Understanding Construction Budgets and Measurement
Budgeting and Measurement
This document outlines the key concepts and processes involved in creating and managing construction budgets, as well as understanding the different types of measurements used in construction projects.
Budget Definition and Purpose
A budget is a crucial document for planning and executing construction works. It encompasses various stages, including design, project preparation, supply procurement, execution, and control. The budget serves as a financial roadmap, outlining the expected costs associated with a project.
Measurement in Construction
Measurement in construction refers to the process of quantifying the dimensions of various elements within a design. It involves determining the units required for each component of the project.
Types of Budgets
There are several types of budgets used in construction, each serving a different purpose:
- Implementation Material Budget: This budget reflects the direct cost of materials and labor required for the construction work, excluding any profit or overhead expenses.
- Undertaking Budget: This budget includes the implementation material cost, along with expenses and profit margins.
- Contract Budget: This budget encompasses all the costs included in the undertaking budget, with the addition of Value Added Tax (VAT).
Materials and Supply Rates
Material Classification
Construction materials are broadly classified into two categories:
- Simple Materials: These are natural or prefabricated elements, such as cement, sand, and bricks.
- Composite Materials: These materials are derived from simple materials and undergo transformation during the construction process, such as concrete and mortar.
Supply Rates
Supply rates encompass the costs associated with materials from the point of manufacture to their arrival at the construction site. These costs include packaging, transportation, storage, loading, and unloading. Factors such as order volume, payment terms, and market opportunities can also influence supply rates.
Labor and Machinery Costs
Labor Costs
Manpower cost refers to the wages and benefits received by workers. These rates are typically outlined in collective bargaining agreements specific to the construction industry in the relevant region.
Business Cost of Manpower
From a business perspective, manpower costs extend beyond wages and include expenses related to social security, insurance, severance pay, and employee licenses. The hourly cost of labor for a company is calculated by dividing the annual labor cost by the total hours worked per year.
Machinery Costs
Machinery plays a vital role in construction, enhancing efficiency, quality, and production while reducing manual effort. Machinery costs can be categorized as follows:
- Ownership Costs: These are fixed costs associated with owning and maintaining machinery, including depreciation, investment expenses, insurance, and taxes.
- Usage Costs: These costs are incurred when the machinery is in operation, such as fuel, maintenance, and repairs.
Indirect Costs and Overhead
Indirect Costs
Indirect costs are expenses that contribute to the overall production process but are not directly tied to specific work units. These costs include:
- Aids: Labor, materials, and equipment that are essential for a unit of work but not directly involved in its execution.
- Indirect Labor: Workers who do not directly participate in the construction work but play a role in organization and management, such as supervisors and foremen.
Overhead Costs
Overhead costs are expenses incurred in the overall operation and development of the construction business. These costs include rent, depreciation, advertising, salaries, travel expenses, and taxes.
Contractors and Industrial Benefit
Contractors
Contractors are typically awarded construction projects through a bidding process and are formally hired through a public deed.
Industrial Benefit
The industrial benefit is the expected profit margin for the contractor, typically set at 6% for government projects and negotiated for private projects.
Budgeting and its Importance
The Budget’s Role
A well-prepared budget is essential for identifying potential errors, ensuring quality control, evaluating construction systems, and exploring cost-effective alternatives. It should be based on a thorough analysis of project plans, geotechnical studies, and relevant reports. A comprehensive budget should be organized, clear, and accurate.
Types of Budgets
Budgets can be classified into various categories, including estimated, empirical, simple reviews, and detailed budgets.
Measurement of Built Surface
Total Built Surface
The total built surface encompasses the sum of all floor areas within the building’s perimeter, including both external and internal facades. Overhanging elements, covered balconies, and terraces are fully considered if enclosed by side walls, and 50% is considered if not enclosed.
Housing Built Surface
The housing built surface is calculated similarly to the total built surface but includes the proportionate share of common elements.
Local Built Surface
The local built surface is calculated similarly to the housing built surface but only includes common elements if the premises utilize them.
Usable Surface Area
The usable surface area refers to the area that can be effectively used, excluding hallways, corridors, bathrooms, and toilets.