CECOST 430

CHAPTER 9 - 13
 CHAPTER 9

PRICING CONSTRUCTION EQUIPMENT

 Renting versus Purchasing Equipment

distinct advantages to renting equipment

1. The contractor does not have to maintain a large
inventory of specialized plant and equipment where
individual items are used infrequently.
2. The contractor has continuous access to the newest
and most efficient items of equipment available.
3. There is little or no need for equipment warehouse and
storage facilities.
 Renting versus Purchasing Equipment

distinct advantages to renting equipment

4. There is a reduced need for the contractor to
employ maintenance staff and operate facilities for their
use.
5. Accounting for equipment costs can be simpler when
equipment is rented.
6. There may be significant savings on company
insurance premiums when a contractor is not maintaining a
inventory of plant and equipment.
However, when the construction operations of a contractor
generate a steady demand for the use of certain items of
equipment or plant, there can be distinct fi_x0002_nancial
benefits gained by owning equipment.
Where a comparison of equipment ownership with the
rental alternative strictly on the basis of cost is needed, the
full cost per unit of time of owning an item of equipment has
to be determined.
aspects of equipment ownership have to be considered

1. Depreciation expense
2. Maintenance and repair costs
3. Financing expenses
4. Taxes
5. Insurance costs
6. Storage costs
7. Fuel and lubrication costs
 Depreciation

refers to the decline in market value of an asset. To

accountants the term has a more narrow meaning having to
do with allocating the acquisition cost of an item of plant
over the useful life of that asset.
 Maintenance and Repair Costs

The costs of maintenance and repairs of plant and

equipment comprise a factor that
cannot be ignored when considering ownership costs.
 Financing Expenses

Whether the owner of construction equipment purchases

the equipment using cash or whether the purchase is
financed by a loan from a lending institution, there is
going to be an interest expense involved.
 Taxes, Insurance, and Storage Costs

Just as with investment expenses, significant variations can

be expected in the cost
of the annual taxes, insurance premiums, and storage costs
together with fees for
licenses required and other fees expended on an item of
equipment.
 Fuel and Lubrication Costs

Fuel consumption and the consumption of lubrication oil can

be closely monitored
in the field.
Equipment Operator Costs
 Company Overhead Costs

Where the equipment ownership costs calculated in

accordance with this chapter are to be used as a basis of
rental rates charged by the contractor to others for the use
of the contractor’s equipment, the full rental rates should
include an amount for company overhead costs and amount
for profit. Company overhead costs are basically
the fixed costs associated with running a business. They
may include the cost of maintaining a furnished office, office
equipment, and personnel together with all the
other costs of business operation.
 SUMMARY

Categories of equipment and how they are priced:

a. Hand tools, priced as a percentage of labor price (add-
ons)
b. On-site equipment used intermittently, priced as a
general expense item
c. Equipment used for specific tasks, priced directly
against the takeoff items
 SUMMARY

When straight-line depreciation is used, the amount of

depreciation from initial cost to salvage value is distributed
equally each year over the life of the asset.
Depreciation can also be calculated using the declining-
balance method or the production or use method. Using
these methods results in depreciation amounts
that are high to begin with but decline as the asset gets
older.
 SUMMARY

When considering the depreciation of a rubber-tired vehicle,

the tire depreciation is calculated separately from the
vehicle depreciation.

Maintenance and repair costs on construction equipment

vary considerably de_x0002_pending on the type of
equipment and the job conditions encountered.
 SUMMARY

Whether equipment purchase is financed by loans or by use

of the contractor’s cash, interest charges will apply. These
are calculated as a percentage of the aver_x0002_age
annual investment amount.
Taxes, insurance charges, and storage costs vary over a
wide range of values de_x0002_pending on particular
circumstances. An allowance for these costs is also
calcu_x0002_lated as a percentage of the average annual
investment amount.
 SUMMARY

Fuel costs depend on the type of engine and are

proportional to the engine’s horsepower rating. An operating
factor that is always less than 100% is also
in_x0002_troduced to account for the fact the engine does
not operate continuously at full throttle.
An allowance for company overheads and profit should be
added to hourly own_x0002_ership costs of an item of
equipment when quoting a price for the rental of the
item.
 CHAPTER 10

