DESIGN MANAGEMENT & AUDITING OF ELECTRICAL

SYSTEM (DMAES)

BE Sem-VIII ElectricalChapter1

L1-6

Estimation

• It is the art of assessment of quantities of different items and cost thereof to plan the amount required for executing a work before actually carrying out the work

• It helps in taking right and definite decision while entering into a contract with any firm

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Purpose of Estimating and costing• Before starting of a new program it is necessary to

know:

– The necessary material required and– The cost involved in it.

• So,

– It is necessary to make a complete project report for the said program.

– As it acts as a complete guide in successful implementation of our program.Fr.CRIT,Vashi 3

Purpose of Estimating and costing• For successful implementation of any program a

complete project report is to be prepared.

• Project report includes-

– knowledge about work to be done, such as drawing of the work,

– Complete details of the necessary material with its costing and

– sequence of operation to be performed. Fr.CRIT,Vashi 4

Aims of estimations and costing

• As we get the list of material before starting the job so that there are less chances of missing any necessary material after starting the work.

• Money is not misused in projects under implementation.

• Time is saved.Fr.CRIT,Vashi 5

Facts should known to an estimator

• Complete specifications, scheme of installations, type of wiring etc.

• Complete schedule of points to be wired with other details

• Drawings marked with details such as positions of switchgear and DB

• Other factors related to location of sites, availability of labor, duration of completion

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Problems that can arise in the work started without estimation and costing

• Interruption may come in continuation of the project as it becomes very difficult to purchase necessary material in the absence of list of materials.

• The money is misused by purchasing smaller or excess quantities of material, and the shortage of money can cause stoppage of work.

• Due to above hurdles, the work can take more time for completion and it can affect the other project which is related to the existing project.

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Qualities of a good estimator• Have thorough knowledge and practical experience

about estimation.• Go to the work place for inspecting the project time

to time .• A good imagination and experimenting power.• Through and update knowledge about the prevailing

designs.• Always keep provision for future extension or

diversions while estimating.• Keep update knowledge of prices of material and for

that he should keep on changing the price lists maintained in his office.

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Steps involved in estimation• Specification of material• Latest market cost of material• Price list• Calculation of material and labor cost• Knowledge of purchase system• Labor cost• Contingencies• Overhead charges• Production cost• Profits• Total cost• Storage cost• Tools and plant chargesFr.CRIT,Vashi 9

Specification of material

• The specification and cost of all necessary material should be known while preparing estimation

• Without the knowledge of specification purchase of material will be difficult

• Without detailed specifications ,shopkeeper feels difficult to provide material.

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Market cost of material and market survey

• This is the cost of the material at which it can be purchased.

• Market survey has to be conducted for estimating the cost of enlisted material so that shop keeper should not overcharge for certain material.

• Market surveying and purchasing should be done by the experts only.

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Market cost of material and market survey

• Mistake or carelessness in market and purchasing will add to the cost of electrical installation and also time in completion of project.

• After market survey ,quotations are invited for the enlisted necessary material from related shops.

• The cost given in quotations of different shops are compared and the material is purchased at the lowest rates offered by supplier

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Price list• By market survey the estimator get the

pricelist for the materials from shop keeper in which the retail and the wholesale prices will also be given according to local market rates.

• Price list should be updated time to time according top market rates

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Net Price• It is the price of an item which includes all taxes such

as VAT, sale tax, central sale tax, excise duty and other local taxes.

• These taxes are not mentioned in a price list.• If the discount is given by the factory then

shopkeeper will deduct the discount and then will charge the tax.

• Eg. If price of an item is 100 Rs. And discount given by factory is 10 % ,then Rs. 100-10=90, and the sale tax at the rate of 5% will give net price=90+4.5=94.5

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Determination of material and labour cost

• The total cost involved in the project is completed in two steps:– Quantity of material and cost determination.

– Determining of labor charges

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Table: List of material

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Sr. No.

Name of item with full specifications

Required Quantity Rate Total cost in Rs.

Remarks

Quantity unit Rs. Per

1 Double pole, iron clad, main s/w,30Amp, rating,250V

1 No. 150 each 150 As main control switch

Determination of labour cost• Labor charges are different at different

places.

