CONSTRUCTION COST ESTIMATING AND TENDER PRICING_SECOND EDITION

CONSTRUCTION
COST ESTIMATING

AND TENDER PRICING

SECOND EDITION

AZIRAH ADNAN

CONSTRUCTION COST
ESTIMATING

AND TENDER PRICING

SECOND EDITION

AZIRAH ADNAN

Printed in Malaysia

Construction Cost Estimating and Tender Pricing
Second Edition

First Published 2022
eISBN 978-967-2409-49-6

©All right reserved. No part of this publication may be reproduced, copied, stored in
any retrieval system or transmitted in any form or by any means – electronic,
mechanical, photocopying, recording or otherwise; without prior permission in writing
from writers.
email : [email protected]

Published by: Azirah Binti Adnan
Civil Engineering Department,
Politeknik Sultan Azlah Shah,
35950 Behrang,
Perak.

CONTENT

PREFACE

This book is prepared for reference for those who are studying in quantity
surveying, construction management, building surveying, architecture and
civil engineering field. The content of this book mainly focuses on the
syllabus for construction costs estimating for polytechnic students in
Malaysia.

This book started with an introduction to construction cost estimating,
followed by the example of cost estimation for major building works which
are excavation, concrete, reinforcement, and formworks. The book has also
been improved in terms of information on cost data for the latest
construction prices as well as some useful information in the built-up rates
preparation. The last section of this book is a brief explanation of the
tendering process and also the difference in tender pricing procedure for
tender based on bills of quantities and tender pricing for tender based on
drawings and specifications. In addition, this book also consists of practice
questions for each topic that can increase the knowledge and skills of
students to prepare the building cost estimation and tender pricing more
accurately.

i

CONSTRUCTION COST ESTIMATING AND TENDER PRCING_SECOND EDITION
CHAPTER

1

INTRODUCTION TO
CONSTRUCTION COST
ESTIMATING
 

AZIRAH ADNAN

What is construction cost
estimating?

Construction cost estimating is Definition of Estimating
considered one of the most important
and critical phases of a construction Estimating is the technique of calculating or
project and seem to be major issue in computing the various quantities and the
the construction industry. In many expected expenditure to be incurred on a
projects development, it is almost particular work or project.
normal that the final building cost is
different from the estimated cost. The requirements for preparing an estimate are
drawings such as plan, elevation and sections
An estimate is not only necessary for of important points, detailed specifications
proposal preparation but also for several about workmanship and properties of materials
project management functions. Despite and standard schedule of rates of the current
the importance of estimating, it has year.
remained a very time consuming
process. Thus, basic knowledge on
building estimating is necessary to
provide proper direction in getting the
almost right and appropriate building
cost.




Need of Estimating

Building estimating has different purposes
for different professions. For quantity
surveyors, the preliminary estimation will be
proposed to the client as guidance in
monitoring the project development.

For contractors and subcontractors, building
estimating will reflect the actual bidding
price that will influence their chances in
getting the project.

1

Need of Estimation 5 A good cost estimate can
(Cont'd) prevents the contractors from

Generally, the needs of losing money and helps the
estimation are::
client avoid overpaying.

Estimate gives an idea of

1 the cost of the work and

hence its feasibility can be
determined such as
whether the project could
be taken up with in the
available funds or not.

2 Estimate can be used to
determine the project's

scope and feasibility and to The better the accuracy of a cost estimate,
the better the planning and decision-
allocate budgets. making is in predicting and adjusting for
future change. This is critical when any
3 Estimate gives an idea of decisions need to be made on educated
time required for the guesses where a bad decision can end up
in a serious loss of profit such as
completion of the work. abandoned project.

4 When it comes to setting The accuracy of a cost estimate relies on a
up a project's parameters, number of things:

precise project cost the quality of the project plan
the experience and skill of the
estimating must take the estimator
the accuracy of cost information
front seat as one of the the quality of any tools and
procedures the estimator uses.
defining elements of

successful progress.

