Model-02 : Calculation of ditect Man-Hour

This page is in continuation to my earlier post Model-01 : Calculation of ditect Man-Hour  .  The direct manpower calculation and the effort required for erection of different types of vessels varies based on their location of installation, type of handling equipment required for the installation of the equipment. Certain equipments can be erected by manual labour by shifting and placing it on top of the foundation. ( In India manpower availability is plenty and cheap and in most of the construction sites direct labourers are more used along with less amount of lifting equipments like cranes).In this model calculation my experience in calculating the direct man power was on the basis of using a truck crane  and direct manpower handling the equipment. I have not elaborated here the type and capacity of the crane to be used for tower erection. Since selection of a particular type of crane itself is a vast subject and will be dealt in my other posts.  For installation of any vessel apart selection of a suitable crane  for installation of the equipment, based on the weight and other parameters, an additional crane from trailing end  of the equipment use to support the equipment to make it vertical.. This manpower calculation does not include any manpower for operation and supporting activities of the crane movement

The man-hour calculation of the estimator should include the time to be spent by various technicians/Laborers  to complete the activity starting from receiving the materials from stores of the owner, loading,  transportation of materials from owners stores to contractors storage yard , unloading and storing at contractors  storage at site yard, retransmission to the point of installation if required ,  surface preparation of foundations along with time required for fabrication/machining of steel shims to be placed below the equipment installation, man-hours required  for installation work for accessories or platforms, man-hours required for testing and commissioning,

,                                          Also major important factor which involves lot of man-hours is the scaffolding activity. If the equipment to be installed is at lower level or on ground the Man-hours required for scaffolding will be nil. In case if the installation is at an elevation the man hours required for preparation and installation of the scaffoldings are to be considered

                                           The normal activities involved in the installation of the Tall towers after receipt of materials at erection sites are preparation of the foundation and bring down the level of the foundation to receive the equipment on top of it with the space available for placing the equipment on top of the foundation. Normally only maximum of 50mm pacer plates are allowed to be placed between the equipment and foundation so that grouting can be taken can effectively. On preparation of foundation check for the condition of the equipment placed on ground on wooden packers. Using the marking on the tower for slings position the crane as close as possible to lift the equipment.  

Tower  Installation

The below mentioned details were calculated in one of chemical plant i worked. Hence details provided by me are bare minimum and guide lines for the estimators in indie. The details provided are based on the productivity of the technicians worked then with me and minor fine tuning as per site data’s of the company .and in consultation with the companies site personals more accurate data’s can be decided by estimators

Towers ( considering the erection procedure with truck crane)           

Slno	Detail	Weight of equipment up to 10MT	Weight of equipment up to 11-20MT	Weight of equipment up to 21-30MT	Weight of equipment up to 31-40MT	Weight of equipment above 41MT-100MT
1	Foundation	16hours	24hours	24hours	32hours	48Hours
2	Installation	16hours	24hours	32hours	40hours	80Hours
3	Total	32hours	48hours	56hours	72hours	128Hours

The above mentioned man-hours calculation does not include the manpower required for receiving the materials from stores up to erection site, activities related to cleaning of equipments, accessory works related with equipment erection work like platform and ladders erection works for the equipment any major scaffolding works,time required for preparation of testing,commissioning,performance guarantee works . The manpower calculation is on the assumption that the equipment will be installed only on the ground..

                                           Based on the above chart let me calculate the man hours required for a Tower weighing 80MT and installed at ground floor. As per the chart the time consumed for installation of this equipment is only 128Man-hours and time required for other activities can be calculated under respective heads and to be added with the basic man-hours.

                                           What should be the cost of this 128 man-hours. It cannot be purely one category like skilled/highly skilled or semiskilled. It is the combination of the technician group engaged in the installation work. Based on the nature of work the category of people are to be divided. in terms of percentages. In this case the highly skilled labourers may not be required much and unskilled workers also will not be required much. So technicians who have capacity to lift and shift the materials may be required more. If we consider total 100% man-hours equals to 128 Man-hours. Out of which Riggers can be considered as 70%( semi skilled) requirement,15% requirement of skilled and remaining 15% manpower will be unskilled to reach total the 100%

          Skilled Labours -15%.........!5/100*128  = 19.2 Man-hours

          Semi skilled      --70%.......70/100*128  = 89.6 Man-hours

          Unskilled   ...........15%........15/100*128 = 19.2 Man-hours

Cost of installation of the Tower on basic conditions based on the Man hour rates (Minimum wages) of notification by Delhi state

          Skilled Labours .........(!9.2/8)* 455   = 1092

          Semi skilled ---           -(50.4/8)*414    = 4636.8

          Unskilled Labours..... .(10.8/8)*374   =  897.6

Total cost of Man-hours for Erection of Tower of 80MT on Ground is  Indian rupees 6626.4 at the location near delhi.

