Rate analysis: meaning, purposes, factors

Rate analysis

Rate analysis is the determination of the cost of executing one unit of an item of work (per m³, m², m, kg or no.), by adding the cost of the materials, labour and equipment needed for that unit, with the overhead and profit.

Purposes

1. To find the unit rate of each item for the abstract of cost and the BOQ.
2. To check the reasonableness of tendered rates and of rates for extra and substitute items.
3. To fix the rates for variations and day-work in a contract.
4. To compare the cost of alternative materials and methods.
5. To calculate the requirement of materials and labour for each unit of work.
6. To prepare the District Rate and department norms.

Factors affecting rate analysis

1. Location and lead: distance from the source of materials to the site (lead) and the lift; remote hill districts have a high transport cost.
2. Availability and price of materials: local or imported materials, royalty, taxes and market fluctuation.
3. Labour: wage rates, availability of skilled labour and productivity (output per day).
4. Specification and quality: mix proportion, grade, thickness and finish required.
5. Quantity of work: a large quantity lowers the unit rate through economy of scale.
6. Equipment and method of construction: manual or mechanical, the cost of machines, fuel and operators.
7. Climate, season and site conditions: rain, altitude, access, difficult soil or water, working space and height of work (lifting).
8. Time of completion: a short time needs more resources and overtime.
9. Wastage and norms: the standard wastage allowance and the consumption norms of the department.
10. Contractor's overhead and profit, taxes (VAT) and insurance, and the mode of payment and contract conditions.