PRICING EXCAVATION AND BACKFILL

 Excavation Equipment and Methods

common types of excavation and the backfill activities

1. Site cut-and-fill operations
2. Basement- type excavations
3. Trench excavations
4. Pit and sump excavations
1. Site cut-and-fill operations—on large projects, scrapers, dozers,
rollers, water trucks, and graders may be used. Smaller jobs may
use just a grader or a bobcat with a small roller.
2. Basement- type excavations—a track backhoe or track loader
and dump trucks are often used.
3. Trench excavations—trenching machines are available for
shallow pipes; rubber- tired tractors and backhoes for call for track-
mounted backhoes.
4. Pit and sump excavations—this is mostly performed using various
sizes of backhoes.
 Equipment Transportation Expenses

The cost of transporting minor items of equipment such as

plate compactors, small rollers, bobcats, and small tractors
to and from the site is priced on the General Expense Sheet
under the item “Trucking and Material Handling.” This item
covers the cost of trucking associated with carrying
incidental construction goods and
equipment where the supplier of these items does not
deliver them to the site.
 Site Cut-and-Fill Operations

The equipment used in cut-and-fill operations depends

mostly on the scale of the project. Extensive operations call
for large-sized, earth- moving scrapers and bulldozers
often working in teams excavating and depositing large
quantities of material, which is then leveled and compacted
by a second team of rollers, water trucks, and graders.
Small cut-and-fill operations can be undertaken with no
more than a small dozer and grader or even with just a
bobcat and a “walk-behind” roller.
 Basement Excavations

Basements are often excavated using a track backhoe of

between 1⁄2- and 1- cubic yard capacity filling dump trucks
that dispose of surplus material. The excavation of large-
sized basements may be undertaken using one or more
track loaders of up to 2- or 3- cubic yard capacity loading
fleets of trucks that access the bottom of the
basement by means of ramps down the sides of the
excavation.
 Trench Excavations

For smaller trenches such as those required for shallow

pipes and cables, trenching machines are available that
attach to rubber- tired tractors and provide a highly
ma_x0002_neuverable and efficient trench-excavating
setup.
Larger trenches are more often dug using backhoes.
 Pit and Sump Excavations

Pit and sump excavation is mostly performed using

backhoes. The particular type and size of backhoe used in
any situation depend mostly on the size of the holes to
be excavated.
Hand Excavation
 Excavation Productivity
• The amount of work excavation and backfilling crews can
perform per hour is highly variable because there are so
many factors that can affect the efficiency of the labor and
equipment involved.
excavation and backfill are influence by:
1. Job Factor
2. labor and management factors
 Job Factors

1. Type of material excavated or backfilled

2. Moisture condition of materials
3. Weather conditions expected
4. Access to and around site
5. Project size and complexity
6. Distance to haul materials for disposal
7. Availability of gravels and fill materials
8. Wage and price levels at the job location
 Labor and Management Factors

1. Quality of job supervision

2. Quality of job labor
3. Motivation and morale of workers
4. Types and quality of tools and equipment
5. Experience and records of similar past projects
 SUMMARY

There are many subcontractors performing excavation and

backfill work. Most of these companies specialize in some
aspect of this trade, often because they have
equipment specifically for one particular type of work.
The cost of transporting equipment should be considered
when pricing excava_x0002_tion and backfill operations;
this should include the cost of loading, unloading,
and trucking requirements.
 SUMMARY

In order to determine the labor price per unit of excavation

work, four elements have to be considered:
1. The number of workers that comprise the work crew and
their trades
2. The wage rates of the trades involved
3. The probable productivity rate of the crew or the
equipment they are operating
4. The productivity time factor (per hour, day, or week)
 SUMMARY

facturers, but the estimator’s best source of information is

his or her own record of previous excavation jobs.
Material prices for backfill have two components:
1. The price of supplying the material to the site
2. The price of spreading and compacting the material
 SUMMARY

The estimator also has to account for swell factors and

compaction factors when pricing excavation and backfill
materials.

