ESTABLISHMENT OF UNIT RATES FOR COMMON BUILDING
AND ROAD WORK ACTIVITIES
May 2010
Establishment of Unit Rates for Construction Works - PPRA
Table of Contents
1.1 Background Information ...................................................................................................... 4 1.2 An Overview of Tanzania Construction Industry ............................................................. 5 1.3 Objectives of the Study ........................................................................................................ 5 2.0 METHODOLOGY ..................................................................................................................... 6 2.1 Methodology Adopted ........................................................................................................ 6 2.2 Selection of a Survey Team .................................................................................................. 7 3.0 DATA COLLECTION AND AGGREGATION ........................................................................ 7 3.1
Data Collection ....................................................................................................................... 7 3.1.1 Geographical Coverage ................................................................................................ 7 3.1.2 Institutions Visited ......................................................................................................... 7 3.1.3 Establishment of Common Activities and their Inputs ............................................. 8 3.2 Data Aggregation .................................................................................................................. 9 3.2.1 Road-works .................................................................................................................... 9 3.2.2 Building Works ................................................................................................................ 9 4.0 UNIT RATE BUILD-UP ............................................................................................................. 9 4.1 Unit Rate Build-Up ............................................................................................................. 10 5.2 Elements for Establishing Unit Rate ..................................................................................... 10 5.3 Establishment of All- In - Rates .......................................................................................... 11 5.3.1 Labour .......................................................................................................................... 11 5.3.2 Materials ....................................................................................................................... 11 5.3.3 Plant and Equipment Costs ........................................................................................ 12 5.3.4 Cost of Tools ............................................................................................................... 12 5.4 Output/Productivity Rates ................................................................................................. 13 5.4.1 Labour Productivity .................................................................................................... 13 5.4.2 Equipment/Plant Production Rate ............................................................................ 13 5.5 6. 0 Unit Rates Build-Up for Selected Items ............................................................................ 13 COMPARISON OF COLLECTED UNIT RATES AGAINST BUILT-UP RATES .................. 14 6.1 Inputs Comparison .............................................................................................................. 14 6.1.1 Materials ....................................................................................................................... 14 2 Establishment of Unit Rates for Construction Works - PPRA
6.1.2 6.2
Unit Rate Comparison for Road Works .......................................................................... 15 6.2.1 6.2 Average Collected, TANROADS, LGAs & Built-up ................................................. 15 Building Works .................................................................................................................... 24 6.2.1 7.0 Equipment/Plants ........................................................................................................ 15 Collected Vs Built-up .................................................................................................. 24 CHALLENGES FACED IN ESTABLISHING UNIT RATES .................................................... 29 7.1 Description of Work Items ................................................................................................. 29 7.2 Specifications ........................................................................................................................ 30 7.3 Construction Materials ....................................................................................................... 30 7.4 Labour Productivity ............................................................................................................ 31 7.5 Equipment /Plant ................................................................................................................ 31 8.0 CONCLUSIONS AND RECOMMENDATIONS ................................................................... 31 8.1 Conclusions .......................................................................................................................... 31 8.2 Recommendations .............................................................................................................. 32 3 Establishment of Unit Rates for Construction Works - PPRA
1.0
INTRODUCTION
1.1
Background Information
Procurement reforms in Tanzania started way back in 1990’s and has brought
important changes that make expenditure of public funds for acquisition of
works, goods and services to be managed in rational manner. The reforms
culminated to the enactment of the Public Procurement Act No. 21 of 2004
(PPA, Cap 410), which established an oversight body, the Public Procurement
Regulatory Authority (PPRA) and decentralized procurement to the public
entities. All these efforts were aimed at putting in place, amongst others, the
most effective measures to achieve the desired outcome of the procurement of
works, goods and services in the public sector.
PPRA and the Government Procurement Services Agency (GPSA) have jointly
developed a system for procurement of Common Use Items and Services
(CUIS). The main purpose of establishing the system is to ensure that public
fund allocated for procurement of commonly used items and services by public
bodies are properly controlled in a manner that will minimize waste. Section
7(m) of the PPA, Cap 410 provides for establishment of a list of such common
use items to be reviewed on an annual basis as one of the important functions
of the PPRA. The objective of the system is to improve efficiency and
effectiveness in procuring supplies, services and works in common use by more
than one Procuring Entity (PE), which may be subject to common
procurement.
