ESTIMATING

TUTORIAL
PRESENTATION 1

GROUP 3
CHARLES | TEO CHIANG LOONG 0323762 | FOO VAN JEAN 0330017 |
LIM YIN RU 0329931 | LIM XIAO SHI 0324410 | ROXANNE | DEONG KHAI KEAT 0320055
Q1.  What  are  the  four  (4)  main  factors  influencing  the  estimate  of  a  
material  cost?  Explain  and  provide  an  example  of  how  each  factors  
influence  the  estimate  of  the  material  cost.

Material  cost  =  Material  Unit  Cost  x  Quantity  Required

Main  factors  influencing  the  estimate  of  a  material  cost

Material  cost  =  Material  Unit  Cost  x  Quantity  Required

1. Delivery charges 3. Wastage

2. Discounts 4. Unloading

3. Variation in price of material 5. Storage & Protection

Main  factors  influencing  the  estimate  of  a  material  cost

Material  cost  =  Material  Unit  Cost x  Quantity  Required

1. Why pay for delivery?

Main  factors  influencing  the  estimate  of  a  material  cost

Material  cost  =  Material  Unit  Cost x  Quantity  Required

1. Delivery charges

• Availability of material.
- Local or overseas?
- This determines the mode of transport
whether to include land transport or
shipment fees.

• Site location.
- Capacity of truck; How many trips
required?
- Significant for precast components used
in IBS system.

• Urgency of the project.

- In order to meet the deadline of each
construction phase, more trucks are hired to
deliver the material required in a day.
Main  factors  influencing  the  estimate  of  a  material  cost

Material  cost  =  Material  Unit  Cost x  Quantity  Required

2. Discounts

• Volume discounts
Supplier offers a discount.
Unit purchase costs declines
as quantity increases.

• Trade discounts
Subcontractor offers a
discount if it is awarded for all
of the trades it submitted its
bid on.

• Cash discounts
Subcontractor or supplier
offers a discount in return for
prompt payment.
Main  factors  influencing  the  estimate  of  a  material  cost

Material  cost  =  Material  Unit  Cost x  Quantity  Required

3. Variation in price of material

The rise or fall of material price on the
markets.

• Supply and demand

Cost of buying materials is affected by
the ability of the manufacturer to
produce it.

• Exchange rate changes

Prices of materials will vary significantly
to keep up with the exchange rate.

• Inflation
The persistent rise in prices causes an
escalation in raw material prices in a
project.
Main  factors  influencing  the  estimate  of  a  material  cost

Material  cost  =  Material  Unit  Cost  x  Quantity  Required

4. Waste

Waste includes both the incidence of

material losses and the execution of
unnecessary work, which generate
additional costs but do not add value to
the product (Koskela 1992)

Any losses produced by activities that

generate direct or indirect costs but do
not add any value to the product from
the point of view of the client.
(Formoso et al. 1999)
Main  factors  influencing  the  estimate  of  a  material  cost

Material  cost  =  Material  Unit  Cost  x  Quantity  Required

4. Waste

Falling  short  on  amount/   Deterioration

Loss  of  material  to  ground

-­ Reduction  of  insufficient   -­ Due  to  moisture,  cement  that  is  

due  to  unintended  losing
not  properly  protected  or  stored,  
whereby  they  absorb  moisture   Breakages
from  the  atmospheric  air  or  any  
other  source  will  cause  cement   -­ Mishandling  of  items  in  
chemically  reacting  to  it transportation  process  or  
due  to  human  error,  
-­ Bricks;;  brittle  material
-­ Window  or  glasses  pane;;  
fragile  materials
Main  factors  influencing  the  estimate  of  a  material  cost

Material  cost  =  Material  Unit  Cost  x  Quantity  Required

4. Waste

Waste  factor

as  the  percentage  of  framing  material  ordered  in  excess  of  

the  estimated  material  needed  for  construction.

Eg:   if  the  actual  quantity  of  concrete  required  is  100  m3  and  
the  waste  factor  is  5%,  the  amount  of  concrete  to  be  
procured  should  be  105  m3.  
Main  factors  influencing  the  estimate  of  a  material  cost

Material  cost  =  Material  Unit  Cost  x  Quantity  Required

5. Post delivery constraints

·   Unloading:

The  unloading’s  cost  depends  of  the  type,  the  quantity  

and  the  size  of  the  material.

