. Calculate Quantities: Apply appropriate formulas for each item (area, volume, number).

4. Abstract Sheet: Transfer quantities and multiply by respective rates.

5. Rate Analysis: Determine rates for each item (if not from SOR).

6. Calculate Total Cost: Sum of all abstract amounts.

7. Add Contingencies & Overheads: Apply percentages.

8. Add Contractor's Profit.

9. Prepare Final Abstract & Summary.

C. RATE ANALYSIS & COST COMPONENTS

Rate Analysis

• Definition: The process of determining the unit rate of a particular item of work by breaking down its cost components.

• Objective: To fix a fair and realistic rate for payment to the contractor.

• Factors Affecting Rate Analysis:

  1. Material Cost: Cost, wastage (5-10%), transportation.

  2. Labour Cost: Skilled/unskilled wages, productivity.

  3. Equipment Cost: Depreciation, fuel, maintenance, operator charges.

  4. Location & Site Conditions: Accessibility, terrain, weather.

  5. Project Scale & Duration: Economies of scale.

  6. Overhead & Profit Percentages.

  7. Government Policies & Taxes.

Cost Components & Percentages (of Structured Cost)

Structured Cost = Direct Cost + Overhead Charges + Contractor's Profit.

Total Project Cost = Structured Cost + Water Supply/Sanitary + Electrification + Contingencies + Fluctuation of Rates + Supervision.

Key Construction Stages & Approximate Cost Percentages

D. VALUATION PRINCIPLES & METHODS

Basic Concepts

• Value: Worth of property in the market.

• Cost: Actual expenditure incurred in construction/acquisition.

• Price: Amount paid/asked in a transaction (includes profit, market sentiment).

• Types of Value:

  • Market Value: Estimated amount property should fetch in open market.

  • Book Value: Cost less depreciation (accounting term).

  • Scrap Value: Value of dismantled materials.

  • Salvage Value: Value of asset at end of useful life (without dismantling).

  • Depreciated Value: Current value after deducting depreciation.

  • Insurance Value: Cost of replacement/reinstatement.

  • Potential Value: Value if used for most profitable purpose.

Methods of Valuation

1. Rental Method (Income Approach):

   • Value = Net Annual Income × Year's Purchase (Y.P.).

   • Used for income-generating properties (rented houses, shops).

2. Direct Comparison Method:

   • Value based on recent sales of comparable properties in same locality.

   • Adjust for differences (size, age, condition).

3. Development Method (Projected Value):

   • Value = Expected Sale Price of developed property - Total Development Cost.

   • Used for land with development potential.

4. Profit-Based Method:

   • Value = Average Annual Profit × Year's Purchase.

   • Used for commercial properties (hotels, theaters).

5. Land & Building Method:

   • Value = Value of Land (by comparison) + Depreciated Replacement Cost of building.

Financial Concepts in Valuation

1. Sinking Fund:

   • Definition: A fund accumulated periodically to replace an asset at the end of its useful life.

   • Importance: Ensures capital is available for renewal without sudden burden.

   • Formula (Annual Sinking Fund):

     \boxed{S = \frac{R \times i}{(1+i)^n - 1}}

     Where, $S$ = Annual sinking fund, $R$ = Replacement cost (original cost - scrap value), $i$ = rate of interest, $n$ = life in years.

2. Year's Purchase (Y.P.):

   • Definition: The present value of an annual income of Re. 1 for a given number of years at a given rate of interest.

   • Formula (considering sinking fund for replacement):

     \boxed{Y.P. = \frac{1}{i + s}}

     Where, $i$ = rate of interest on capital, $s$ = sinking fund factor ($$\displaystyle s = \frac{i}{(1+i)^n - 1} $$).

   • Simplified (if only interest considered): $$\displaystyle Y.P. = \frac{1}{i} $$ (Perpetuity).

3. Dual Rate Interest:

   • Concept: Different rates for interest on capital ($i$) and sinking fund ($s$).

   • Application: Used in valuation where the investor expects both a return on investment and a fund for asset replacement.

   • Y.P. with Dual Rate: $$\displaystyle Y.P. = \frac{1}{i + s} $$.

4. Gross Income vs. Net Income:

   • Gross Income: Total potential rental income (if fully let).

   • Net Income: Gross Income - Outgoings (taxes, repairs, insurance, management charges).