• In cities a trained electrician may charge Rs. 150/- a day.

• In rural equally trained electrician may charge Rs.80/- a day.

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Determination of labour cost• The labour charges are decided as per:

– work duration & work amount i.e. actual labour cost as paid to daily wages.

– As per unit work basis.

– As per percentage of material cost.

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Table: Labour rates & labour payment

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SrNo

Class of labour No. of days

Rate per day

Total payment

Remarks

Rs. Paise Rs.

Paise

Skilled labour

Unskilled labour

Table: Total labour payment

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SrNo.

Description of unit work conduit

No. of points

Rate Total payment

Remarks

Rs. Paise Rs. Paise

1.2.3.4.

Main board installation15 s/w boards @ 2 points for each s/w boardInstallation of bell push button & laying under ground wiring up to main gate @ 6 points per bellTotal points light/fan/sockets

430640

20202020

00000000

80600120920

00000000

Total labour charges 1720 00

Table: Determination of Labour charges

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SrNo

Description of material

Rate AmountCost (say)

% of total material

cost

1. Total cost of wiring material

6115.00

15% Rs. 917.25920.00

Knowledge of purchase system

• It is compulsory to have a complete knowledge of purchase system on the part of department.

• Department officer is also responsible for: – proper storage of material and – Issue of material time to time.– Should keep a complete account of material used on the

project from day to day.– Purchase of the item fallen short in the store and – Issue the same as and when necessity arises.

• The department has to ensure that the project work is not stopped due to lack of material.

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Contingencies

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• Contingencies are:– The emergency expenses which cannot be calculated

while calculating the material and labor expenses during completion of project.

– These expenses may be due to natural calamities such as floods, earth quack, storms, etc.

• emergency expenses may be due to increase in cost of material or increase in labor costs.

• 3% to 5% of material cost and labor cost is estimated to be on contingency.

Overhead charges

• Overhead charges are:– Other expenses like Govt. taxes and additional

expenses on labor in addition to the estimated expenditure.

• Divided in two categories:– Maintenance overhead charges– Administrative overhead charges

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Maintenance overhead charges

• Expenditure involved on:

– keeping machine in working condition.– Water charges– Electricity charges– House tax– Depreciation charges on components and

instruments.

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Administrative overhead charges• Fund is required to run administration of

various departments and their employs properly and efficiently.

• Expenditure involved on:– Functioning of departments like

• Purchase section• Sales section• Salaries section• Account section etc.

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Administrative overhead charges• Office furniture• Stationary• Reception • Stay arrangement of guests• Payment on commissions of sales• Publicity of product• Dispatch of material • Transport• Sales tax

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Production cost

• Production cost = Cost of material + labor charges

+ overhead expenses (maintenance +administrative +supervision)

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Supervision charges

• A contract is given to professionally trained and expert engineers to supervise the project work

• Supervision charges are:

– The payment of contract money and other expenses involved on the team.

– 1% to 1.5% of total cost.

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Profits• Are calculated on the basis of total expenditure

involved in the project completion stage.

• Can be from 10% to 30% or even more if expenditure are controlled and full efficiency is exercised while working on the project.

• Profit % can fall if:– Poor planning– Inadequate and insufficient staff – Lack of proper supervision– Purchase of low quality material at higher rates.

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Storage Charges

• The cost involved to:– Transport purchased material to store– Transport material to Work sites– Labor expenses on loading and unloading

the material.

• 2% to 3% of total cost on purchase of material

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Tool and Plant charges• Expenditure on purchase of tools and

machines

• Expenses on breakage and damage losses.

• 2 % of total cost of material.

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Total Cost

• Total of all expenses occurred on the project.

• Total of material cost, labor charges and overhead charges.

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Total cost

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Sr.No

.

Details of expenditure of all types. Expenditure in

Lacs

Remarks

1.2.3.45.6.7.

Material costLabour expenditureContingency-3% material costOverhead expenditure-11% of

material cost & labour cost.(7.75)

Total Supervision overhead charges on above all-1.5%

Total coatRounded off to Rs.

7.000.750.210.85

8.81 0.13

8.94

9.00