---
title: "Purposes of rate analysis"
subject: "Estimating and Costing"
chapter: 4
key: "semester_7/estimating_and_costing:purposes-of-rate-analysis"
source: https://www.bctengineer.com/q/semester_7/estimating_and_costing/purposes-of-rate-analysis
site: BCT Engineering
---

# Purposes of rate analysis

Estimating and Costing · Chapter 4: Analysis of Rates

- Asked in: 2070 Chaitra, 4 marks
- Video: [Quantity Surveying | Estimates | Lesson 8 What is RATE ANALYSIS?  Costing by Engr ilyas khan](https://www.youtube.com/watch?v=QO3cN00R87M) — Engineering Softwares
- Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14
- Page: https://www.bctengineer.com/q/semester_7/estimating_and_costing/purposes-of-rate-analysis
- Whole chapter: https://www.bctengineer.com/md/semester_7/estimating_and_costing/chapter-4

## Question

What are the purposes of rate analysis?

## Short answer

Purposes include finding unit rates for estimates and BOQs, fixing rates for extra items and variations, checking tender rates, determining material/labour/equipment quantities, comparing alternatives, preparing standard rates, and controlling cost and settling claims.

## Answer

The purposes of rate analysis are:

1. To find the **unit rate** of each item for use in the abstract of cost and the BOQ of an estimate.
2. To fix the **rates of extra and substitute items** and of variations in a contract.
3. To check the **reasonableness of the rates quoted** in tenders and to judge unbalanced or abnormally low bids.
4. To determine the **quantity of materials, labour and equipment** needed per unit of work.
5. To **compare** alternative materials, mixes and methods of construction.
6. To prepare **standard rates** such as the District Rate and departmental norms.
7. To control the cost of the project and settle claims.

## Check yourself

The answer's key points as multiple-choice questions, with the correct option and why.

1. Which purpose is for the abstract of cost and BOQ?
   A. To draw plans
   B. To test materials
   C. To select site
   D. To find the unit rate of each item
   Answer: D. Unit rates are used in abstract of cost and BOQ. (Key point: Unit rate)

2. How does rate analysis help in tenders?
   A. Checks reasonableness of quoted rates and detects unbalanced or abnormally low bids
   B. Chooses the highest bid
   C. Fixes bid security
   D. Cancels all bids
   Answer: A. It gives a reference to judge bids. (Key point: Tender check)

3. What standard rates does rate analysis help prepare?
   A. Bank rates
   B. District Rate and departmental norms
   C. Exchange rates
   D. Income tax slabs
   Answer: B. Used to prepare standard rates. (Key point: Standard rates)

4. Rates of extra and substitute items are fixed by what?
   A. Guess
   B. Previous year bill only
   C. Rate analysis
   D. Client's wish
   Answer: C. Rate analysis gives fair rates for variations. (Key point: Extra items)

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