Recap and pricing excavation and backfill can be done

manually or via com_x0002_puter.
 chapter 11

PRICING COCNRETE WORKS

 Cast- in- Place Concrete Work Generally

Concreting work encompasses a large array of activities

that can be divided into four main categories:
1. Supplying and placing concrete
2. Construction and removal of formwork
3. Supplying and placing reinforcing steel
4. Miscellaneous items associated with concrete work
 Supplying and Placing Concrete

Productivity Placing Concrete

Job Factors
1. Method of placing concrete
2. Rate of delivery of ready- mix concrete
3. Properties of the concrete to be placed
4. Size and shape of concrete structures
5. Amount of rebar in the forms
 Labor and Management Factors

1. Quality of supervision
2. Quality of job labor
3. Motivation and morale of workers
4. Type and quality of tools and equipment
5. Experience and records of similar past projects
 Method of Placing Concrete

There are a number of methods of placing concrete

available, including:
1. “Pouring” direct from mixing trucks by means of chutes
2. Using hand- operated or powered buggies
3. Using crane and bucket setup
4. Using concrete pumps
5. Using conveyors
6. Using a combination of two or more of these methods
 Properties of the Concrete to Be Placed

Some concrete mixes are easier to handle than others.

Higher-slump mixes of con_x0002_crete that are sloppier
and more liquid than low-slump mixes will flow more easily
and will take less time to consolidate.

superplasticizer - used to maintain a low water/cement

ratio in a concrete mix for maximum strength but produce a
high-slump concrete mixture that has the good
workability required for easy placing.
 Concrete Materials

Prices for ready- mix concrete are obtained from local

suppliers who are interested in quoting the supply of all
concrete required for a project.
 issues that the estimator has to carefully consider when
pricing concrete materials
1. Does the concrete described in the quote meet the
specifications?
2. What are the extra charges for supplying special
cements like sulfate- resisting or high- early cements?
3. What are the extra charges for air entrainment, calcium
chloride, or any other concrete additives required to meet
specifications?
4. Are there additional charges for cooling concrete in hot
weather or heating concrete in cold weather to account for?
 issues that the estimator has to carefully consider when
pricing concrete materials
5. If small quantities of concrete are required on a project, what
are the premi_x0002_ums charged on small loads of concrete?
6. If delays are anticipated in unloading the concrete at the site,
what will be the waiting time (demurrage) charges?
7. If concrete is required to be delivered to the job outside of
normal working hours, what are the additional charges?
8. If disposal of surplus concrete and cleaning of concrete
trucks are restricted because of environmental restrictions, are
there any additional fees payable to cover these activities?
 Waste Factors

Allowance for waste and spillage of this material can be

made by increasing the takeoff quantities or by raising the
price by the percentage factor considered necessary.
 Formwork

method of providing formwork is adopted, there are a

number of costs that must be considered when
pricing a formwork system:
1. The cost of building the form system (fabrication) and
keeping it in good re_x0002_pair, which can be spread over
the number of uses the form system is put to.
2. The cost of setting up the form system each time it is
used.
 Formwork

3. The cost of removing the system after the concrete has

been placed (strip_x0002_ping). The cost of cleaning and
oiling the forms ready for reuse should be included with the
stripping cost.
4. Other possible costs such as transportation, handling,
and storage of the
form system between uses.
 Formwork Productivity

The factors that affect the productivity of crews fabricating

and erecting formwork systems include the same general
job factor and labor and management factors
pre_x0002_viously discussed, but there are a number of
items that impact the productivity and cost of formwork,
particularly:
1. Potential for reuse of a form system
2. Complexity of formwork design
3. Use of “fly forms” (“gang forms”)
4. Number of form ties required for a system
 The number of form ties required for a
system depends on five variables:
1. The capacity of the form ties
2. The rate of filling the forms
3. The temperature of the concrete
4. The method of placing concrete
5. The depth of drop and the distribution of reinforcing steel
Formwork Productivity Rates
 Pricing Formwork Materials
• Formwork for cast- in- place concrete may be constructed
of lumber, plywood, alumi_x0002_num, steel, and
combinations of these materials.
• The cost of materials used in a formwork system would
include the rental or purchase cost of all the components
involved in its construction except for form ties and other
hardware items that are priced sepa_x0002_rately
 Reinforcing Steel
• Reinforcing steel for concrete includes welded wire mesh
and reinforcing bars. Welded wire mesh is purchased in
mats or rolls delivered to site for placing, so there are two
costs associated with mesh: the supply cost, including
delivery to site, and the labor cost for installation.
cost of supplying and placing reinforcing steel bars on a project