In the process of attainment of such objective, PPRA came up with the decision
of carrying out the study in order to establish average unit rates for common
activities in the construction works which will be reviewed from time to time.
This study was intended to cover mainly those activities which constitute the
largest proportion in terms of value of contracts awarded.
The procurement market in Tanzania, like in many other countries, is
dominated by building and civil works in terms of total value of contracts
awarded. Recent statistical data show that, within developing countries,
procurement of works is often the largest domestic market. As for Tanzania, in
the financial year 2007/08 the volume of awarded contracts for the works was
61 % of the all procurement while in 2008/09 works contracts accounted for
56% (Mlinga, 2009).
4 Establishment of Unit Rates for Construction Works - PPRA
1.2
An Overview of Tanzania Construction Industry
The construction industry is the sector of the economy that transforms various
resources into constructed physical, economic and social infrastructure
necessary for socio-economic development. It embraces the process by which
the said physical infrastructure are planned, designed, procured, constructed or
produced, altered, repaired, maintained and demolished 1 .
The term construction covers a wide variety of activities; these include the
dwellings, non residential buildings and civil engineering works such as roads,
bridges, dams, harbours, railroads etc. Construction activity also encompasses
repair, renovations, rehabilitations and maintenance of existing structures, etc.
Infrastructure projects, in particular, require large capital outlays on the part of
spending public bodies and therefore there is need to ensure that their
procurement achieves value for money.
The industry comprises numerous stakeholders, namely; clients, consultants,
contractors, materials producers and suppliers, and equipment/plants suppliers.
Equally important, are procurement systems, management philosophies,
techniques and tools that play significant roles in the determination of the
performance of each stakeholder. The government is involved in the
construction industry as the client, operator and regulator. It executes those
roles through its agencies such as Local Government Authorities(LGAs),
Ministries, Tanzania Building Agency (TBA), Tanzania National Roads Agency
(TANROADS), Tanzania Electrical and Mechanical Services Agency(TEMESA),
NHBRA and regulatory boards such as National Construction Council (NCC),
Public Procurement Regulatory Authority (PPRA), Architect and Quantity
Surveyor Registration Board (AQRB), Engineers Registration Board (ERB) and
Contractors Registration Board (CRB) etc,
1.3
Objectives of the Study
The objectives of the study are:
•
to comply with Section 7(m) of the Public Procurement Act No. 21 of
2004 [PPA, CAP 410] which requires PPRA to establish a list of works,
services and supplies in common use by more than one procuring
entities. PPRA had already established the list of common use items and
supplies with their average prices and published the same in the website.
1
Construction
industry policy, 2003 5 Establishment of Unit Rates for Construction Works - PPRA
2.0
•
to respond to an outcry of the stakeholders on the significant differences
in unit rates for common activities in construction industry;
•
o establish a database for average prices of construction materials; hiring
rates for equipments, equipment productivity; labour productivity for
the selected common activities.
•
to assist the government and suppliers, service providers, contractors
and consultants to have access of the prevailing unit rates in common
activities in construction works
•
to be used as basis or indicative figures by Procuring Entities when
preparing engineers estimates.
METHODOLOGY
2.1
Methodology Adopted
In order to achieve the objectives of this study the following methodology was
adopted:-
•
Identification and establishment of comprehensive list of common
activities in both roads and buildings works as a tool to collect the
existing unit rates in the industry;
•
Identification and establishment of comprehensive list of
equipment/plants and materials as a tool to collect for hiring rates and
prices respectively;
•
Data collection; the institutions earmarked for data collection were
TANROADS, Municipals and District Councils and professional
associations;
•
Compilation and analysis of the data collected;
•
Establishment of unit rates for some of the activities for both roadworks and buildings works from the first principles;
•
Comparison of the built-up unit rates against the average collected unit
rates and
•
Clarification on the discrepancies proposal for way forward.
