Chapter 14 Pricing General Expenses

Objectives Upon completion of this chapter, you will be able to: –Define general expenses –Use a checklist to identify general expense requirements for a project –Explain how general expense requirements are assessed

Objectives (cont’d.) –Describe how general expenses are calculated –Calculate general expenses for several items –Identify general expense items that are calculated as add-ons –Price the general expenses for a project using manual methods

Objectives (cont’d.) –Use Excel spreadsheets to list and price general expenses –Takeoff the general expenses for a project using MC 2 ICE software

Introduction Direct costs measured in takeoff –Labor, material, and equipment General expenses –All of additional, indirect costs General Requirements of the Project or Project Overheads General Expense sheet

Figure 14.2 Selection of General Expense Add-Ons (Delmar/Cengage Learning)

Project Schedule Realistic schedule of project work –Necessary at the time estimate Duration of project determines cost –Prepared based on: Anticipated crew productivities Approximate methods for subcontracted work (e.g., bar-charts)

Figure 14.3 Sample Bar-Chart Schedule for an Estimate (Delmar/Cengage Learning)

Site Personnel Cost of site personnel –Proportional to project duration –Determined by: Multiplying monthly payroll cost personnel by the number of months they are required –Site personnel needs of a project Can vary enormously

Safety and First Aid Safety requirements expenses: –Cost of workers’ time Attending safety meetings and engaged in safety-related activities –Provision of safety awards and supplies First aid expenses: –Cost of providing on-site first aid supplies –Cost of personnel administering first aid

Travel and Accommodation Charges include: –Travel expenses for site staff –Room and board expenses for site staff –Travel expenses plus possible travel time allowances for project work force –Room and board for the project work force –Travel and other expenses incurred by head office staff on visits to project site

Temporary Site Offices Costs may include: –Rentals –Costs to move trailers in and out –Office furniture and stationery supplies –Fax machines and copying machines –Computers, printers, etc. –Office heating, utility, and janitorial costs –Catering facilities

Temporary Site Services Costs include: –Water services –Electrical services for power and lighting –Sanitary and storm sewer services –Telephone services –Installation costs

Hoardings and Temporary Enclosures May include: –Fences or barricades –Covered walkways and supports –Access stairs and railings –Enclosures over work areas –Covers, barricades, and partitions –General protection of existing structures

Temporary Heating Categories of temporary heating: –Localized areas to allow operations –Temporary enclosures –Building heating to allow work completion Costs: –Rental rate or ownership costs –Fuel consumed

Site Access and Storage Space Often interconnected –Road or storage space may have to be cleared Usually detailed in contract specifications –Access roads may need maintaining –Cleanup and restoration of pavements Liabilities may be imposed –Lack of space may be difficult to solve

Site Security May be spelled out in specifications –Can include a variety of items Examples: site fence, surveillance systems, security systems Unspecified security requirements –Contractor must decide on how to proceed Specification conditions and trade-offs Other requirements

Site Equipment Sections and pricing methods: –Major equipment items: rental rates or ownership costs against hours used Tower cranes –Hand tools and lower value equipment: percentage of total labor price –Equipment kept at the site: priced with general expenses

Trucking Cost of providing incidental trucking –Minor items of equipment and small material orders that need to be transported Best dealt with when equipment cost is estimated Trucking requirements –Vary with size and type of project

Dewatering Cost of removing water from excavations and basements –Usually performed with submersible electric pumps and hoses Other techniques are available –Sometimes detailed in specifications –High risk in estimate

Site Cleanup Categories: –Ongoing daily cleanup expenses Renting garbage containers Constructing and taking down chutes –Final cleanup expenses Cleaning, floors, fixtures, and windows Usually subcontracted

Miscellaneous Expenses Common items: –Layout –Snow removal –Saw setup –Photographs –Project signs –Materials testing –Water leakage tests –Warranty –Fire protection –Wind-bracing –Traffic control –Municipal charges –Financing charges –Taxes

Labor Add-Ons Only calculated when total estimated labor cost has been determined –May include: Small tools and consumables Wage increases Overtime premium Payroll additive

Bid Total Add-Ons Final group of add-ons –Assessed as a proportion of total bid price –Calculated at the end of the estimate Simple way to calculate –Apply percentage rates to final subtotal of estimate Produces a slight error

Examples General Expenses Pricing Notes Example 1—House –Refer to Figure General Expenses Pricing Notes Example 2—Office/Warehouse Building –Refer to Figure 14.11

Pricing General Expenses Using MC 2 ICE Software Allows many ways to assess and account for general expenses –Simplest way: Select items required from the list that can be accessed in the Project Information window –Refer to Figures through 14.15

Summary Indirect costs of construction projects: –General expenses or project overheads –Usually general contractor’s responsibility to assess and price Calculated as percentage or function of duration Can be done manually or via computer