Estimation and Costing Notes for SSC JE Electrical PDF | SSC JE Electrical Engineering Estimation and Costing

Estimation or estimating is the process of calculating the quantities of various items of work involved in the project.

The general estimate can be listed under major steps

1. Estimation of quantities
2. Cost analysis
3. Record or data maintenance
4. Providing selling aids

Purpose of Estimation and Costing:

• Need to know the necessary material and the cost to be incurred before starting the project.
• Ensure all the materials required for the execution of the project.
• To avoid misuse of money.
• To save the time required for completion of the project.
• To complete the project uninterruptedly.

The following data related to the estimate should be known to be estimators while they prepare the estimate for the electrical internal wiring:

1. Complete specifications of the product (types of wiring, types of material used, etc.)
2. Complete Complete schedule of points to be wired for with their switches and fittings
3. Plan and section mark with the details
4. Factor affecting the cost of estimate

Note: Before accepting an offer from contractors, an estimate must be prepared reaching the approximate cost of the job.

Electrical Schedule:

It is a list or plan that provides information about types of wiring, number of points and other related things under the estimation.

Catalogs:

For the pricing of estimated up-to-date catalog quotations from the manufacturer and wholesaler dealer for the special material must be available with the estimate. 

They save time by making judicious selections of standard catalogs, which are most useful for their work.

Market Survey and Source Selection: Good estimating is only possible with an updated knowledge of:

1. Availability of product
2. Source for production vendor selection
3. New products and their quality
4. Product price
5. Product Discount

A market survey for the collection of the above information and retention of the same in a library will help in easier Estimation and decision-making for the selection of materials and vendors. 

Estimated Record:

All estimates must be stored in a database or written in a book kept for the sole purpose. With the help of it, the actual cost of a complete job can be more easily compared with the estimated cost.

Contingencies:

1. The amount is provided under the head of contingency to cover the unforeseen expenditure such as to cover extra cost on account of delay in delivery, minor accident and unforeseen variation from the plants of the estimation department.
2. It is around 5%.
3. The contingencies fully compensate for additional material cost, labor cost and other allied expenses which could not be accounted for. Such expenses may be due to natural calamities such as floods, earthquakes, storms, hailstorms etc.

Overhead Charges:

The overhead charge, also called a standing charge for the business, covers all expenditures necessary to carry out the business in addition to the special expenditure, in curd the carrying out a particular job.

This can be classified under the following heading:

• Office Rent
• Rent for the workshop
• Alliances for the maintenance of the building
• Plan 10 machine depreciation
• Wages of clerical staff
• General Expenses
• Rates and Taxes
• Lighting and heating
• Advertisement
• Insurance
• Internet and telephone
• Travel allowances
• Legal costs etc

A defined 10 to 15 percent overhead charges of each added to the net cost of each estimate.

Profit:

This is usually added in the form of a percentage to the gross or true cost of the job in order to determine the selling price of the job

It is governed by the following factors:

• Size of the job with him
• Degree of Competition
• The state of turnover
• Anxiety to secure a particular job

Purchase Enquiry:

• The enquiry tender shell indicates the complete description and specifications of the required material
• Drawing, wherever available, she'll be enclosed with the enquiry / standard.
• Tenders must be invited to as many standard specifications as possible. (e.g.: ISS)
• A sample is to be shown to the vendors or they may be requested to submit their sample.
• In cases where an option to supply materials is to be exercised, the tenders must be asked for him to alternate offers with their own supply of material and with supplied materials.
• Delivery expected shall be realistic and specifically indicated.

Mode of Tendering:

• Open tendering
• Global tendering
• Limited tendering
• Single tendering
• Proprietary tendering
• Spot tendering

Open tendering:

• No registered dealer can participate.
• Giving an advertisement to at least three leading English language newspapers

Global tendering:

• When the items to be purchased are not available indigenously, global tender sale should be resorted to.

Limited tendering:

• Only the most likely and suitable sources are addressed.
• To invite adequate competition, it is necessary that at least five sources of supply are addressed.

Single tendering

• When the Purchase is finalized on the basis of a single offer or an offer from a single source invited, this is called a single tender purchase.

It is cause of the common occasion as given:

• When market research reveals that there is only one known reliable source of supply
• When management is in the interest of real long term economy, quality assurance, assured service standard of delivery etc
• A single party has already undertaken the risk of development of the atom required and their value of water is such that there is no economy to develop alternate source of supply
• The item is known to be in short supply and its stocks happen to be available only with one source at the time of purchase.
• The manufacturer or government can alie the supply only through a single source
• Surprise from fare price shops Supermarket, government, semi government Cooperative undertaking
• Direct purchase from a reputed manufacturer or their accredited dealer

Proprietary tendering:

• This tender is addressed only to a proprietary manufacturer / their authorized agent because no equivalent or near equivalent is available from any source

Spot tendering:

• It is only resorted to in emergency situations.
• All the readily approachable and well known vendors are requested to assemble and their offers are obtained after the requirement is explained.

Petty Purchase:

• Items of nominal value say up to rupees 500 could be purchased directly from the market through their purchase assistant without issuing a formal order.

Imprest purchase system:

• The purchase department arranged for purchases of urgent production items as well as at the atoms of low value.
• In this case, no formal offer is invited.
• The concerned person is authorized to record the rate of a minimum of three suppliers and approve their purchase.
• Under the system, purchases of the value of each atom may be restricted to rupees 1000.

Purchase Order:

The purchase order shall carry the following information

• Purchase Order Number and Date
• Detailed specifications of items
•  Value of Purchase Order
• Name of suppliers
• Due date of delivery
• Quantity of item order
• Tax if applicable
• Dispatch details
• Mode of payment
• Inspection system

Tender Form:

• It means taking the form on which an offer is made from a party to make supply or undertake some work as it is coated on some specified condition.
• That tender is usually accompanied with an amount called earnest money.
• Earnest money is guaranteed from the tender to deposit the required security and to enter into the required agreement on the intimation of acceptance of his tender after acceptance of the tender 
• Earnest money is usually 2%.

Security Deposit in Tender:

• An amount of money shall be deposited by the contractor whose tender has been accepted in order to render himself liable to the department to pay compensation.
• When contract security is required, the contractor may, in lieu of a performance bond and a labor and material payment bond, provide a security deposit.
• When a security deposit is delivered, it must be, in the amount of 10% of the contract price for construction contracts and at least 10% for other contract types.
• Security deposits are always refundable in nature.
• The security deposit cannot be withheld from any other contract with the same client.