6 Establishment of Unit Rates for Construction Works - PPRA
2.2
Selection of a Survey Team
Collection and Compilation of average prices for construction activities is a
complex assignment as they consist of a long and varied set of operations. The
assignment necessitates having a survey team with detailed knowledge of the
construction industry to ensure that information provided by material
suppliers, construction contractors and other stakeholders can be evaluated for
reasonableness, and practical use. In this survey engineers and quantity
surveyors were selected with a supporting staff to undertake the assignment.
The survey team comprised the following members:1. Eng. Mary M. Swai (PPRA)
Manager Research & Documentation
2. Eng. Raymond J. Mbishi (PPRA)
Procurement Expert
3. Qs. Grentina B. Kidulile (PPRA)
Procurement Expert
4. Eng Raphael Mahundi (UDSM)
Civil Engineer
5. Said Mrisho (Ardhi University)
Quantity Surveyor
6. Alois Manamba (PPRA)
Library and Documentation Officer
3.0
DATA COLLECTION AND AGGREGATION
3.1
3.1.1
Data Collection
Geographical Coverage
In the collection of data, five zones were identified and visited taking into
account geographical location. The identified zones were; Northern [Arusha,
Manyara, and Kilimanjaro], Lake (Mwanza and Mara), Central [Dodoma,
Singida, Tabora and Shinyanga], Southern Highlands [Iringa and Mbeya],
Southern Zone[Mtwara and Lindi] and Eastern [DSM, Morogoro and Tanga].
The basis for the choice of the zones was to get more representative unit rates
from different locations for analysis.
3.1.2 Institutions Visited
Data collection took place between 28th December and 17th April, 2010. Among
the institutions that were visited are the following LGAs; Arusha Municipal
Council, Arusha District Councils, Meru District Councils, Monduli District Councils,
Babati Town Councils, Babati District Councils, Moshi District Council, Moshi
Municipal Council, Hai District council, Same Distric Councils, Mwanga District
Councils, Tanga City Councils, Mkinga District Council, Muheza District
Council, Korogwe District Councils, Iringa District Council, Mbeya District
Council, Mbeya Municipal Council, Dodoma Municipal Council, Bahi District
Council, Morogoro Municipal Council, Morogoro District Council, Mwanza
City Council, Ilemela District Council, DSM City Council, Kinondoni Municipal
Council, Temeke Municipal Council, Ilala Municipal Council, Igunga District
7 Establishment of Unit Rates for Construction Works - PPRA
Council, Manyoni District Councils, Nzega District Council, Bunda District
Council and Musoma District Council.
Other institutions were TANROADS regional offices including; Morogoro,
Dodoma, Arusha, Kilimanjaro, Mbeya, Iringa, Mwanza, Lindi, Mtwara, Tanga,
Manyara. Data was also collected from some Tanzania Building Agency [TBA]
regional offices, namely; Iringa, Mwaza, Dar es Salaam, Mara and Manyara. It
was also necessary to gather information from the National Construction
Council [NCC], Contractor Registration Board [CRB], Tanzania Civil
Engineering Contractors Association [TACECA], Association of Consulting
Engineers Tanzania [ACET] and Contractor Association of Tanzania [CATA].
In the process of data collection, the suppliers of construction materials,
suppliers of equipment/plants as well as the contractors were visited and
interviewed to get indepth information on the availability of materials,
equipment and production rates.
3.1.3 Establishment of Common Activities and their Inputs
During data collection process, unit rates were extracted from the contract
documents for the projects executed in the financial year 2009/2010. The
identified list of activities was used as a tool for collecting the unit rates. There
was also a flexibility of adding more activities which were considered to be
common depending on the institutions visited and bills of quantities (BoQ)
used. The understanding was that during aggregation of the collected data the
team will analyse the collected data and decide which activities are common
for the time being as this study is a continuous process. Due to diversity of the
construction industry for the purpose of this study, it was agreed that as a
starting point the team should concentrate on two categories works, namely,
road works and building works.
One of the institutions visited, TANROADS, has a system which requires them
especially in maintenance activities to collect and find average of the unit rates
for each activity from the maintenance contract.
