Since the description of the item in the BOQ changed (the thickness in this case) then you need to do a price analysis.
The price analysis will be based on the rates of similar items in the BOQ. So in this case, you will only change the cost of the material from thickness 1 to thickness 2.
With kind regards,
Samer
Member for
19 years 1 month
Member for19 years1 month
Submitted by Mohamed Sahir on Tue, 2009-04-14 05:49
Hey guys wait a minute!
Let me give you an example:
Variation: Change in thickness of the 150mm Gre Pipe. (Pl. Note it is not the Dia. but the thickness that has changed)
BoQ Item Description Is : In trenches, depth: not exceeding 1.5 m for 150mm pipe
Rate Break down from the: Schedule of rate break down.
Material-60%, Labour-15%, plant-10% & ohp-15% Total (100%)
Now the general approach would be to
1. Break up the rate into M, L, P components based on the Schedule of rate break down %’s.
2. To the material component apply the price differences, to get the new material cost.
3. Assuming there will not be any increase in labor and plant costs the new direct cost ( M+L+P) will be (New M + L + P )
4. Now the new rate has to be (New M + L+ P) x 1.15 (I.e., including the OHP) or can we say the new rate is (New M)/0.6 .These two approaches yields two different OHP’s.
The consultant is in favor of the former. We objected to this saying, how can we have two different approaches, while breaking up the rate and then when rebuilding it.
So their argument was doesn’t rely on the “Schedule of rate break down” build up the plant and labor components for the new rate. This is ok, but it just makes the post contract administration simply tough.
Still we decided to buildup the L&P cost, then the productivity is always questioned, and academic evaluations are done leading to wastage of time and energy and disputes.
What went wrong in our contract? Was it the format of the Schedule of rate break down, that is creating the problem? Is it not the standard way to show your rate breakdowns?
I understand but dont agree that my OHP is 17.647%.
Although, in the end it wont make a difference in terms of amount. But, if I have a lump sum contract then I may loose ground as I am asking higher OHP.
My 15% OHP is based/integrated in my selling price and not in my direct cost. So, I divide my direct cost by 0.85 to reach my selling cost.
DC = 1080
Selling Price = 1080/.85 = 1270.59
Now, what is my OHP in 1270.59 is 15%.
OHP = 1270.59x.15 = 190.59
So, my direct cost comes to what you have claculated earlier.
It is just how you present/argue your claculations.
I am looking forward to listen on my way of presenting the entitlement.
Thankyou for you view, But my question is if the schedule of rate breakdown shows OHP as 15 %, is it 15% of rate or 15 % of (M+L+P), as when calculating the rate from first priciples.
The General format for the schedule of rate breakdown is:
item “A”: Material – 70%, Labor-10%, Plant-5%, OHP-15% Totaling 100%
I hope iam clear now.
Regards : Md. Sahir
Member for
17 years 3 months
Member for17 years3 months
Submitted by Samer Zawaydeh on Mon, 2009-03-30 00:11
For variations, you need to calculate the actual costs. So start by submitting the quotations or actual invoices, then you can estimate the number of hours+ supervision+ overhead and profit+ any other cost associated with it.
You can not use the original formual for the variation. Unless the variation is an extra quantity. If it is a new item, then a fresh analysis is needed.
kind regards,
Samer
Member for
19 years 1 month
Member for19 years1 month
Submitted by Mohamed Sahir on Sun, 2009-03-29 03:00
Member for
19 years 10 monthsHi Moahmed The first thing to
Hi Moahmed
The first thing to think about is not re start long dead threads - it is anoying for PP members to be reminded of 4 year old topics.
If you have any number of queries please set them down in the appropriate forum and PP members will respond.
Best regards
Mike Testro
Member for
14 years 8 monthssalaam to you all, my name
salaam to you all, my name is moahmed, i am from maldives, i have lots to ask, if any body have time 4 me plz i need some help,
Member for
17 years 3 monthsRE: Schedule of rate breakdown
Dear Mohamed,
You can make the format that is appropriate for the project that you have.
Basically you will have the following sections:
1. Material
2. Manpower
3. Equipment
4. Others depending on the type of project.
Then you apply the factors for Overhead and Profits.
With kind regards,
Samer
Member for
19 years 1 monthRE: Schedule of rate breakdown
Samer Thank you for your reply,
But my basic question is regarding the way in which the schedule of rate breakdown is presented. The standard format.
The variation example was just to explain the complexity of it.
regards
sahir
Member for
17 years 3 monthsRE: Schedule of rate breakdown
Dear Mohamed,
Since the description of the item in the BOQ changed (the thickness in this case) then you need to do a price analysis.
The price analysis will be based on the rates of similar items in the BOQ. So in this case, you will only change the cost of the material from thickness 1 to thickness 2.
With kind regards,
Samer
Member for
19 years 1 monthRE: Schedule of rate breakdown
hello,
I was waiting to get some suggestions.Is any more detailing required.
regards
mds.