2

Type of Cost Estimation

The project cost estimation is usually prepared during preliminary design
stage and acts as budgetary advice for clients. There are two types of project
estimation:

PRELIMINARY ESTIMATE DETAILED ESTIMATE

Construction Estimates which is A detailed estimate is drawn up
prepared from a brief or when there's more information
preliminary project design (before available or the scope of the
detailed drawing are complete) to project is better known.
provide a client with advice on
project affordability. It need all the details on every
item necessary for a project,
It is prepared at the early stage of including detail drawings,
a project. specifications, quantities, costs and
rates.
Preliminary estimates should use
the most accurate estimation Quantity surveyor will puts
techniques available to together a list of the materials
approximate the total cost of a needed, how much of each
project since there are often many material will be required to
unknowns during the initial stages complete the project, and how
of a project's life cycle. much that amount will cost

Usually, methods used for this type During preparation, factors such
of estimation are: as the vailability of material,
a) Floor Area Method location of site and availability of
b) Unit Method Labour must be considered.
c) Volume Method
d) Storey Enclosure Method Contractors also apply the same
e) Approximates Quantity Method type of estimation for project
bidding.

3

BUILT-UP RATES

Built-up rates is a calculation made to obtain the price rate of a building item by taking into
account various factors that can affect the price rate of the item. There are FIVE main factors
that need to be considered in preparing the built-up rates which are:

1. MATERIAL COST

Materials cost include the cost of all Material cost is not constant and it
materials that are required to complete fluctuates depending on the supply and
a building. The usage of materials is demand in the market. Quantity surveyor
referring to the bills of quantities that must use current material price in the cost
consist in tender document. The cost of estimating.
materials must include:

Delivery charges from the factory to
the site.
The cost of unloading and storing.
Construction sites normally have
limited space to store materials. The
contractor must allow for any double
handling that may be necessary due
to the nature of the site, condition of
contract and other possibility.
Wastage should be allowed on all
materials due to handling process
and the percentage of wastage is
dependent on the type of material
used.
Additional materials for fixing such
as nails for roof, tying wire for
reinforcement, etc.
Increment in volume for example
excavated materials that will increase
in volume has an effect on the cost of
removal.
Compaction and loss of bulk. Some
materials reduce in bulk when
placed in position such as sand and
hardcore.

4

BUILT-UP RATES (CONT'D)

2. LABOUR COST

Labour cost is important component in
overall project cost. Types, categories and
performance of labour must be early
determined before make the estimating
because it will cause different cost
implication.

Labour cost is divided into two categories
which are:

1.Direct Cost - is the fee for the labour
after they completed the work given.

Labour fee is different according to
skills, gender, market condition,
location of the site, work condition,
etc.

The skills of the labour also will affect
the labour cost. Generally, labour can 2. Indirect Cost

be divided into two categories that are This cost is usually not included in the
unskilled labour and skilled labour. price of work but priced at the

Work that requires no specific preliminaries such as insurance, EPF
education or experience is often and SOCSO contributions, workers
available to workers who fall into the basic amenities such as housing,
unskilled labor force. electricity and water supply, transport
and so on.

Skilled labour is workers who have However, quantity surveyor or
specialized training or a learned skill- contractor shall include any indirect
set to perform the work. These costs that are not listed in the
workers can have varied levels of preliminary requirements to the rate
training or education. of the price.

5

BUILT-UP RATES (CONT'D)

3. PLANT COST

Almost all construction projects, PLANT COST can be divided into
especially high-rise project need the two category which are mechanical
use of machinery. Normally, equipment such as hammers, hoes,
contractors will not maintain their baskets, curtains, benches, stairs
own machinery to avoid the additional and no mechanized equipment
cost during bad times due to uncertain such as trucks, excavators, concrete
demand in the industry. mixer, vibrator, and compactor.

Therefore, rental of such machineries Costs related to plant can be
are common practice in the industry. calculated in two ways. First, the
However, big firms will normally have cost of the plant is taken into
their own machineries. account in calculating the rate of
the specific work. For example, the
cost of backhoe taken into account
in the rate of excavation work,
concrete mixers costs in the price
of concrete and the like.

