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Chapter 8 Pricing General Expenses

Chapter 8 Pricing General Expenses. Introduction. The direct costs of a building project include the cost of labor, material, equipment, and subtrades. General expenses (project overheads) are the indirect costs incurred in the building project.

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Chapter 8 Pricing General Expenses

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  1. Chapter 8Pricing General Expenses

  2. Introduction • The direct costs of a building project include the cost of labor, material, equipment, and subtrades. • General expenses (project overheads) are the indirect costs incurred in the building project. • A list of items is shown on Figure 8.1(see next slide). • This list can be used as a checklist. • The estimator chooses those items that are required on the particular project under consideration. • Accurate assessment of general expenses is important so estimators should consult project supervisors to help determine which items are needed for a job.

  3. Project Schedule • A job schedule is useful to have before pricing general expenses because many costs are determined by the duration of the project. • Builders usually have only a short time to prepare their estimates so approximate schedules are compiled quickly for use with the estimate. • Many homebuilders simply search their records for a similar job to the one being estimated and use the actual duration of the past job as a guide to the duration of the new project. • These schedules are usually in the form of Gantt charts (bar charts).

  4. Job Personnel • Job staff may include a superintendent and other job supervisors. • Wages used to price staff may or may not include payroll burden (the cost of fringe benefits). • In the examples, net wage amounts are used to price site personnel and the total amount for site personnel is added to the rest of the labor in the estimate. • An allowance for payroll burden is added to the total labor amount at the end of the estimate as an add-on. • Add-ons are used to price a number of items such as insurance. • See next slide.

  5. Temporary Offices, Site Storage, and Sanitary Facilities • Temporary buildings at the jobsite Include: • Office trailers • Storage trailers • Tool lockups • Toilets • On small jobs sites, offices are seldom required. • Construction trailers and/or sales offices may be needed on larger developments. • For a large multi-unit project, a sales office with mockups of suites is sometimes constructed. • In these cases, a full estimate of building, servicing, and later removing the structure will be required.

  6. Utilities and Site Services • Utilities and site services required vary a great deal depending on the type of project to be constructed. • When building on a serviced lot in a city, site services will be in place and will normally be available for temporary use by the builder. • In a new subdivision, there may or may not be services available. • The estimator needs to investigate. • Permanent connections to sewer systems, natural gas, and electrical systems are sometimes provided by the municipality for a fee. • Otherwise, the homebuilder’s subtrades will have to make the connections. • There may still be municipal charges to pay.

  7. Scaffolds, Hoardings, and Temporary Enclosures • May include one or more of the following: • Fences or barricades • Temporary scaffolds • Temporary enclosures built to provide security and/or allow a space to be heated • Temporary partitions or dust curtains • General protection of existing structures on or adjacent to the work site • Cost of work includes materials, labor, and any necessary equipment required to erect the structures, plus the cost of taking down and removing the materials from the site after their use.

  8. Temporary Heating • May include: • Heating provided to allow operations like masonry to continue in cold weather • Heating a temporary enclosure • Heating the house to allow the finishing trades to complete their work • Two costs need to be estimated: • Portable space heaters • Fuel consumed • Both depend upon the duration of the heating period and the amount of heat required. • See next example.

  9. Heating Example • To heat a space 60 feet x 30 feet x 10 feet for four weeks with 50 Btus per CY per hour; heater rental is $75.00 per week; propane is $1.05 per gallon (90,000 Btus per gallon) • Volume heated = 60 x 30 x 10/27 = 667 CY • Heat required = 667 x 50 = 33,350 Btus per hour • Heater rental = 4 weeks x $75.00 = $300.00 • Heat consumed = 33,350 x 28 days x 24 hrs = 22,411,200 Btus • Propane = 22,411,200 x $1.05/90,000 = $261.46 • Total cost = $561.46

  10. Equipment Rentals • Equipment is priced in three different ways: • Major equipment used in excavation and concreting operations is priced directly. • Hand tools and other items of minor equipment are priced as a small tools add-ons. • Site equipment is priced in general expenses. • Typical site equipment includes: • Table and radial-arm saws • Compactors • Air compressors • Pneumatic tools and attachments • Generators, etc.

  11. Cleanup • Cleanup on a housing project can be divided into five categories: • General site cleanup • Final site cleanup • Cleaning the furnace • Cleaning windows • Move-in cleanup

  12. Stakeout Survey and plot plan Saw setup Photographs Project signs Soils testing New home warranty Municipal charges Financing charges Other General Expenses

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