Hence Rate per MT in that location is Indian Rupees 82.83

You can find out that man power cost decreases with respect to weight of the tower but while we calculate the other cost involvement for installation of the tower like cost and crane hours and additional indirect man power cost we can arrive at the exact cost per MT of heavy equipments which falls under this catogory

Engineering, procurement and construction contract

 

Out of the different contracts the Engineering procurement and construction contract (EPC)follows the  most common project finance  path. In the EPC contract the contractor is entrusted with the  obligation  to build and deliver the project facilities on a turnkey basis. In these type of contract the contract is awarded to a well established and resourceful contractor who has thorough knowledge about the project on a lump sum fixed price . The price is based on acceptance of a certain specifications, and with certain performance warranties. In the EPC contract the completion date of the project and the effective date of the contract plays very vital role.Is quite complicated in terms of legal issue, therefore the project company and the EPC contractor need sufficient experience and knowledge of the nature of project to avoid their faults and minimize the risks during contract execution.

The terms EPC contract and turnkey contract are interchangeable. EPC stands for engineering (design), procurement and construction. In the Turnkey contract the owner of the project provides some basic agreed facilities and rest of the remaining works of the projects are to be carried out by the contractors and hand over the project to the owner in such a way that l it will need to be done by the owner  to do is turn the key and the facility will function as intended. Alternative forms of construction contract are a project management approach and alliance contracting. Basic contents of an EPC contract are:

·         Description of the project

·         Price

·         Payment

·         Completion date

·         Completion guarantee and Liquidated damages:

·         Performance guarantee and LDs

·         Cap under LDs

Decription of the project: Every project is described prior to fixing of the price of the project cost. In case of Thermal power plant the capacity of the plant to be produced in terms of MW and how many units, what are all the major systems to be provided in place . further project description narrates what is the specification for major equipments ,process guarantees, time of completion are specified

600 MW Thermal Power Plant

Price on EPC contracts are decided as single lump sum price for completion of the entire project.. Since EPC contracts are voluminous in nature with long duration from  date of beginning to date of commercial operation of the project the price is divided as design and engineering component price,cost for supply of the materials with specified terms and for civil and site services a separate price.. The price is always linked with certain important deliveries of equipments and in case of site services with completion dates of major mile stones.

Payment : Even though price is fixed separately for  design and engineering, supply of equipments ,civil and site services the contractor must be provided with free access to collect the money on completion of certain activities. In order to facilitate this the payment terms are framed in the contract when the payment must be made to the contractor and what percentage of money to be released. It is further discussed among the contractor and owner and billing break up is agreed. Based on which the contractor gets his money on completion of the obligations

Always the payment done by the owner to the contractor is safeguarded by an agreed project completion schedule with starting date or effective date of the contract and completion date of the contract. Theses two mile stones are most important and all the other intermittent activities can be adjusted to achieve the final date. The schedule thus prepared is called project schedule and being followed by every one of the project to achieve the final date of completion in a successful way.

In the contract agreed between the owner and the contractor it is very clearly mentioned the liquidated damages not in form of penalty to be paid by the contractor to the owner in case if the contract is not fulfilled as agreed. However the penalty is applicable only it is legally proved by the owner that the obligations mentioned in the contract are not properly carried out. Normally in power projects the liquidated damages are imposed for the performance of the equipments supplied by the contractor in terms of heat rate to be met by the contractor along with auxiliary power consumption. Another type of liquidated damage is for the delay in completion of the project due to the fault of the contractors .

There is always a cap agreed and mentioned  in the contract for the delay and performance in terms of money which is prefixed while siging the contract

Model-1 Calculation of Direct Manpower

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Model-01 : Calculation of ditect Man-Hour

Out of the two parameters for calculating the direct manpower cost, the first parameter labour cost is normally calculated considering the details of Minimum wages as the basis. But when it comes for calculation of Man hours it is vast in nature and it differs from one item to the other. For example if we want to calculate the Man hours required for installation of Heat exchanger or drum ( a static equipment ) the Man hours consumed for installation of Heat exchanger differs from installation of a tower which is different. To calculate the man hours of heat exchanger the estimator must aware of the procedure of installation of the heat exchanger.