The second way is to include the
cost of the plant in the preliminary
requirements. This method is
suitable for a plant that can be used
for many type of work and
therefore its costs cannot be
calculated in the related work.
These items include vehicles for
construction site staff, an elevator
for worker, tower cranes, generator
sets and so on.

6

BUILT-UP RATES (CONT'D)

4. WASTAGE COST

The efficient use of materials on Common practice in considering
site can help reduce costs due to wasteful costs in the preparation of
minimum wastage. built -in rates is dependent on the
type of material itself.
Construction sites usually have
very high material wastage. Commonly, 5% of wastage is
considered for material such as
Materials like cement, aggregates
and sand contribute higher reinforcement, tiles, bricks, and
wastage because it needs to be more than 30% is considered for
transferred from one place to concrete works.
another.

Fragile materials such as glass,
tiles and bricks require higher
percentage of wastage to be
allowed in the calculation.

For materials made from timber
or steel, which have been cut to fit
the required size, there is usually
no allowance for wastage must be
made.

7

BUILT-UP RATES (CONT'D)

5. PROFIT AND
OVERHEAD

PROFIT AND OVERHEAD must be General management cost or
included in the estimating to cover the overhead is fixed expenses incurred
management cost for the project and in managing the construction
gain some profit from the work done. company.
Management cost can be divided in
two category, site management cost Overhead costs include expenses
and general management cost or for staff salaries, office rental,
overhead. stationery, utility bills, professional
fees such as accountants' fees,
Site management cost must be put in interest on loans and mechanized
the preliminary and overhead cost equipment such as hammers, hoes
must be included in the work price and so on.
estimation.
The rate of profit is at the discretion
of the contractor itself. Usually the
contractor determines the rate of
profit using the same calculation
for overheads.

The profit percentage also based on
competition in the market. During
high competition, the percentage of
profit will be low.

8

LET'S
DO

SOME

ACTIVITY

ACTIVITY 1

Based on the picture, explain the relevant
issues and give your opinion on how to
overcome this problem and at the same
time it can reduces the construction cost of
the related construction element.

ACTIVITY 2

Based on the picture, explain the
relevant issues and give your opinion
on how to overcome this problem and

at the same time it can reduces the
construction cost of the related
construction element.

ACTIVITY 3

Based on the picture, explain the relevant
issues and give your opinion on how to
overcome this problem and at the same time it
can reduces the construction cost of the
related construction element.

9

BUILT-UP RATES

In this chapter,
the built-up rates
is classified into
FOUR main
trades of work
namely:

EXCAVATION CONCRETE REINFOREMENT FORMWORKS
WORKS WORKS WORKS







Note: All required materials and labour output data used in this section are cited from Abdullah, A.
(2005). Anggaran Kos Kerja Bangunan: berdasarkan SMM2. Petaling Jaya, Selangor:
Pearson/Prentice Hall.

10

CHAPTERCONSTRUCTION COST ESTIMATING AND TENDER PRCING_SECOND EDITION

2

BUILT-UPRATESFOR

EXCAVATION WORKS

AZIRAH ADNAN

EXCAVATION WORKS

Excavation work is work that is usually done at
the initial stage of construction. The excavation
work is including site preparation, excavation
and removal of excavated soil and backfilling
into the excavated area if necessary.

The cost of work depends on the scope and
amount of work, soil conditions and the way
work is done. Temporary jobs required during
the excavation, soil transportation and place to
dump the wastage disposal should also be taken
into account when estimating the price of the
excavation work.

1) SITE PREPARATION

Skilled and unskilled labour fee rates

Rental rate for plants 11
Excavator output

BUILT-UP RATES EXAMPLE

1.SITE PREPARATION

Tree Removal

12

BUILT-UP RATES EXAMPLE

1.SITE PREPARATION

Cutting Down Hedges

13

BUILT-UP RATES EXAMPLE

2. EXCAVATION

Excavation by Hand

Excavation that use tools like hoe, scoops, hammer, etc. this method is very time
consuming and just suitable for certain situations like excavation in small quantity which
are not economical when using machine and when machinery or plant cannot be used
in certain areas like in services cable area.

