Tuesday, June 23, 2020

How to Prepare Rate Analysis?

Rate Analysis

As per many requests by our beloved prestigious readers regarding the topic on Rate Analysis, here we are try to give our best knowledge regarding rate analysis. In earlier blog, we mentioned some importance of Rate analysis but this is in the Hindi language, as I know you can change the blog language and read this information page.
Now we are going to explain some important points in Rate Analysis.
  1. Why Rate Analysis Required?
  2. How to prepare it?
  3. What are the important points in it?
  4. What to do After Rate Analysis?
 All Newcomers need to know this important information after joining his job and getting some experience they will be realized about the importance of rate analysis.

 Why Rate analysis Require?

When any contractor, Govt. Authorities or Developers want to start new project. They need to work on it. After that they will prepare Tender or Estimation. But before bidding any tender we need to study on it to bid the right rate as per market condition otherwise you will face some challenges while completing the project. Following points need to read to know the need of rate analysis.
  1. Preparation of tender documents
  2. Finalization of bidding amount.
  3. Sanctioning of budget.
  4. Finalization of every item rate if tender in item rate tender.
  5. Govt. authorities have their own rate list known as DSR but this will also update yearly. They also study market rates.
  6. To work out the actual budget of per unit of the work items with considered all possibilities.
  7. To work out the financial use of materials and processes in completing the particulars item.
  8. To work out the cost of extra items & works which are not mentioned in the tender, but are to be done as per the approval of the authorized department.
  9. To revise the rates of tenders due to increase in the cost of material and labor or due to changes in drawing, changes in the work process, or technique. 

How to Prepare Rate Analysis?

Before the preparation of Rate analysis, they have visited the site. Getting requirements of the project location. Like
  1. Soil testing.
  2. Plot area.
  3. Govt. sanctions area.
  4.  Building/ structure type.
  5. Approximate cost.
After getting an idea of all the above points they will start working on it. In the 1st stage, they are preparing a drawing or plan of this plot as per govt. sanction after finalizations of plan they give approval from govt. authorities. And then start to work on the tendering process. After getting an approximate idea about quantities they will visit at the project location and visit or doing inquiries of rates about the material, labor, transportation, etc.

What are the important points in Rate Analysis?

Rate analysis is very important but some other important points need to know while preparing rate analysis.
  1.  Rate of material.
  2. Rate of material.
  3. Rate of Transports.
  4. Rate of Machinery.
  5. Approximate Cost of Overheads Like Water, Electricity, Transportation, etc.
  6. Constants Material & Labour Work per Unit.

What to do After Rate Analysis?

After completion of rate analysis, we can prepare the following things
  1. Quantity Survey: this task can be done at similar to Rate analysis, Quantity survey is not connected to the rate analysis both procedures are different.
  2. Estimation: We can prepare proper estimation with the help of quantity survey and rate analysis.
  3. Preparation of BOQ: with the help of Rate analysis & Quantity we can prepare BOQ (Bill of Quantities). This is very useful to raise the bill to your client.
  4. Preparation of tender document: with the help of Rate analysis and quantity we can prepare DTP (Draft Tender Paper) and after approval of DTP, authorities will open this tender for bidding.

 Main Component in Rate Analysis

The following are the Main Components and assumptions in Rate analysis. All components are assumed as per market practice, but if you calculated all figures are near to this percentage.
  1. Material: 60-70%
  2.  Labour: 15-20%
  3.  Machinery : 1.5-2%
  4. Overheads: 1.5-2%
  5. Profit: 12-15%

Here we are giving some simple tips to prepare rate analysis to start your project.

1st Step to know Constant by Mix design report

A mix design report is easily available at your office or you can get this.

2nd step to know wastage of material in percentage, here we need to consider 2 types of wastage. 1st  wastage is row material wastage and 2nd is wastage after preparation on mortar, concrete, etc.

First wastage is before start the work that means where your material is stocked your wastage of material is around 5-10% as per the situation of work. The second wastage of material is after work wastage. Suppose, your concreting is 13 Cum but you need to order 5% extra, so you require concrete only 13Cum but you directly ordered more than that, so concrete is prepared you cannot do anything so you will do PCC or other work, but this is wastage of material.

3rd step to know the all rates like material, labor, machinery, overheads, etc.

Material: After doing the site survey meet all the suppliers around and nearest the site, also need to visit sites near your project. Therefore you can realize the actual rate of material at your site location.

Labour: please keep visit of your labor contractor to know about the labor rates, please confirm the scope of work to your labor before giving any rates from labor contract or otherwise you will need to pay more amount than decided,

Machinery rate also impacts your rate analysis therefore while visiting the site need to know soil depth, foundation depth, transportation distance of material. The current rate of machinery which are cheap on hiring per day or per month or company can do this work within machine cost. It is easy to get the idea to buy the new machinery or hire the machinery.

Overheads: There are many types of overheads but need to study all the overheads like
Electrical charges,
Water Charges
Labour Camp
Labour Amenities
Plot Rent (If required)
Staff Payment
Administration at Site
Administration at Office for this site.
Safety & Quality
Client Extra Demands, etc.
All the above points are very useful to know how to work about rate analysis.

4th step to prepare a good format in excel or in a notebook to approve the rates from your higher authorities.

Format: Format is very important to give a proper presentation of this work, as we can give our best knowledge about this project and may chance to approve your rates.

5th step cross-check the rate analysis with your competitor or your past work rates. Just cross-check.

Cross-checking: Some of companies are work in other states but while bidding they are just taking the formal idea about the rate in the other state work before bidding any work, and may be this not good, we think need to do a survey about rates actual situation of work, roads, transportation, etc. then we will get a good idea to prepare the rate analysis.

6th step when you put these rates in your tenders, you will get lost due to time and all other matters. 

Offer and Discounts: This word is good for presentation but please consider the time off work, your payment terms, deposits, deductions, debits, etc, after that, you can decide how to bid any tender and what rate can be bid for the same work. Forbidding any rate you need to keep at least 10% rates higher than your rate analysis, as you can offer a discount to your client. or you can prove your rates are genuine.

In the given picture, you will be easily understood the format of rate analysis which is very useful for all. You also can prepare it on excel or will send it to you in your mail on your request. as well as in our last blog regarding Rate analysis all the details give you can check this on This Blog.

As per our suggestion all engineers need to know about this because rate analysis is very important part in our engineering sector, because in today the situation of civil engineering not good due to COVID-19, therefore you need to become an expert in financial concept, which are direct impacts on your project. You also can realize the cost of the project, and how any builder or developer is complete this project. After the realization of your mind, you can also prepare a budget for the project, monthly schedule of the project.

CBEC India