                                           The man-hour calculation of the estimator should include the time to be spent by various technicians/Labourers  to complete the activity starting from receiving the materials from stores of the owner, loading,  transportation of materials from owners stores to contractors storage yard , unloading and storing at contractors  storage at site yard, retransportaion to the point of installation if required ,  surface preparation of foundations along with time required for fabrication/machining of steel shims to be placed below the equipment installation, man-hours required  for installation work for accessories or platforms, man-hours required for testing and commissioning,

,                                          Also major important factor which involves lot of man-hours is the scaffolding activity. If the equipment to be installed is at lower level or on ground the Man-hours required for scaffolding will be nil. In case if the installation is at an elevation the man hours required for preparation and installation of the scaffoldings are to be considered

                                           The normal activities involved in the installation of the Drum/heat exchanger after receipt of materials at erection sites are preparation of the foundation and bring down the level of the foundation to receive the equipment on top of it with the space available for placing the equipment on top of the foundation. Normally only maximum of 50mm pacer plates are allowed to be placed between  the equipment and foundation so that grouting can be taken can effectively. On preparation of foundation check for the condition of the equipment placed on ground on wooden packers. Using the marking on the heat exchangers/drums for slings position the crane as close as possible to lift the equipment. However the requirements and suitability of the cranes are not considered in this article

Heat Exchanger

The below mentioned details were calculated in one of chemical plant i worked. Hence details provided by me are bare minimum and guide lines for the estimators in indie. The details provided are based on the productivity of the technicians worked then with me and minor fine tuning as per site data’s of the company .and in consultation with the companies site personals more accurate data’s can be decided by estimators

Drum/Heat Exchangers 

Slno	Detail	Weight of equipment up to 2MT	Weight of equipment up to 3-10MT	Weight of equipment up to 11-20MT	Weight of equipment up to 21-30MT	Weight of equipment above 30MT
1	Foundation	8 hours	16hours	16hours	24hours	32Hours
2	Installation	8hours	16hours	24hours	32hours	40hours
3	Total	16hours	32hours	40hours	56hours	72hours

The above mentioned man-hours calculation does not include the manpower required for receiving the materials from stores up to erection site, activities related to cleaning of equipments, accessory works related with equipment erection work like platform and ladders erection works for the equipment any major scaffolding works,time required for preparation of testing,commissioning,performance guarantee works . The manpower calculation is on the assumption that the equipment will be installed only on the ground..

                                           Based on the above chart let me calculate the man hours required for a drum weighing 30MT and installed at ground floor. As per the chart the time consumed for installation of this equipment is only 72 Man-hours and time required for other activities can be calculated under respective heads and to be added with the basic man-hours.

                                           What should be the cost of this 72 man-hours. It cannot be purely one category like skilled/highly skilled or semiskilled. It is the combination of the technician group engaged in the installation work. Based on the nature of work the category of people are to be divided.in terms of percentages. In this case the highly skilled labourers may not be required much and unskilled workers also will not be required much. So technicians who have capacity to lift and shift the materials may be required more. If we consider total 100% Riggers can be considered as 70%( semi skilled) requirement,15% requirement of skilled unskilled laborious and remaining 15% manpower will be required to reach the 100%

          Skilled Labours -15%.........!5*72/100  = 10.8 Manhours

          Semi skilled      --70%.......70*72/100   = 50.4 Manhours

          Unskilled   ...........15%........15*72/100 = 10.8 Manhours

Cost of installation of the Drum on basic conditions based on the Man hour rates (Minimum wages) of notification by Delhi state

          Skilled Labours .........(!0.8/8)* 455   = 614.25

        Semi skilled ----(50.4/8)*414              = 2608.2

        Unskilled Labours......(10.8/8)*374     = 504.9      

Total cost of Manhours for Erection of Drum of 30MT on Ground is  Indian rupees 3727.35 at the location near delhi.

Hence Rate per MT in that location is Indian Rupees  124.245

Like wise manpower calculation can be done for all other items. Another way of calculating manpower details calculation by productivity method

Minimum wages

To calculate the labour cost in India two most important parameters are to be known to the estimator. What is the amount of wages we have to pay to workers? Whether the wages are same for all the labours or it differs. Second parameter is the man-hour to be spent for completion of a particular type of activity. How many persons of different category are to be deployed for that activity? Are there any common guide lines to calculate the parameters? Yes. Regarding the labours wages there is a common guide line in India.   Remuneration which the workers are entitled for the work performed by them can be find out by Minimum wages act in India..