The unit rates for
maintenance activities from all regions were obtained from their 2nd quarter
reports for FY2009/2010.
Information on inputs for the constructions activities such as material prices,
equipment/plant hiring rates, productivity rates for both equipment/plant and
labour as well as prices for handtools were collected using tools specifically
designed for the purpose. The information was collected from the suppliers
and sellers of the construction materials and hand tools, plant equipment
hirers, as well as from clients and contractors.
8 Establishment of Unit Rates for Construction Works - PPRA
3.2
Data Aggregation
The data collected was compiled using Microsoft Excel, which made the
analysis such as average unit rates, average price of materials and hiring rates
for equipment/plants easier. The aggregation for building and road works was
done separately. The collected information from the LGAs and TANROADS
were compiled separately to enable comparisons of established unit rates from
the two major clients of road works
3.2.1 Road-works The list of activities and their average unit rates as aggregated from LGAs and
TANROADS are attached as Appendix R1 and Appendix R2, respectively. The
list of some of the materials used for road-works and their average price are
attached Appendix R3, while the hiring rates of equipment/plant used for road
work activities and their average hire rates are attached as Appendix R4 to this
report.
3.2.2 Building Works The collected data for building works activities from LGAs, TBA and
associations such as TACECA, ACET and CATA were aggregated and the
average unit rates for the common activities obtained. The aggregated list of
activities and their average unit rates are attached as Appendix B1. The list of
building works materials and their average prices are attached as Appendix B2.
4.0
UNIT RATE BUILD-UP Unit rates build-up is the process of developing a unit rate for the activities
involved in the execution of the project. Its purpose is to develop an
approximation of costs of the resources needed to complete project activities
which ultimately establish cost of a project as well as assist in cash flow analysis
and checking expenditure during project execution. From the client’s
perspective, a unit rate for performing an activity is a vital tool for checking
cost and ensure that the contract sum is within the approved budget or cost
limit in all stages of implementing the project, namely; pre-construction, during
construction and post construction. In the case of contractors, the unit rate
build-up is the process of determining the cost of carrying out an activity so as
to produce a competitive bid by analyzing the resources required and time it
will take to execute an activity. Broadly, for both stakeholders, the process
involves aggregating the estimated costs of individual activities or work
packages to establish a cost baseline for cost management, as well as tracking
changes or trend in the cost of the project.
9 Establishment of Unit Rates for Construction Works - PPRA
4.1
Unit Rate Build-Up
The proposed model for building up unit rates is basically intended to
examine individual resources and the amount needed for each activity. It
consists of three stages:•
•
•
Establishment of all-in rates for the individual resources in terms of Tshs
per hour/day for labour Tshs per hour/day for items of
plants/equipment and the cost of material. All these can be referred to
as inputs required for each activity depending on the activity to be
executed;
Selection of methods and outputs or productivities of the
plants/equipment required for each activity. These two depend on the
specifications of the inputs, process or workmanship required. This
phase is inputs-process stage in order to obtain the required product;
and
Adding an overhead and profit to the net cost obtained from above.
By using standard spreadsheets [Microsoft Excel], one is able to process basic
information on inputs to provide an output [unit rate].
5.2 Elements for Establishing Unit Rate
The key elements to consider when establishing a unit rate are direct costs,
indirect costs, overheads and profit. These elements are explained further
below:
a) Direct Costs: cover materials, labour, plant and tool costs, and transport of
materials and equipment which are directly related to the construction of a
project.
b) Indirect Costs: are cost incurred away from the site or are costs allocated to
the project as well as costs incurred by a company that uses in-house
resources to implement a project. These cover:
•
Preliminaries: - Site camp facilities, insurance, bonds, road signs, safety
measures, general transport, tendering costs, accommodation, hire of
support equipment, etc.
•
Risks: - Bad weather, work rectification, delayed payment, carelessness
by employees, rising prices, etc.