1. The cost of rebar shop drawings

2. The cost of the raw steel bars
3. The cost of handling, cutting, bending, and identifying
(tagging) rebar in the fabrication shop
4. The cost of transporting the bars to the site
5. The cost of spacers, chairs, saddles, and ties used in the
installation of rebar
6. The labor cost of installation
 Reinforcing Steel—Installation Productivity

factors affecting productivity of labor installing reinforcing

steel bars
1. The size and lengths of the reinforcing bars
2. The shapes of the bars
3. The complexity of the concrete design
4. The amount of tolerance allowed in the spacing of bars
5. The amount of tying required
 summary
• The cost of supplying concrete includes the cost of the
ingredients plus the cost of mixing and transporting the
mixture to the site. The basic price offered by
ready_x0002_mix concrete suppliers generally covers
these components and goes on to quote prices for a
number of possible other requirements such as air
entrainment and sulphate- resisting concrete.
• An allowance for waste and spillage of concrete is added
as a waste factor to con_x0002_crete takeoff quantities.
 summary
• There are a number of different costs to consider when
pricing a formwork system:
• 1. Cost of building the system (fabrication)
• 2. Cost of setting up the system each time it is used
• 3. Cost of removing the system after concrete is placed
(stripping)
• 4. Other possible costs including transportation and
storage expenses
There are a number of different costs to consider when
pricing a formwork system:
1. Cost of building the system (fabrication)
2. Cost of setting up the system each time it is used
3. Cost of removing the system after concrete is placed
(stripping)
4. Other possible costs including transportation and storage
expenses
The factors that affect the productivity of crews fabricating
and erecting form_x0002_work systems include the same
general job factor and labor and management
factors previously discussed plus the following:
1. Potential for reuse of a system
2. Complexity of form design
3. Use of fly forms (gang forms)
4. Number of form ties required for a system
 chapter 12

pricing masonry, carpentry and finishing works

 Masonry

The cost of masonry work includes the cost of labor crews

laying the masonry units and installing accessories such as
horizontal ladder reinforcing and wall ties; masonry
materials including accessories and mortar; equipment
used in the mixing and hoisting of masonry materials; and
erecting and dismantling temporary scaf_x0002_folding and
work platforms required by the work crews.
 what to consider
• Masonry Productivity
• Masonry Materials
 Masonry Productivity

job factors that affect the productivity of crews

1. What is being built with the masonry units
2. The standards of workmanship required
3. The size and weight of the masonry units being used
4. The kind of mortar being used
5. The kind of bond being used
6. The complexity of the design of the work
7. The presence or lack of repetition in the work
8. The availability of workers skilled in the masonry trade
 Masonry Materials

The prices of masonry units and accessories can vary

greatly depending on requirements.
 Rough Carpentry
• Labor and material prices are applied directly to the
takeoff quantities listed on the rough carpentry recap
 Rough Carpentry Productivity

job factors:
1. The nature of the carpentry components being used
2. The size of cross- section and length of the pieces of
lumber involved
3. The extent to which power tools are used in the work
4. The complexity of the design of the work
5. The presence or lack of repetition in the work
6. The extent to which components and assemblies are
fabricated off- site
 Rough Carpentry Materials

