--- title: "Rate analysis: meaning, purposes, factors" subject: "Estimating and Costing" chapter: 4 key: "semester_7/estimating_and_costing:rate-analysis-purposes-factors" source: https://www.bctengineer.com/q/semester_7/estimating_and_costing/rate-analysis-purposes-factors site: BCT Engineering --- # Rate analysis: meaning, purposes, factors Estimating and Costing · Chapter 4: Analysis of Rates - Asked in: 2082 Bhadra, 1+2+3 marks; 2076 Asoj, 5 marks; 2067 Asar (old course), 3 marks; 2073 Shrawan, 4 marks (asked 4 times) - Video: [Purpose and Importance of Rate Analysis - Specifications and Rate Analysis](https://www.youtube.com/watch?v=pX3GAjs6WlI) — Ekeeda - Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14 - Page: https://www.bctengineer.com/q/semester_7/estimating_and_costing/rate-analysis-purposes-factors - Whole chapter: https://www.bctengineer.com/md/semester_7/estimating_and_costing/chapter-4 ## Question What do you mean by rate analysis? What are the purposes of rate analysis and the factors affecting rate analysis? ## Short answer Rate analysis determines the unit cost of a work item by summing material, labour, equipment, overhead and profit. It is used to find unit rates, check tender rates, price variations, and compare alternatives. Factors include location, material and labour rates, specifications, quantity, equipment, site conditions, and overhead. ## Answer #### 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. ## Check yourself The answer's key points as multiple-choice questions, with the correct option and why. 1. What is rate analysis? A. Finding the cost of one unit of an item of work from materials, labour, equipment plus overhead and profit B. Finding the total cost of the whole building C. Estimating quantities from drawings D. Fixing the contractor's profit only Answer: A. It gives the unit cost of an item (per m³, m², etc.). (Key point: Definition) 2. Which is a purpose of rate analysis? A. Preparing structural drawings B. Checking tendered rates and fixing rates for variations and extra items C. Computing bar bending schedules D. Deciding the site location Answer: B. It checks the reasonableness of tendered rates and prices variations/day-work. (Key point: Purpose) 3. Why does location affect the rate? A. Location changes the cement grade B. Location decides contractor profit by law C. Lead (distance from source) and lift raise transport cost, especially in remote hills D. It only affects labour attendance Answer: C. Remote districts have higher transport cost. (Key point: Lead and lift) 4. How does a large quantity of work affect unit rate? A. It raises the unit rate B. It has no effect C. It doubles the overhead D. It lowers the unit rate by economy of scale Answer: D. Larger quantity spreads fixed costs, lowering the unit rate. 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