Labour output for hand excavation
Labour output adjustment

14

BUILT-UP RATES EXAMPLE

2. EXCAVATION

Excavation by Hand

15

BUILT-UP RATES EXAMPLE This excavation use
plant such as
2. EXCAVATION backhoe, dragline
excavator, crane,
Excavation by Machine etc. this method is
suitable for large
Excavator Output and continue
excavation work.
Excavator Output Adjustment
This type of
excavation is
cheaper when
applied to large and
continue excavation
work.

Fuel need for Excavator

16

BUILT-UP RATES EXAMPLE

2. EXCAVATION

Excavation by Machine

17

BUILT-UP RATES EXAMPLE

3. DISPOSAL OF EXCAVATED
MATERIAL

When soils dug up and removed Additional percentage for friability differences
from the site were excavated, the
soil will increase its volume a) Disposal by hand
compared with the quantities
measured on the drawings. This type of disposal is using tools like hoes, baskets,
carts, etc. This method is usually used in cases where
This means that the quantity of the quantity of work involved is small and the disposal
soil to be disposed of by the area is not far from the excavation site. The time taken
employee on site is more than for this work depends on the distance between the
the measured quantity. place of excavation and disposal soil. Labour output to
remove the soil by hand for common soil with a
Therefore this factor must be distance not exceeding 50 meters are shown in the
taken into account in the table below.
estimating of rates for soil
disposal. Additional percentage
friability is different and depends
on the type of soil were
excavated.

There are two methods for
disposal of excavated material.
a) Disposal by hand
b) Disposal by plant

Labour output for soil disposal

18

BUILT-UP RATES EXAMPLE
3. DISPOSAL OF EXCAVATED

MATERIAL

Disposal excavated material by hand

b) Disposal by plant

The use of plant is the usual way to transporting and disposing the soil in large quantities. This
method can save time and cost. Plant that commonly used for this purpose includes truck and
dump. Load and fuel requirements for the truck are shown in the table below.

Load capacity and fuel needed for lorry

19

BUILT-UP RATES EXAMPLE
3. DISPOSAL OF EXCAVATED

MATERIAL

Disposal excavated material by lorry

20

BUILT-UP RATES EXAMPLE Backfilling costs are
4. BACKFILLING influenced by the type of
excavation, sources of
Backfilling use material arising from excavation soil use and also how the
work be implemented.
Backfilling use imported material
The quantity of soil used
for backfilling is more
than the quantity of
excavated soil.

This cost should be
added 25% due to the
need of land bought from
outside.

Labour for backfilling
work is usually only
requires general labour
and labor output for this
work is 0.75 hours / m3.

21

BUILT-UP RATES EXAMPLE
5.FILLING TO MAKE UP LEVEL

The materials used to making up level Labour output for spreading hardcore
can be from the excavation, the
materials were chosen from excavation
or materials taken from outside the site.
Hardcore often used in filling to make
up level work.

Filling to make up level in large area
need to use roller to compact the layer.
In this situation, cost for roller must be
included in the estimation.

22

BUILT-UP RATES EXAMPLE
5.FILLING TO MAKE UP LEVEL

Hardcore

23

LET'S
DO

SOME

ACTIVITY

EXERCISE 1

Calculate the built-up rate for site preparation below.

24

LET'S
DO

SOME

ACTIVITY

EXERCISE 2

Calculate cost for excavation to receive pad foundation below.

25

LET'S
DO

SOME

ACTIVITY

EXERCISE 3

Calculate cost for excavate trench to receive foundation below.

26

LET'S
DO

SOME

ACTIVITY

EXERCISE 4

Calculate cost for disposal excavated material by lorry below.

27

LET'S
DO

SOME

ACTIVITY

EXERCISE 5

Calculate cost for filling to make up level below.

