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DIFFERENT TYPES OF VALUE

 Scrape Value:
o Scrape value is the value of the dismantled material.
o That means after dismantle we will get the steel, brick, timber etc. in
case of machines the scrape value is metal or dismantle parts.
o In general the scrape value is about 10 % of total cost of construction.
o Scrape value = sale of useable material – cost of dismantling and
removal of the rubbish material.
 Salvage Value:
o It is the value of the utility period without being dismantled.
o We can sale it as a second handle.
 Market Value:
o The market value of a property is the amount which can be obtained at
any particular time from the open market if the property is put for
sale.
o The market value will differ from time to time according to demand
and supply.
o This value is changes from time to time for various reasons such as
change in industry, change on fashion, means of transport, cost of
material and labour etc.
 Book Value:
o Book value is the amount shows in the account book after allowing
necessary depreciation.
o The book value of property at a particular year is the original cost
minus the amount of depreciation year.
o The end of the utility period of the property the book value will be
only scrape value.
 Rateable Value:
o Rateable value is the net annual letting value of a property, which is
obtained after deducting the amount of yearly repairs from the gross
income.
o Municipal and other taxes are charged at a certain percentage on the
rateable value of the property.

ANNUITY:

o It is the annual periodic payments for repayments of the capital


amount invested by a party. Annuity is either paid at the beginning or
at end of each period of installment.

YEAR’S PURCHASE:

o The capitalize value which needs to be paid once for all to receive a
net annual income of Re 1 by way of interest at the prevailing rate of
interest in perpetuity (i.e. for an indefinite period) or for a fixed no. of
days.
o YP = 100/ rate of interest = 1/R
o Years Purchase (Y.P) = 1/ (R + Sc )

MORTGAGE:

o When the owner of freehold or leasehold property grants an interest in


his property to other person against the security of a loan advanced by
the person, he is said to perform a mortgage deed. The person who
grants such interest is known as the mortgagor and the person who
advances loan for such interest is known as the mortgage.
TENDER:

o Tender is an offer in writing for executing certain specified work or


for supplying specified materials subjected to certain terms and
conditions like rates, time limit etc.
 Types of Tender:
o Open Tender or Public Tender
o Selected Tender or Limited Tender
o Negotiated Tender

TENDER NOTICE:

o The notice inviting tender paper is a very important document on


which tenders and subsequent agreements with the contractors are
based.
o Tender notice should stipulate reasonable time for completion of
work; in an urgent case the authority which is competent to approve
N.I.T. in that particular tender might curtail the period but the period
should be realistic period.
o The main inclusion are:
 Name of the authority inviting tender.
 Particulars of contractors eligible to submit tenders.
 Name of work and its location
 Estimated cost of work.
 Estimated cost of work.
 Earnest money deposit.
 Time of completion.
 Last date, time limit and place of receipt of tender and also time
of opening of tender and accepting authority.
CONTRACT:

o A contract is a promise or set of promises that are legally enforceable


and, if violated, allow the injured party access to legal remedies.
o Contract law recognizes and governs the rights and duties arising from
agreements.
 Form of Contracts:
o Lump-Sum Contracts
o Unit-Price or Item Rate Contracts
o Cost Plus or Percentage Contracts

EARNEST MONEY DEPOSIT

o To ensure that a Bidder does not submit a Dummy Bid or back out at
time of tender opening, Department collects a small refundable fee
from each bidder, which is called EMD.
o EMD is always in form of a Demand Draft & Cheques or cash are
strictly not allowed. EMD is returned when all Bids are opened &
tender is awarded to other firm. In case Tender is cancelled, the EMD
is returned.
o In case, your firm is the winning bidder, the said EMD shall be
returned to you only after you complete the supply or you make a
security deposit. After Bid is opened, if Bidders refuses to take the
contract, then his EMD is forfeited. EMD is generally less than 5% of
the Tender Value.

SECURITY DEPOSIT

o Once it is decided that a Tender is awarded to a Bidder, he has to


deposit a Security Deposit with the Buyers such that if he does not
complete the task as per the work order, the Buyer can recover the
loss by forfeiting his Security Deposit.
o For e.g. If a Bidders gets Rs.10 Cr contract to construct a Bridge
within 12 months , than he has to deposit a Security deposit of 10%
i.e. 1 Cr with Buyers. Now if he does not complete the bridge on time
or leaves it incomplete, the Department can forfeit his 1 Cr as penalty.

ORGANIZATION CHART FOR CONSTRUCTION COMPANY