The  cost  will  depend  of  the  unloading’s  method:

-­ By  hand  à labor  cost  e.g.  time  of  unloading,  
number  of  necessary  people
-­ With  machine  à rental  cost  for  every  machine,  
labor  cost  for  using  machine
Main  factors  influencing  the  estimate  of  a  material  cost

Material  cost  =  Material  Unit  Cost  x  Quantity  Required

5. Post delivery constraints

·   Storage:

If  there  is  not  enough  space  to  store  the  material,  it  will  
be  necessary  to  find  alternative:
-­ Rent  a  conteneur
-­ Rent  an  emplacement

·   Protection:

It’s  necessary  to  protect  the  materiel  depending  on  his  

characteristic:
-­ Fragility  à provide  protections  for  storage  such  as  
tarpaulins,  shelter,  skin  foam,  barrier
-­ Value  à set  up  all  the  way  to  avoid  damage,  theft  
…  (locked  shelter,  video  surveillance)
Main  factors  influencing  the  estimate  of  a  material  cost

Material  cost  =  Material  Unit  Cost x  Quantity  Required

• Late deliveries / lesser quantities • Early deliveries / greater quantities than

- Delay of progress. required.
- Gypsum board to transported into - Disorder at site, extra handling, storage.
the houses by crane when assembling. - Quality affected, breakage and loss of
Extra cost of labour and machinery. material.
Main  factors  influencing  the  estimate  of  a  material  cost

Example

Reinforcement Bars | High Tensile (T10)

RM
Quoted price of T12/T10 rebars RM 2250/tonne
delivered to site

Add Labour unloading and stacking RM 5/tonne

Add Wastage 7% RM158/tonne
Add Tie wire 7kg/tonne @ RM5/kg RM 35/tonne
Allow spacer at RM4/tonne RM4/tonne
Add Rolling margin at RM22/tonne RM 22/tonne

SUBTOTAL RM 2474/tonne
Volume discounts 5% RM 123.70/tonne
Cash discounts 2.5% RM 61.85/tonne

TOTAL RM 2288/tonne

6% GST RM 137.40/tonne
TOTAL RM 2425.40/tonne
Q2.  What  are  plants  and  tools?  Recommend  the  methods  of  estimating  
for  plants  and  tools.

Plant  is  generally  re-­useable,  and  so  as  well   Tools  might  be  considered  to  be  instruments  
as  being  purchased  new,  it  may  be  purchased   that  are  used  by  hand
second  hand  or  hired.
• Hand  tools:  Shovel,  Hammer,  Screwdrivers,  
• Mechanical  Plants  :  Crane,  Paver,   Brushes,  Trowels,  Knives
Excavator,  Concrete  Mixer.  Forklift  truck • Power  tools:  Mixers,  Saws,  Cutters,  Drills,  
• Non-­mechanical  Plants  :  Site  office  ,   Guns,  Breakers
Scaffolding • Machine  tools:  Cutting,  Boring,  Grinding
Q2.  What  are  plants  and  tools?  Recommend  the  methods  of  estimating  
for  plants  and  tools.

For power driven mechanical For small and non-mechanical

plants, the cost to be allowed when plants and tools, the cost to be
estimating includes: allowed for when estimating
includes:
1. Cost of machine per hour
(which includes machine 1. Percentage addition to the
depreciation, maintenance, estimated cost of works
insurances, licenses and
overheads)
2. All-in-rate for operator
3. Fuel
Methods  of  estimating  for  plants  and  tools

Method  1  :  Software  application

Accounting  software for  construction  management  often  features  plant  management  

modules.  This  can  enable  plant  to  be  assigned  efficiently,  by  listing  plant  and  their  
relevant  details,  including  availability.

By  using  such  software  to  manage  plant,  it  is  also  possible  to  monitor  variable  and  fixed  
costs  associated  with  insurance,  storage,  operation  and  depreciation.

Rising  costs  are  also  easier  to  detect  and  monitor,  and  can  help  a  company  make  
informed  decisions  about  managing  the  fleet,  i.e.  replacing  an  older  vehicle  that  has  had  
large  repair  bills
Thank you