          The Minimum Wages Act, 1948: It is landmark legislation in India for regulating of wages in the country. A basic rate of wages and a special allowance i.e. cost of living allowance; A basic rate of wages with or without cost of living allowance and case value of concessions for supplies of essential commodities; An all inclusive rate, i.e. basic rate, cost of living allowance and cash value concessions. The Government may fix the minimum rates of wages either by the hour, by the day, by the month or by such large wage-period as may be prescribed which may be revised at intervals and reviewed 

The Government may fix or revise minimum wages either by committee procedure of by notification procedure.. The rates recommended by the committee and accepted by Government or the rates determined by Government after consideration of all representatives should be published in the Official Gazette. Minimum Wages in India are revised during the month of April and October of every year. The living wage is an informal benchmark, not a legally enforceable minimum level of pay, like the national minimum wage. The Indian Constitution has defined a 'living wage' that is the level of income for a worker which will ensure a basic standard of living including good health, dignity, comfort, education and provide for any contingency. 

However, to keep in mind an industry's capacity to pay the constitution has defined a 'fair wage'.. Fair wage is that level of wage that not just maintains a level of employment, but seeks to increase it keeping in perspective the industry’s capacity to pay India introduced the Minimum Wages Act in 1948, giving both the Central government and State government jurisdiction in fixing wages. The act is legally non-binding, but statutory. Payment of wages below the minimum wage rate amounts to forced labour. 

Wage Boards are set up to review the industry’s capacity to pay and fix minimum wages such that they at least cover a family of four’s requirements of calories, shelter, clothing, education, medical assistance, and entertainment. Under the law, wage rates in scheduled employments differ across states, sectors, skills, regions and occupations owing to difference in costs of living, regional industries' capacity to pay, consumption patterns, etc. Hence, there is no single uniform minimum wage rate across the country and the structure has become overly complex. 

Since minimum wages are not standard and from one state to other state it varies because of living conditions and enforcement of minimum wages by both state and central governments it becomes utmost important for the estimator to understand which Minimum wages act ( whether state minimum wages act or central minimum wages act) is to be followed.There are standard guidelines and official notifications and amendments from time to time are to be collected and kept in position ready before starting the estimation which will sort out calculating the first parameter of the direct manpower calculations. The minimum wages rate for Indian workers are normally indicated not with their technical designation like welder, fitter, rigger, electricians, khalasi  and helpers. They are divided in to four different  disciplines classified.. Technicians with high degree of skills to perform the works are called highly skilled labours. Normally High pressure welders, electricians, fabricators, Foreman etc fall under this heading. Fitters , junior electricians, structural welders ,Riggers are categorised in skilled workers levels similarly khalasis are considered in semiskilled level and helpers are in unskilled level.

                      

The minimum rates at delhi as below:

The following rates of minimum wages shall be applicable in respect of unskilled, semiskilled and skilled categories in all schedules employments except employment in the establishments where the workers are given facilities of meals or lodging or both by the employer Category Rates as on 01.04.2016 (Rupees) Dearness Allowances (pm) w.e.f 01.10.2016 (Rupees) Rates from (Rupees) 01.10.2016 Per-Month Per-Day Un-skilled 9568.00 156.00 9724.00 374.00 Semi skilled 10582.00 182.00 10764.00 414.00 Skilled 11622.00 208.00 11830.00 455.00 The following rates of minimum wages shall be applicable in employment in establishments where the workers are given facilities of meals of lodging or both by by the employer Category Rates as on 01.04.2016 (Rupees)  Dearness Allowances (pm) w.e.f 01.10.2016 (Rupees) Rates from (Rupees) 01.10.2016 Per-Month Per-Day Un-skilled (i)9412.00 156.00 (i)9568.00 (i)368.00 (ii)8710.00 (ii)8866.00 (ii)341.00 (iii)8606.00 (iii)8762.00 (iii)337.00 Semi skilled (i)10426.00 182.00 (i)10608.00 (i)408.00 (ii)9620.00 (ii)9802.00 (ii)377.00 (iii)9516.00 (iii)9698.00 (iii)373.00 Skilled (i)11440.00 208.00 (i)11648.00 (i)448.00 (ii)10582.00 (ii)10790.00 (ii)415.00 (iii)10452.00 (iii)10660.00 (iii)410.00 (i)Where only lodging is provided (ii) where only meals twice a day is provided  (iii) Where both meals and lodging are provided.  The following rates of minimum wages shall be applicable in respect of Clerical and     Supervisory Staffs in all Scheduled Employments Category Rates as on 01.04.2016 (Rupees)  Dearness Allowances w.e.f .01.10.2016 (Rupees)    Rates from   (Rupees) 01.10.2016 Per Month Non Matriculates 10582.00 182.00      10764.00  414.00 Matriculates but not graduates 11622.00 208.00      11830.00  455.00 Graduate and above 12662.00 208.00      12870.00 495.00 *( All Rates are in rupees)  The estimator to identify the state and place of work to be carried out and collect proper minimum wages document to fix the wages of different disciplined people.