Chapter 14

1. Chapter 14 Pricing General Expenses

2. 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

3. 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

4. Objectives (cont’d.) • Use Excel spreadsheets to list and price general expenses • Takeoff the general expenses for a project using MC2 ICE software

5. 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

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

7. 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)

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

9. 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

10. 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

11. 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

12. 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

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

14. 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

15. Temporary Heating • Categories of temporary heating: • Localized areas to allow operations • Temporary enclosures • Building heating to allowwork completion • Costs: • Rental rate or ownership costs • Fuel consumed

16. 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

17. 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

18. 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

19. 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

20. 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

21. 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

22. 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

23. 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

24. 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

25. Examples • General Expenses Pricing Notes Example 1—House • Refer to Figure 14.10 • General Expenses Pricing Notes Example 2—Office/Warehouse Building • Refer to Figure 14.11

26. Pricing General Expenses Using MC2 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 14.13 through 14.15

27. 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