Member for
19 years 1 monthRE: Schedule of rate breakdown
Hey guys wait a minute!
Let me give you an example:
Variation: Change in thickness of the 150mm Gre Pipe. (Pl. Note it is not the Dia. but the thickness that has changed)
BoQ Item Description Is : In trenches, depth: not exceeding 1.5 m for 150mm pipe
Rate Break down from the: Schedule of rate break down.
Material-60%, Labour-15%, plant-10% & ohp-15% Total (100%)
Now the general approach would be to
1. Break up the rate into M, L, P components based on the Schedule of rate break down %’s.
2. To the material component apply the price differences, to get the new material cost.
3. Assuming there will not be any increase in labor and plant costs the new direct cost ( M+L+P) will be (New M + L + P )
4. Now the new rate has to be (New M + L+ P) x 1.15 (I.e., including the OHP) or can we say the new rate is (New M)/0.6 .These two approaches yields two different OHP’s.
The consultant is in favor of the former. We objected to this saying, how can we have two different approaches, while breaking up the rate and then when rebuilding it.
So their argument was doesn’t rely on the “Schedule of rate break down” build up the plant and labor components for the new rate. This is ok, but it just makes the post contract administration simply tough.
Still we decided to buildup the L&P cost, then the productivity is always questioned, and academic evaluations are done leading to wastage of time and energy and disputes.
What went wrong in our contract? Was it the format of the Schedule of rate break down, that is creating the problem? Is it not the standard way to show your rate breakdowns?
Please comment.
Member for
20 years 2 monthsRE: Schedule of rate breakdown
Sajid/Samer,
I agree to both of you. Hope we made it clearer this time.
Best regards,
Rommel
Member for
17 years 3 monthsRE: Schedule of rate breakdown
Dear Everyone,
This is a numbers issue.
The Contractual OHP = 15% of the Final Price = 17.647% of the M+L+P.
You just have to point this issue to the Consultant, and they should understand.
Unless you have another clause in your Contract stating clearly that the OHP=15%.
Best Regards,
Samer
Member for
18 years 5 monthsRE: Schedule of rate breakdown
Hi Catalan
I understand but dont agree that my OHP is 17.647%.
Although, in the end it wont make a difference in terms of amount. But, if I have a lump sum contract then I may loose ground as I am asking higher OHP.
My 15% OHP is based/integrated in my selling price and not in my direct cost. So, I divide my direct cost by 0.85 to reach my selling cost.
DC = 1080
Selling Price = 1080/.85 = 1270.59
Now, what is my OHP in 1270.59 is 15%.
OHP = 1270.59x.15 = 190.59
So, my direct cost comes to what you have claculated earlier.
It is just how you present/argue your claculations.
I am looking forward to listen on my way of presenting the entitlement.
Regards
Member for
20 years 2 monthsRE: Schedule of rate breakdown
Dear Mohammad,
Let us calculate:
For example if your BOQ rate is 1,200:
Material = 840 (70%)
Labor = 120 (10%)
Plant = 60 (5%)
OH&P = 180 (15%)
Therefore, your Direct Cost (M+L+P) is 1,020 and OH&P is 180. Then, what is the % OH&P?
OH&P = 17.647% of Direct Cost (180/1020)
Let us check whether the 17.647% is correct:
1,020 x 15% = 153 (Wrong)
1,020 x 17.647% = 180 (Correct)
From the above example, if the new material cost is 900, what is the new BOQ rate?
Direct cost = 900+120+60 = 1,080
OH&P = 1,080 x 17.647% = 190.59
New BOQ Rate = 1,270.59
Hope the above helps,
R. Catalan
Member for
17 years 3 monthsRE: Schedule of rate breakdown
Dear Mohammad,
You will calculate the total cost including everything, then apply the percentage of OHP.
Kind Regards,
Samer
Member for
19 years 1 monthRE: Schedule of rate breakdown
Dear Samer,
Thankyou for you view, But my question is if the schedule of rate breakdown shows OHP as 15 %, is it 15% of rate or 15 % of (M+L+P), as when calculating the rate from first priciples.
The General format for the schedule of rate breakdown is:
item “A”: Material – 70%, Labor-10%, Plant-5%, OHP-15% Totaling 100%
I hope iam clear now.
Regards : Md. Sahir
Member for
17 years 3 monthsRE: Schedule of rate breakdown
Dear Mohammad,
For variations, you need to calculate the actual costs. So start by submitting the quotations or actual invoices, then you can estimate the number of hours+ supervision+ overhead and profit+ any other cost associated with it.
You can not use the original formual for the variation. Unless the variation is an extra quantity. If it is a new item, then a fresh analysis is needed.
kind regards,
Samer
Member for
19 years 1 monthRE: Schedule of rate breakdown
There is a correction:
For Ex: item “A”: Material – 70%, Labor-10%, Plant-5%, OHP-15% Totaling 100%.