10 Establishment of Unit Rates for Construction Works - PPRA
The indirect costs have not been considered in this model; the assumption is
that the costs will be covered in the preliminary and general items of the
respective project based on the terms and conditions of contract.
c) Profit/mark-up: profit is defined as a return on investment. This is normally
judged or assessed rather than calculated. The margin depends on the
judgement of the market and the state of the business. It is what provides
the contractor with an incentive to perform the work as efficiently as
possible.
d) Overhead costs: are costs which cannot be attributed to a single task of
construction work. They are basically hidden costs of managing and
running a construction firm. Usually it is expressed as a percentage of the
annual turnover of the company. The costs include; salaries of staff
[technical, administrative, management, support], running cost of office
[renting, telephone, electricity, water, stationery, etc.], taxes [withholding
tax, stamp duty composition, VAT, etc.], interest on overdraft, business
promotion [e.g. printing of calendars with company logo], renewal of
licences, etc.
5.3
Establishment of All- In - Rates
5.3.1 Labour
The cost element in labour has been made up of wages and emoluments to be
paid to workers and statutory costs, which are incurred automatically as a
result of payment for labour. Wage rates have been developed for each labour
craft [unskilled, skilled and foreman] which represent the total hourly cost rate
to the construction contractor. The main items considered include; statutory
minimum wage, workman's insurance, payroll levy, training levy, social
security, cost of non-productive time, transport for workers, medical costs.
These summed costs have been expressed as an hourly cost with the possible
exception of vacation which may be easily converted to an hourly cost. There
is a debate whether contractors are normally paying these statutory costs to
their employees. However, there is a need for establishing exactly costs which
contractors are required to pay their employees which should be considered in
the unit rate establishment.
5.3.2 Materials
Under normal circumstances prices for materials and supplies should involve
summarising the information obtained from inquiries made and quotations by
suppliers in order to make a proper comparison and choice. For purposes of
11 Establishment of Unit Rates for Construction Works - PPRA
this model, the prices for materials and supplies have been obtained from the
suppliers and contractors in the respective regions visited. The averages of
prices for materials and supplies have been used in establishing the unit rates.
Waste consideration has been taken into account in the build-up of respective
unit rate by allowing some percentage. Allowances for transport and handling
costs, i.e., load, off-load, stockpile or warehouse materials have been taken
into consideration as part of build-up the unit rates. Construction materials
which need secure storage such as temporary building should be considered as
indirect costs to be built-up under preliminary and general costs.
5.3.3 Plant and Equipment Costs
Construction equipment and plants refers to the instruments, machinery, and
other mechanical implements required in the performance of construction
work. The plant/equipment cost is either the cost of owning and operating the
plant or hiring the equipment from hiring firms. When plant is already owned,
cost should include allowances for; ownership costs [depreciation based on the
purchase price and expected economic life, return on capital, labour for
maintenance and related overheads, parts for maintenance, insurance, road
licence, etc.] and running costs [emoluments of the operators, fuel, lubricants,
tyres and other consumables].
In this model, the assumption is that the equipment/plants are hired and
respective hire rates have been obtained from hirer and contractors in the
respective regions visited. The averages of the collected hiring prices for
equipment/plants have been used in establishing the unit rates.
5.3.4 Cost of Tools
The cost of hand tools and miscellaneous non-capitalized equipment should be
estimated and incorporated in the establishment of unit rate. This is the
ownership cost of tools to be used in respective activities, which is spread over
the entire project. Cost of tools is computed as follows:
Cost of tools per person-day = Cost of tools over the project /
Expected person-days over the
project
It should be noted that the cost of tools per project would be factored
depending on the number of projects for which they may be used.
12 Establishment of Unit Rates for Construction Works - PPRA
5.4
Output/Productivity Rates
5.4.1 Labour Productivity
Estimating labour productivity is subject to many diverse and unpredictable
factors. The complexity of the variables affecting productivity makes it difficult
to estimate a production rate. The labour effort needed to perform a particular
task varies with many factors, such as the relative experience, capability,
morale of the workers, the size and complexity of the job, the climatic and
topographic conditions, the degree of mechanization, the quality of job
supervision, amount of similar task repetition, and the existing labourmanagement agreements and/or trade practices. The effort from these labour
efficiency factors and work practices that exist in the project locality must be
considered in each productivity assignment. Therefore, in this model, labour
productivity rates are based on records of past production rates for the same
or similar work and interviews with the practitioners in the industry.
