ABSTRACT
The resources on which resource-estimating unit rates are based are, depending on the item being priced, some or all of the following:
Labour costs – the all-in labour rate. This is built up from operatives’ wages plus obligatory statutory ‘on costs’ such as National Insurance, etc. Labour costs include the costs of employing both skilled (trades) and unskilled (general) operatives together with the additional payments set down in nationally negotiated agreements.
Material costs – the basic costs of materials plus the costs of delivery, unloading, storage and allowances for wastage.
Plant costs – the hire cost of mechanical plant such as excavators, dumpers, plus delivery to site, operating costs (drivers and fuel), etc. Some items of plant can be included in the Preliminaries section of the bill of quantities or work package, under the appropriate clause (see NRM2 Clause 2.6.4.1), while other plant costs associated directly with a specific trade or element are included with that item.
Overheads – overheads include such items as head-office costs, etc. As with plant costs, NRM2 gives the estimator the opportunity to include these costs in the Preliminaries pricing schedule at the front of the bill of quantities or work package. Overheads are in two categories:
project overheads, that is costs associated with a specific project; or
general overheads, also referred to as Establishment charges; that is, costs associated with meeting the general expenses of the contractor or sub-contractor, to which every contract has to make a contribution. General overheads/establishment charges do not relate to a specific project.
Profit – the profit margin will vary according to a number of external factors, including market conditions and the perceived risk. In the UK, the profit margin for many general contractors and sub-contractors is surprisingly low and the level of profit recovery is usually determined by the directors during the adjudication process – see Chapter 5.