   • Valuation is based on Net Income.

E. PROJECT DOCUMENTATION & SCHEDULES

Detailed Project Report (DPR)

• What is DPR? A comprehensive document prepared before project execution covering all technical, financial, and managerial aspects.

• Content:

  1. Executive Summary.

  2. Project Background & Objectives.

  3. Market Analysis & Demand.

  4. Technical Feasibility: Site details, design, specifications, technology.

  5. Financial Analysis: Cost estimates (detailed), sources of finance, projected cash flows, profitability, IRR, NPV.

  6. Implementation Schedule: Phasing, time chart.

  7. Risk Analysis & Mitigation.

  8. Social & Environmental Impact.

  9. Conclusions & Recommendations.

Schedule of Rates (SOR)

• Current Schedule of Rates (CSR): A document issued by government/agencies (e.g., PWD, CPWD) listing standardized rates for various items of work in a specific region.

• Significance:

  • Basis for preparing detailed estimates.

  • Reference for rate analysis.

  • Used in contract agreements and payment certification.

  • Ensures uniformity in public works.

• Components of a Rate in SOR:

  • Item description & unit.

  • Basic rate (material, labour, plant).

  • Overhead percentage.

  • Contractor's profit percentage.

  • Total rate (often inclusive of all).

Tender Documentation

• Tender Notice (Invitation to Bid):

  • Purpose: To invite contractors to submit bids.

  • Content:

    1. Name & address of employer/consultant.

    2. Nature & scope of work.

    3. Estimated cost.

    4. Time for completion.

    5. Earnest money deposit (EMD).

    6. Last date & time of submission.

    7. Address for submission & opening.

    8. Eligibility criteria.

    9. Sale period & cost of tender documents.

F. MISCELLANEOUS & APPLICATION-ORIENTED TOPICS

Fixation of Standard Rent

• Method: Based on Year's Purchase method.

• Steps:

  1. Find Depreciated Value of building (Original cost - Depreciation).

  2. Add Market Value of Land.

  3. Total Capitalized Value = (Depreciated Building Value + Land Value).

  4. Calculate Net Annual Income (Gross rent - outgoings).

  5. Standard Rent = Net Annual Income × Y.P.

• Factors: Location, building type, amenities, maintenance, local rent control laws.

Material Statement Preparation (Example: 1 m³ M20 Concrete)

• Grade M20 Mix Ratio: 1 : 1.5 : 3 (Cement : Sand : Coarse Aggregate).

• Total Parts = 1 + 1.5 + 3 = 5.5 parts.

• Volume of Dry Concrete ≈ 1.54 × Wet volume (to account for voids).

• Calculations for 1 m³ Wet Concrete:

  • Dry Volume = 1.54 m³.

  • Cement = (1/5.5) × 1.54 = 0.28 m³ → (0.28 × 1440 kg/m³) ≈ 403 kg ≈ 8 bags (50 kg/bag).

  • Sand = (1.5/5.5) × 1.54 = 0.42 m³.

  • Coarse Aggregate = (3/5.5) × 1.54 = 0.84 m³.

  • Water-Cement Ratio for M20 ≈ 0.5 → Water = 403 × 0.5 = 201.5 liters.

Costing of Building Services

• Drainage: Usually 5-8% of structured cost. Includes pipes, traps, manholes, inspection chambers.

• Electrification: 6-10% of structured cost. Includes wiring, switches, fixtures, distribution boards, earthing.

• Estimation: Often done as a lump-sum percentage in preliminary estimates. In detailed estimates, measured from drawings (length of wires, number of points, pipe lengths).

Calculation of Year's Purchase (Numerical Example)

• Given: Life ($n$) = 30 years, Interest rate ($i$) = 5% = 0.05, Sinking fund rate = 4%.

• Sinking Fund Factor ($s$):

$$s = \frac{i}{(1+i)^n - 1} = \frac{0.05}{(1.05)^{30} - 1} = \frac{0.05}{4.3219 - 1} = \frac{0.05}{3.3219} = 0.01505$$

• Y.P. with Dual Rate:

$$Y.P. = \frac{1}{i + s} = \frac{1}{0.05 + 0.01505} = \frac{1}{0.06505} = 15.37$$

• Interpretation: The present value of an annual income of Re. 1 for 30 years at 5% interest and 4% sinking fund is Rs. 15.37.