5.4.2 Equipment/Plant Production Rate
After determining the type of equipment/plants to be employed, the
establishment of the production rates of each equipment/plant is an important
step in the process of build-up the unit rate. Again, estimating equipment/plant
productivity is subject to unpredictable factors. The production rates may
depend of the factors such as; the quantity and type of vegetation, soil
conditions, topography, climate conditions, skills of operators etc. In this
model, emphasis has been placed on the importance of establishing a
reasonable production rate. In the absence of historical established production
rates, the productivity rates have been through interviews with the
practitioners during data collection exercise. Per hour rental costs of the
construction equipment/plant have been used as the basis to price them. Due
to difficulties of getting the production rates for some of the equipment/plant,
unit rates for some of activities could not be established.
5.5
Unit Rates Build-Up for Selected Items
As explained above the objective of the study is to establish average unit rates
for common activities in construction works. This model presents some of
identified common used unit rate. The identification applies the 80/20 rule,
which states that approximately 80 percent of the project cost is contained in 20
percent of the activities. This is because identified activities account for most of
the project cost. The built up unit rates for activities in the road-works and
building projects have been established and are attached to this report as
13 Establishment of Unit Rates for Construction Works - PPRA
Appendix R5 and Appendix B3 respectively. Establishing the unit rates for the
remaining common activities will be carried on as study continues.
6. 0 COMPARISON OF COLLECTED UNIT RATES AGAINST BUILT-UP
RATES
6.1
Inputs Comparison
6.1.1 Materials The inputs for establishing unit rates collected were material prices and
equipment hiring rates. It was observed that there is significant difference in
materials prices and hiring rates in the region visited. The average materials
prices presented in the table below have influence in establishing unit rate for
selected activities.
Table No.1: Summary Average Materials Prices Collected in the Regions
S/No
MATERIAL
S
REGIONS
UNIT
1
DAR
DOM
MORO
MBEYA
ARUSHA
K’NJARO
13,300
13,500
13,500
13,000
1.62
2.1
2.0
Bag
12,500
13,000
ton
1.5m
1.04
ton
1.5 m
-
-
1.5 m
-
1.62 m
2.0 m
2.0 m
3
Re – bars –
Mild Steel
Re-bar
High
Tensile
Steel
Aggregates
M3
40,000
50,000
80,000
75,000
45,000
25,000
60,000
50,000
4
Fuel
Lts
1,450
1,430
1,450
1,800
1,440
1,530
1,500
1,500
5
Sands
m3
10,000
7,500
10,000
25,000
10,000
15,000
25,000
25,000
6
Stone
m3
25,000
10,000
15,000
20,000
15,000
15,000
20,000
15,000
7
Concrete
pipe
600mm
Concrete
pipe
900mm
Concrete
pipe
1200mm
m
90,000
75,000
50,000
120,000
50,000
120,000
75,000
80,000
m
125,000
120,000
75,000
180,000
80,000
150,000
120,000
120,000
m
160,000
150,000
120,00
200,000
120,000
180,000
150,000
150,000
8
9
14 17,000
IRINGA
Cement
2
3.
12,700
MWZ
Establishment of Unit Rates for Construction Works - PPRA
The prices of construction materials vary from one place to another due to
geographical location. For instance, cement price is higher in Mwanza region
compared to Dar-as-salaam because of transportation costs involved due to distance
from the source which is Dar es Salaam. The price of cement being higher in
Mwanza, this will have direct impact on the established unit rates on activities such as
concrete, stone masonry, blocks walling, etc which cement is incorporated.
Aggregates in Morogoro and Mwanza are at higher prices compared to other regions.
In general price of materials in Mwanza is higher compared to other regions.
6.1.2 Equipment/Plants
Equipment/plants are major input in construction activities which account for 40 –
60% of the project cost. The data collected has revealed that there is significant
difference in hiring rates of major equipment/plants used in construction especial for
civil engineering projects. The table presents the average hiring rates collected in the
different regions.
