On
receipt of the construction bids the company decides their participation based
on the principles of the companies quoting for the bid. Once decided to participate
in the race for the work with other competitors the strength and weakness is
analysed and strategies are made to hit the work. The estimator starts work on
the bid. While estimating at what cost the work to be quoted the minute details
and requirements of the client is to be understood. Because each requirement
mentioned in the bid by the owner has
cost implication for the company participating and the estimator to calculate
the cost for each item mentioned. .Let us consider the company participates in
a mechanical erection works the minimum basic items to be considered by the
estimator are
1.
Direct manpower cost
2.
Indirect manpower cost
3.
Cost of consumables to be used for that
work
4.
Heavy equipment hire charges
5.
Non destructive testing and other
testing requirement cost
6.
Cost of maintenance of tools going to be
used
7.
Amount to be spent on documentation for
obtaining statutory requirements
8.
Arrangements to be made onsite cost
9.
Arrangement for stay of persons at site
10.
Expenses incurred at corporate office on
account of this work
11.
Salary of the officers/staff working at
site
The details
mentioned are the basic cost to be considered .over and above any special
requirement of owners cost also to be included in the cost. The sum of total of
the said cost becomes the basic cost for completion of the works. However all
the companies work towards earning their profit which is not included in the
above calculated cost. Erection works are very dangerous in nature. Hence
workers and staff persons who will involve in the works are also to be covered
under some safety scheme which is not covered in the above cost. With all possibilities
for various reasons like lack of time, not getting the required correct input
in time delay from subordinates in compilation of the work and many other
reasons may leave the estimator in omission of certain items in the bid which
is to be covered in the form of contingencies.. On various stages of quoting
the work many types of guarantees are required by the owner/client of the
project which in turn cannot be given by any company as cash. So some of the
bankers of the company stand guarantee for the amount and it is normally
accepted by the owner in their own accepted format which in turn was already approved by their bankers. Such
type of guarantees is given for non withdrawal of the bid after the specified
date mentioned in owners document. Likewise for the performance of the work carried
out by the contractor and for any major defects caused in their work. In many cases the bank Guarantee
formats are discussed between the contractor and owner on award of contract for all guarantees except
for bid gurantee.Normally it is common practice in India for execution of the
work the estimated amount is not totally spend by the company of their own.
There are lenders and financers who is ready to help the companies on good will
and with some interest for the amount given by them. Such interest amounts are
not normally added in the cost of the work before taking it further with owner
for finalisation. Even when we go for any purchase we are not satisfied by the
sale price mentioned in the tag. Everyone is happy with the discounts and
reduction in price. Same principle apply here too. On finalisation of the
contract the owner too wants reduction in the sale price of that work and the
contractor always keep provisions on the calculation to pass it on to the owner
and to clinch the contract. To execute the work from corporate/regional/head
offices the indirect expenses spent while executing the project needs to be
considered..Every company based on its size and volume have their own norms for
this purpose and it is being communicated to the estimator to add it up along
with other expenses. Addition of the total basic cost along with the above said
hidden cost forms the basis for the cost of the work. On further discussions
and requirement for that particular work for the company the cost is revisited
and finalised and submitted to the owner,