28

CHAPTERCONSTRUCTION COST ESTIMATING AND TENDER PRCING_SECOND EDITION

3

BUILT-UPRATESFOR

CONCRETE WORKS

AZIRAH ADNAN

CONCRETE WORKS

CONCRETE WORK is the main work
of construction of a building.
Contractors can use concrete that mix
by hand or using a concrete mixer, or
use ready mix concrete supplied from
the outside. Generally concrete is
measured in cubic meters.
The materials used for concrete
comprising of cement, sand,
aggregate and water.
Materials such as sand and cement
were added and mixed water will
shrink.
A small portion of this material will
also be wasted during transport and
mixing.
Therefore, the contractor shall add
another 50% on the cost of materials
to accommodate shrinkage, wastage
and density in the calculation of the
price.
Concrete work can be done in 4 ways:
i. Concrete mixing and placing by

hand
ii. Mixing by concrete mixers and

lifting and placing by hand
iii. Mixing and placing concrete using

plant
iv. Ready mixed concrete

29

BUILT-UP RATES EXAMPLE

1. Concrete mixing and
placing by hand

The average labor output for mixing concrete by hand is around 2.00 hours / m3 concrete. The average
worker's output bearing of a mixing concrete to be placed at a distance to and not exceeding 100 m and
pouring concrete into the mold is shown in the table below. Contractor shall make such adjustments for
mileage in excess of 100 m.

Labour output for placing concrete by hand

30

BUILT-UP RATES EXAMPLE

1. Concrete mixing and
placing by hand

The average labor output for mixing concrete by hand is around 2.00 hours / m3 concrete. The
average worker's output bearing of a mixing concrete to be placed at a distance to and not exceeding
100 m and pouring concrete into the mold is shown in the table below. Contractor shall make such
adjustments for mileage in excess of 100 m.

31

BUILT-UP RATES EXAMPLE

2. Mixing by concrete mixers

and lifting and placing by
hand

The amount of concrete that can be produces is determined by the frequency of use and the used
concrete mixer output. The table below shows the number of labour required, output and fuel for
concrete mixers with different sizes. The number of employees, however, may change depending on
the contractor management.

Concrete mixer output

32

BUILT-UP RATES EXAMPLE

2. Mixing by concrete mixers

and lifting and placing by
hand

33

BUILT-UP RATES EXAMPLE

2. Mixing by concrete mixers

and lifting and placing by
hand

34

BUILT-UP RATES EXAMPLE

3. Concrete mixing and

placing concrete using
plant

The example below shows the rate of mixed concrete by concrete mixer owned by the
contractor and placed using hired cranes.

35

BUILT-UP RATES EXAMPLE

4. Ready mixed concrete

The cost of ready mixed concrete depends on concrete specification, quantity needed
and also the distance between the place of mixing and construction sites. The example
below shows the price estimate for ready mixed concrete and use a crane to transporting
and placing concrete into the mould.
The percentage of wastage material ranges from 2% to 5% of the cost of materials. The
amount of wastage is higher for components that have a small surface such as columns
and beams.

36

LET'S
DO

SOME

ACTIVITY

EXERCISE 1

Calculate cost for concrete mixing and placing by hand below.

37

LET'S
DO

SOME

ACTIVITY

EXERCISE 2

Calculate the cost for concrete mixing by concrete mixer and
placing by hand below.

38

LET'S
DO

SOME

ACTIVITY

EXERCISE 3

Calculate the cost for concrete mixing and placing concrete using plant

39

LET'S
DO

SOME

ACTIVITY

EXERCISE 4

Calculate the cost for ready mixed concrete below.

40

CHAPTERCONSTRUCTION COST ESTIMATING AND TENDER PRCING_SECOND EDITION

4

BUILT-UPRATESFOR

REINFORCEMENT
WORKS

AZIRAH ADNAN

REINFORCEMENT WORKS

Reinforcement is a steel bar or
mesh of steel wires used as a
tension device in reinforced
concrete to strengthen and aid the
concrete under tension.
Concrete is strong under
compression but has weak tensile
strength.
Reinforcement significantly
increases the tensile strength of
the structure.

41