mod 3 methods of execution

ES402 ESTIMATION,
SPECIFICATION AND
BUDGETING
MODULE-V
EXECUTION OF WORK
➔ Following are the methods adopted for the execution of the work:
◆ Piece work method
◆ Daily basis method
◆ Lump sum method
◆ Labour rates method
◆ Percentage method
1. Piece work method
In this method, contractors pay workers based on the number of units
completed or tasks performed.
For example, a certain amount is paid per square meter of brickwork

completed or per cubic meter of concrete poured.
This method provides incentives for workers to increase productivity.

1. Piece work method
Disadvantages:
Quality may be compromised as workers focus on completing tasks quickly

rather than ensuring high standards.
Difficult to accurately estimate total project costs as the final cost depends on
the productivity of workers.
2. Daily Basis
Workers are paid a fixed amount for each day of work, regardless of the
amount of work completed.
This method is commonly used for tasks where it's difficult to accurately
measure productivity or where the work involves irregular tasks.
Provides stability for workers as they receive a predictable income.

2. Daily Basis
Disadvantages:
Contractors may face challenges in managing costs if productivity varies

significantly from day to day.
Workers may lack motivation to work efficiently if they receive the same pay
regardless of productivity.
3. Lump Sum
Also known as fixed-price contracts, lump sum contracts involve the
contractor agreeing to complete the entire project for a predetermined fixed
price.
This method shifts the risk of cost overruns from the client to the contractor,
who must carefully estimate costs to ensure profitability.
Provides clients with cost certainty since the price is fixed upfront.
3. Lump Sum
Disadvantages:
Contractors bear the risk of cost overruns, potentially leading to losses if

unforeseen expenses arise.
Changes or additions to the scope of work can be difficult to accommodate

and may require renegotiation of the contract
4. Labour Rate
In this method, contractors charge clients based on the number of hours
worked by laborers, along with any associated overhead costs.
The labor rate may vary depending on factors such as skill level, location, and
demand
The process of doing rate analysis gives a clear picture of the various types of
labour and material required for completing a particular work.
Requirement of Rate Analysis
1. Correct information about the market rate and materials

2. Correct information on the rate of various categories of labourers
3. Output of labourers i.e. task or out turn per day for various types of labourers.
4. Knowledge, rate and outturn of various types of plants to be used in the
construction work.
5. Update knowledge of construction work
Factors affecting Rate Analysis
1. Quality of materials
2. Proportion of mortars
3. Construction facilities available with regards to tools and plants
4. Location of the work site.
5. Facilities available for transportation of labour and material to the worksite.
6. Transportation charges, condition of road or passage to the site of work
7. Overhead charges
8. Miscellaneous expenditure and profit desired
9. Experience of workers and amenities provided to them
10. Proper management and guidance.
Task or out-turn work
This is the quantity of work which can be done by a skilled labour (with the
help of semiskilled and unskilled labours) of the trade working for 8 hours a
day or it can be also defined as the capacity of doing work by a skilled labour
in the form of quantity of work per/day.
The out-turn of work per skilled labour varies according to the nature, height,
climatic condition, location etc.
Out-turn is more in larger cities, as the more specialised and experienced

labourers are available, than the small cities and countrysides.
Procedure for Rate Analysis
The analysis of rate is worked out for the unit payment of the particular item of work
under two heads: Materials and Labour.
Total cost = Cost of labour + Cost of material.
Labour cost
To obtain labour cost the number and wages of different categories of labourers, skilled
(Skilled ISt Class), semi-skilled (Skilled 2nd Class) and unskilled, required for each unit
of work should be known and this number is multiplied by the respective wage per day.
The labour charges can be obtained from the standard schedule of rates.
Material cost
The rate of various materials as per specifications for the items under
consideration can be found out from a market survey.
The costs of materials are taken as delivered at site of work which includes
● The first cost (cost at origin),
● Cost of transport, railway freight (if any), etc.
● Local taxes and other charges.
Other costs included to the above cost of items of work are:

● Tools and plants - 2.5 to 5% of the labour cost
● Transportation cost (if conveyance more than 8 km is considered)
● Water charge- 1.5 to 2 % of the total cost
● Contractors profit - 10 to 15% of the total cost.

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ES402 ESTIMATION,

◆ Daily basis method

◆ Lump sum method

◆ Labour rates method

For example, a certain amount is paid per square meter of brickwork

This method provides incentives for workers to increase productivity.

Quality may be compromised as workers focus on completing tasks quickly

Provides stability for workers as they receive a predictable income.

Contractors may face challenges in managing costs if productivity varies

Contractors bear the risk of cost overruns, potentially leading to losses if

Changes or additions to the scope of work can be diﬃcult to accommodate

1. Correct information about the market rate and materials

Out-turn is more in larger cities, as the more specialised and experienced

Total cost = Cost of labour + Cost of material.

Other costs included to the above cost of items of work are:

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