Factor Affecting Rate Analysis

Factor Affecting Rate Analysis

The factors which affect the rate analysis of an item are broadly classified into main categories: -

A. Major Factor

B. Minor Factor

Major Factor

a) Material

i. Material is major part required for the construction.

ii. About 50-60% of total cost of work is due to the cost of materials.

iii. Hence, it is necessary to work out the exact quantity of material required.

iv. The excess quantity of materials or shortage of material greatly affects the rate analysis.

v. Cost of material includes material cost, freight, transportation, sales tax and insurance charges.

b) Labour

A person who helps or work as per instruction of skilled person to perform work as per drawing and specification.

i. Number of labours required for the work is worked out correctly.

ii. About 30% of total cost of work due to the cost of labourers

iii. The rate of labours varies from place to place and depends on the categories of labours such as skilled, semi-skilled and unskilled labour.

Minor Factor

i. Tools and plants

Different types of tools and plants are necessary for execution of work. A good estimator will decide whether purchasing is more economical or hiring tools and plants is advisable. Use special equipment increases the cost of construction.

ii. Overhead Charges

This mainly consists of office expenses, expenditure on labour welfare, depreciation amount, testing of material, electrification, water supply connections, etc. This is usually 2-5% of cost of work.

iii. Contractor’s Profit

Normally 10% of actual cost of work is considered as contractor’s profit

iv. Place of work

If site is in remote area, transportation charges increases. Similarly labour charges also varies i.e. if site conditions are difficult, cost will be more.

v. Magnitude/ nature of work

Greater the magnitude of work lesser will be the cost.

vi. Condition of contract

If the condition of contract is very stiff the rates high.

vii. Specification of the work

If specification require, use of superior quality of material, the rate will be higher.

viii. Site Conditions

For difficult site conditions, the cost will be on higher side.