Softwood lumber rather than hardwood is more commonly

used for rough carpentry
Softwood lumber is classified by use into three groups:
1. Yard lumber—Lumber used for general building
purposes.
2. Structural Lumber—Lumber of at least 2" nominal width
that will be ex_x0002_posed to structural stresses.
3. Factory and shop lumber—Lumber selected for
remanufacturing use.
Softwood lumber is also classified according to the extent of
processing in its manufacture:
1. Rough lumber—Sawn lumber that has not been
surfaced.
2. Surfaced (dressed) lumber—Lumber that has been
surfaced by a planer to provide a smooth finish on one or
more sides. This lumber is referred to as S1S if one side is
dressed, S2S if two sides are dressed, and so on.
3. Worked lumber—In addition to being surfaced, worked
lumber has been further shaped to produce such products
as tongue-and-groove boards.
Lumber Lengths and Waste Factors
Lumber is generally available in lengths that are
multiples of 2 feet. Studs, however, can be obtained precut
to the required length.
Lumber Grades
Within lumber’s use classification, lumber is graded in order
to provide information to users so that they can assess its
ability to meet requirements.
 Tables are published that list the allowable stresses
for structural lumber in each of the following use categories,
including:
1. Light framing
2. Structural light framing
3. Structural joists and planks
4. Appearance framing
5. Decking
6. Beams and stringers
7. Posts and columns
 Structural light framing generally has five grades for each
species:
1. Select Structural
2. No. 1
3. No. 2
4. No. 3
5. Stud
 Rough Hardware

Rough hardware for lumber mostly consists of nails, but

other fasteners and such items as joist hangers may also
be required. Many estimators allow for rough
car_x0002_pentry hardware in the same way we allowed
for formwork hardware.
 Finish Carpentry and Millwork

The process of pricing finish carpentry and millwork

consists of applying materials and labor prices to the items
measured in the takeoff process. Many finish carpentry
components such as stairs, doors, windows, and cabinets
are manufactured goods that are constructed off- site,
delivered to the site by the supplier, and merely installed
by the site labor crews
 Exterior and Interior Finishes

The most dependable way of estimating the cost of exterior

and interior finishing work follows the same procedure we
have adopted with the preceding trades in this text.
Wage Rates
 chapter 13

PRICING SUBCONTRACTORS
Subcontractors often perform 80% or more of the work on
building construction projects. In some situations all of the
project work is put in place by subtrades, leav_x0002_ing
the general contractor to merely coordinate the activities of
the subtrades as construction manager.
 Potential Problems

1. Unreliability of some subcontractors

2. Errors in subtrade bids
3. Overlap or underlap in the scope of work subcontracted
4. Conditional bids from subcontractors
5. Bid closing congestion
6. Compliance with government positive action
requirements regarding minorities
 Unreliable Subcontractors

While most subtrades can be relied on to deliver the bids

they have promised to submit and, at least, to try to meet
their contractual obligations, there are still occasions when
some subcontractors break their agreements leaving the
contractor in much difficulty.
 Errors in Subtrade Bids

One of the recurring reasons for the deficient performance

of subtrades is the pres_x0002_ence of errors in the
estimates prepared by the subtrades. Accepting a subtrade
bid
that contains a mistake can lead to endless trouble for a
contractor, so the estimator has to make every effort to
ferret out subtrade bids that contain errors if the
conse_x0002_quential problems are to be avoided.
 Overlap and Underlap of the Scope of Work Subcontracted

Ensuring that all the work of the project is properly covered,

either by subtrades or by the contractor’s own forces, can
be difficult since it is easy for a section of work to
be excluded from the subtrade’s scope and be overlooked
in the contractor’s takeoff.
 Conditional Subtrade Bids

The estimator’s task becomes far more complicated when

subtrades attach condi_x0002_tions to their bids. Where all
of the subtrades quoting a certain trade base their bids
on the same scope of work and comply with the same set of
specifications, selecting a subtrade price should not be
difficult.
 Bid Closing Congestion

Compounding all of these problems is the congestion that

often occurs in the prime contractor’s office when the
subtrade bids are received on the bid closing day.
 Positive Action Programs

On some publicly funded projects, the general contractor

may be required by gov_x0002_ernment regulations to
award a certain percentage of the work to women- owned
and minority- owned businesses.
 Contacting Subcontractors

Once the subtrade needs of a project have been defined,

the next task is to inform subcontractors that the general
contractor is going to prepare a bid for the project
and that bids for their trade will be required. Most
contractors maintain a directory of the subtrades they prefer
to deal with.
• One way to organize this process is to have a subtrade checklist
like the one shown as Figure 13.1 set up on a computer
spreadsheet and then proceed as follows:
1. The estimator checks off the trades required for the project
and adds trades that are not on the basic list.
2. The completed checklist is then compiled.
3. A copy of this checklist is e- mailed to all the subtrades on the
contractor’s mailing list.
4. The subcontractors are asked to return the checklist with their
name against all the trades on the checklist that they are prepared
to submit prices for.
 Unknown Subcontractors

