Review of project cost estimation

The last edit to this post was made by clguan on 2009-9-9 at 14:13. It seems that the construction contractor’s quote is based on fixed rates, rather than comprehensive unit prices listed in a schedule :) The responses to the relevant questions are as follows (personal opinions): 1. The understanding is correct; that is, according to the standard rates, the basic cost for argon-electric welding of carbon steel pipes with a nominal diameter of DN100 per 10 meters is 92.41 yuan； 2. Increases in labor costs are generally adjusted uniformly in accordance with the relevant documents issued by the local quota authority, within the pricing table or fee schedule (the first page of the quote), rather than on a per-item basis ； 3. I’m not quite clear about this issue – is the price quoted by the contractor (47 yuan per meter) the base price for installation? Is it the price of the main materials again? Because the usual installation base price does not include the cost of the main materials, which are charged separately ； 4. It is recommended to read books on project cost estimation and to carefully study the relevant detailed guidelines for quotas. Additionally, as a supplementary point, when reviewing project costs, it is recommended to focus on the accuracy of the quantity calculations, the selection of items from the pricing standards, and whether the coefficients in the cost calculation table are appropriate. For reference!

We supply all the main materials for this project; the supplier is only responsible for the auxiliary materials and installation. So the price of 47 per meter here refers to the installation cost (including auxiliary materials, equipment, and labor). It seems necessary to learn to become a cost engineer. Thank you for the answer from above. But is it really that expensive to install a one-meter pipeline? 47 pieces? !

Is the installation cost of 47 yuan per meter the price including tax after deductions? The base price listed in the quota manual is the basic price without any costs or taxes, and it does not take into account increases in labor costs resulting from factors such as location and time. To determine whether this price is reasonable, one can consult the owners of similar projects in the area; there are significant differences across different regions regarding the increase in labor costs ； In the past two years, the daily wage for a laborer (non-technical worker) involved in construction projects in Guangzhou has already reached over 60 yuan: lol, for reference only!

The fixed price usually does not include the main materials. 47 yuan per meter generally refers to the comprehensive unit price that includes the main materials, installation costs, labor costs, auxiliary materials, management fees, profits, and risk premiums; some of these comprehensive unit prices also include taxes； The standard price is set based on the overall social average level at the time when the standards were established. If the standards were created in the year 2000, then there are now adjustment documents for labor costs in many provinces; these adjustments are generally made with reference to the social average level. The prices of main materials are determined according to market rates, and the prices of auxiliary materials can also be adjusted based on market conditions. In some places, adjustment coefficients have been introduced for machinery costs as well – regions such as Guangdong and Ningbo in Zhejiang have relevant regulations in this regard. It should be noted that standards represent a set of rules, and it’s impossible for them to reflect market prices 100% accurately; there will always be aspects that are reasonable or unreasonable. However, once it is agreed to use certain standards, it is necessary to abide by the rules set by those standards. It’s not possible to apply higher rates according to the standards while using lower rates based on market conditions. I’ve encountered many provincial installation standards that are based on the national unified installation standards, and the standards for various industries tend to be of a relatively high quality

The budget is calculated according to the national unified installation rates: for carbon steel pipes of 10mDN100 welded using argon-electric welding, the cost is 47 yuan per meter (including installation fees, labor costs, auxiliary materials, management fees, profits, and taxes). Whether this amount is high or not depends on the pressure rating of the pipes. For high-pressure pipes, 47 yuan per meter is still low.

The base price does not include taxes, nor does it cover fees, additional costs, or other such expenses; as a result, the actual cost at the time of settlement will be higher than the budgeted amount, unless otherwise stipulated in the contract.

Anyway, I think the price quoted by the supplier is too high. The pipeline is a standard low-pressure pipeline, with an operating pressure of less than 10 kg. 47 yuan per meter covers labor and auxiliary materials. Since I’m not sure about the details right now and think it’s too expensive, there’s only one option: negotiate a lower price!