The Civil Tales 1

Rate Analysis of
Construction Work
- From the Desk of The Civil Tales

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What is Rate Analysis?

Rate analysis is the process of determining the unit cost of construction items
like brickwork, concreting, plastering, etc., by breaking them down into:

• Material costs.
• Labour costs.
• Equipment usages.
• Overheads.
• Profits.

Why is Rate Analysis Important?

Rate analysis gives a well-defined thought of tools, services, and machinery

involved in the construction of a project.
Rate analysis helps in proportioning the effect of the market on the payments
made for construction work. It also helps in determining the construction costs per unit
as stipulated in the specifications. The use of rate analysis makes it possible to come up
with uniform standards for construction works.
So, in a simple way we can say:
• It helps in preparing estimates and tenders.
• Aids in cost control and budgeting.
• Ensures transparency and accuracy in billing.
• Useful in project planning and decision-making.

How do we calculate rate analysis?

Let’s discuss the five factors in detailed that play a pivotal role when calculating
rate analysis.

i. Material costs:

When determining the material costs, we need to determine purchase prices, storage
prices, transportation costs, and wastages (typically 5–10% extra) due to excesses. These
rates are resolved from the current market rates.

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ii. Labor costs:

When determining the labour costs, we determine the amount of labour required per
unit measurement of a construction project. The numbers are then multiplied by the
relevant applicable wages to get the labour costs per unit.
Example: 1 mason + 2 helpers = Total daily labour cost.

iii. Equipment costs:

There is different machinery employed in construction work like Hire/rental charges
for machinery (concrete mixer, crane, etc.). If machinery is used for construction work,
the cost will be added to the activity cost involved. For instance, we will add a concrete
mixer to the cost of preparation of concrete. However, if a machine is used for different
types of work, a separate budget is reserved for them.
iv. Overheads:

The costs of overheads are also inclusive during rate analysis. These include office,
rent, furniture, wages, and contingencies. The charges are about 5% of the overall costs.
Taxes are also included in overheads as 6% of taxes have to be paid prior.

v. Contractor’s profit:

A contractor’s profit of about 10% is included in the overall costs in overall project
cost. The profit is about 8% in big projects and 15% in small projects.

Factors Affecting Rate Analysis:

1. Location: Material prices vary by region.
2. Labor Skill: Skilled workers may charge higher wages.
3. Project Size: Bulk purchases reduce material costs.
4. Market Fluctuations: Prices of fuel/steel may change.

Tips for Accurate Rate Analysis:

• Use current market rates for materials and labour.
• Always account for wastage (e.g., 5% extra cement).
• Update rates regularly to reflect inflation.
• Use software/tools (e.g., Excel) for calculations.

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Basic Components of Rate Analysis:

Component Explanation
Includes quantity and cost of items like cement, sand, bricks, steel,
1. Materials
etc.

2. Labour Skilled and unskilled labour cost per unit of work.

3. Tools & Plants
Small tools and equipment used (usually taken as a percentage).
(T&P)

Charges for water used in mixing, curing (generally 1.5% of

4. Water Charges
material cost).

5. Overhead Charges Office, supervision, electricity, etc. (usually 10–15%).

6. Contractor’s Profit Usually added at 10% of total cost.

General Format of Rate Analysis Calculation:

1. Material Cost
2. Labour Cost
3. Add Tools & Plants (1.5 to 2%)
4. Add Water Charges (1.5%)
5. Add Overheads (10 to 15%)
6. Add Profit (10%)
= Total Rate per Unit (e.g., per m³ or m²)

Let’s take an example:

We will do Rate Analysis of 1 m³ Cement Concrete (1:2:4)

Step 1: Material Calculation

• Cement: 1 unit

• Sand: 2 units

• Aggregate: 4 units
Total = 1 + 2 + 4 = 7 units

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Assume, 1 m³ of concrete requires 1.52 m³ of dry material.

Now, split:

• Cement = (1/7) × 1.52 = 0.217 m³

• Sand = (2/7) × 1.52 = 0.434 m³

• Aggregate = (4/7) × 1.52 = 0.869 m³

Convert and calculate cost:

• Cement = 6.25 bags = ₹ 375 (if ₹ 60/bag)

• Sand = 0.434 m³ × ₹ 1200 = ₹ 520.8

• Aggregate = 0.869 m³ × ₹ 1000 = ₹ 869

Total Material Cost => (₹ 375 + ₹ 520.8 + ₹ 869) = ₹ 1764.8

Step 2: Labour Charges

• Masons, helpers = ₹600 per m³

Step 3: Tools & Plants (T&P) = 2% of (Material + Labour)

= 0.02 × (1764.8 + 600) = ₹47.3

Step 4: Water Charges = 1.5%

= 0.015 × (1764.8 + 600) = ₹35.49

Step 5: Overhead Charges = 10%

= 0.10 × (1764.8 + 600) = ₹236.48

Step 6: Profit = 10%

= 0.10 × (Total cost till now)

Let’s say total = ₹3283

Profit = ₹328.3

Final Rate = ₹3611.3 per m³ (approx.)

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Standard Units for Rate Analysis

Item Unit
Brickwork m³
Plaster m²
Flooring m²
Concrete m³
Earthwork m³
Painting m²
Steel Reinforcement kg or tonne

Final Conclusion:

Rate analysis is essential in every construction project. We need to be aware of

the financial concepts that directly impact our project. After realizing the cost impacts
on our projects, we can use the results from rate analysis to prepare a budget and a
monthly schedule for project.

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