Having to award contracts to companies from outside their

select group of preferred subcontractors can be a stressful
experience for some general contractors; however, it
may be necessary for a number of reasons. For instance,
simply complying with bid conditions can necessitate that a
contractor deal with an unknown subcontractor.
 Nominated Subcontractors

Occasionally the project designers or even the owner may

make a deal with a sub_x0002_trade sometime before bids
are called from general contractors. A clause is then
in_x0002_serted into the bid documents informing all
bidders that the subtrade named is to be awarded the
subcontract for the work of a certain trade.
 Unsolicited Subtrade Bids

More commonly, a contractor will be faced with an

unfamiliar subtrade when a low price is received for a trade
from a company who is not known to the contractor.
This can put the contractor in a difficult position: On one
hand, the contractor may need to use the low price to
maintain a competitive bid, and, on the other hand, the
contractor may be hesitant to accept the risk of using an
unknown subcontractor.
 Evaluating Subcontractors

two main concerns when considering an unfamiliar

subtrade are:
1. Is the subtrade capable of meeting the quality and
schedule requirements of
its work?
2. Does the subtrade have the financial capability
required?
 An effective evaluation of subtrade companies would
involve an investigation of
a number of factors,
• 1. The general reputation of the company
• 2. The quality of previous work performed by the company
• 3. The quality of the company’s management
• 4. The company’s disposition in terms of its general
cooperativeness and the
• ease of dealing with company site and office personnel
• 5. The financial status of the company
 Bonding of Subtrades

Under the terms of the contract it has with the owner, the
prime contractor is always
held responsible for the performance of the work, including
the performance of the
work done by subcontractors.
 Pre- Bid Subtrade Proposals

At one time, most subtrades submitted their bids to the

prime contractor by tele_x0002_phone shortly before the
prime contractor’s bid was due to be presented to the
owner.
 Analyzing Subtrade Bids

The estimator has to ensure that all of the work required

from a trade, as defined by
the project drawings and specifications, is included in the
subtrade bid. One problem
is that even though the CSI MasterFormat neatly classifies
construction trades, the
scope of work of trade contractors may not exactly match
that of the CSI classifica_x0002_tion
• The estimator has to ensure that all of the work required
from a trade, as defined by the project drawings and
specifications, is included in the subtrade bid.
 Bid Depositories

There is always a temptation for those who receive bids to

disclose the amount of a bid from company A to a preferred
company B on the understanding that if com_x0002_pany B
can equal or better the price, it will be awarded the contract.
While this practice, which is variously known as “bid
shopping” or “bid peddling,” may not be
illegal, it is certainly unethical and there have been many
attempts to put an end to
such practices in the construction industry.
 Scope of Work

If a bid depository using trade scope definitions is operating

in the area where a
project is to be built, anyone preparing a bid for the project
is strongly advised to
obtain the list of trade definitions published by the local bid
depository.
 SUMMARY
• The evaluation of a subcontractor needs to consider:
• 1. The general reputation of the company
• 2. The quality of previous work performed by the company
• 3. The quality of the company’s management
• 4. The company’s disposition in terms of its general
cooperativeness and the ease
• of dealing with company site and office personnel
• 5. The financial status of the company
One way to manage the risk of nonperforming subtrades is
to have subtrades obtain performance bonds.
Another tool in subtrade management is the pre- bid
subtrade proposal. This out_x0002_lines for the contractor’s
estimator the terms of the subtrade bid in good time
before the subtrade releases its price at the last minute.
The contractor’s estimator needs to carefully analyze
subtrade bids to ensure that
all of the work required from a trade, as defined by the
project drawings and
specifications, is included for in the subtrade bid price.
Bid depositories have been set up by contractors and trade
associations to help
combat the practice of “bid shopping” and reduce the last-
minute rush of sub_x0002_trade bids to the prime
contractor.
The bid depository has also been used in some instances to
introduce generally
accepted definitions of the scope of work for trades that
submit their prices
through the depository.
THANK YOU!!!!!