In this step the Estimator must complete the following tasks:
Identify the type of materials required by the Contracting party
Calculate Direct Material Cost.The characteristics of the Materials to be used are defined in the Bidding documentation. In case of doubt, the Bidders will have the possibility to formulate consultations and ask for clarifications up to X working days before the submission of the Proposals. The Contractor’s written responses to the consultations and requests for clarifications are equally notified to all Tenderers and become part of the Tender Documents
Quantification or computation of Materials
Calculate Direct Material Cost. If the quantification of work has 10% error, the budget will have at least 10% error. Therefore, the task of quantification is a decisive step in the formulation of a Budget and must be executed with precision.
Cost of Materials
Calculate Direct Material Cost. In this stage, the Estimator must obtain, in due time and form, the quotations of each of the Materials identified that intervene in the Project, with their delivery terms and payment conditions.
A common and effective practice for quoting is to divide the Project into category’s, for example:
Civil Works category, Piping and Equipment category, Electrical Works category, Instrumentation, and Control category, Pre-Commissioned and Commissioner category.
The specialists of each category (for small works the whole task can be done by a single estimator with extensive experience in Works), will divide each it in subcategory and these in different items.
A- Category Civil Works.
A-1-Subcategory: Armed Concrete Base.
A-1-1 Cutting, bending, and Iron arming item.
A-1-2 Construction and assembly of Formwork item.
A-1-3 Concrete Casting item.
A-1-4 Stripping and Cleaning of Formwork item.
B- Piping and Equipment.
B-1 Subcategory Aerial piping.
B-1-1 Construction of prefabricated
B-1-2 Prefabricated hydraulic test.
B-1-3 Painting and transfer of prefabricated products.
B-1-4 Assembly of prefabricated products, Supports, and adjustment sections.
B-1-5 Final hydraulic test and painting retouching.
C- Electric Category.
C-1. Subcategory Layings of conduits.
C-1-2. Laying and fixing of pipes.
C-1-3. The casting of poor concrete.
C-1-4. Laying of Cables and their identification according to Technical Specifications.
Once the Project has been divided into category’s, sub-category’s, and items, we must settle the following for each item:
The drawings or documentation that is analyzed in that item.
The Material with its specification, the unit of measure to be used and the data of the Supplier.
Calculate Direct Material Cost | Calculate man-hours. The Cost of the Material and its waste, plus the cost of the transfer to the Work Site per unit of measure gives us the Unit Cost of the Material for the Item we are dealing with.
In these spreadsheets, the consumption of hours required by a work crew to execute the activity is also recorded per Item and per unit of measure. The composition of the work crew and its cost. This topic will be detailed in the next post.
The above is observed in the following figure, which highlights the part of inventory and direct cost of materials.
The most widely used work tool is Microsoft’s Excel program, as it allows you to use a large number of formulas and pre-designed templates that save work.
The format of the Excel spread sheet is built only once and then this template is used for all the Works, adapting it to each particular work.
Excel also allows you to change any computation or cost quickly.
But if you want to save even more time and avoid human error in data capture, it is convenient to use some software to inventory data automatically, for example from Auto CAD.
The advantage of using already integrated applications and tools is that with each modification all the data is updated without the need to capture all the information again.
Calculate Direct Material Cost | Calculate Man Hours