Table No.2: Summary Average Equipment Prices Collected in the Regions
S/No.
EQUIPMENT
Dar
1.
Concrete Mix
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Motor Grader
Bulldozer
Roller
Wheel loader
Water Bowser
Pedestrian Roller
Tipper 7 tons
Tipper 10 tons
Tipper 15 tons
Bitumen
Distributor
Chip Spreader
Excavator
12.
13.
6.2
100,000
Dod
REGIONS [Average Hiring Prices in Tshs.]
Moro
Iringa
Mbeya
Mwanza
90,000
50,000
500,000
666,666
568,000
600,000
650,000
500,000
500,000
381,500
400,000
450,000
150,000
190,000
150,000
71,500
80,000
93,333
125,000
150,000
120,000
120,000
200,000
200,000
180,000
140,000
200,000
250,000
300,000
200,000
200,000
800,000
300,000
800,000
1,200,000
625,000
475,000
700,000
800,000
600,000
40,000
Arusha
K’njaro
100,000
700,000
600,000
800,000
700,000
600,000
1,000,000
600,000
600,000
560,000
450,000
500,000
400,000
550,000
560,000
372,000
500,000
450,000
650,000
157,500
350,000
200,000
350,000
120,000
150,000
25,000
300,000
120,000
120,000
100,000
180,000
140,000
140,000
220,000
200,000
450,000
560,000
Unit Rate Comparison for Road Works
6.2.1 Average Collected, TANROADS, LGAs & Built-up
The comparison of the average unit rates for the collected data, TANROADS, LGAs
and the built-up rates indicates that grass cutting, bush clearing and site clearance there
are no significant differences. For the cut and spoil, cut and borrow to fill shows that
15 Establishment of Unit Rates for Construction Works - PPRA
built up unit rates are significantly higher than the unit rates for TANROADS and the
average collected. TANROADS unit rate is the highest in the activity of clearing
borrow area and remove overburden. The differences could be attributed by the lack
of clear specification on the haulage distance of the borrow materials and distance for
disposing the removed overburden. The details of comparison of the average unit
rates are indicated in figure No. 1 below.
Figure No.1: Comparison of Unit Rates for Site Clearance, Bush Clearing, Cut and
Spoil, Cut and Borrow to Fill, Grass Cutting and Clear Borrow area and
Remove Overburden
The comparison of the average unit rates from the TANROADS, LGAs, collected and
the built-up for gravelling within Free Haulage Distance (FHD) indicates that there is
no significant difference between the unit rates from TANROADS, collected average
and LGAs collected. The built up rate is significantly the highest. The established unit
rate has considered FHD to be 10 km and the difference could FHD specified in the
specifications in contract document used by these institutions as unit rate for gravelling
is influenced very much with haulage distance of the gravel materials. Furthermore, in
16 Establishment of Unit Rates for Construction Works - PPRA
the built up rate has taken into account an overhead cost and profit margin of 30%.
The overhead cost and profit margin vary very much from one company to another.
Figure No.2 below shows the comparison of the average unit rates discussed.
Figure No.2; Comparison of Unit Rates for Pothole/Eroded Road Section Filling,
Gravelling within FHD
In the comparison of unit rates for road formation activities, the average unit rates
built -up for heavy grading, light reshaping and heavy reshaping are the highest while
the LGAs rates are the lowest for the same activities. For light grading the LGAs rate is
the highest while the built up rate is the lowest. The rates for TANROADS are slight
higher than the average collected except for the light grading. The difference in rates
can be contributed by the specifications given to the contractor whether road
formation category includes watering and compaction or not. Other factors could be
equipment/plants hiring rates, productivity rates and topography type. Figure No.3
shows comparison of the unit rates for discussed activities.
17 Establishment of Unit Rates for Construction Works - PPRA
Figure No.3; Comparison of Unit Rates for Road Formation Category
In the comparison of unit rates for road surfacing activities, it indicates that the built
up rates are significantly lower than the unit rates from TANROADS, Average unit
rates collected. The unit rate from LGAs is the highest in resealing single surface layer.
TANROADS unit rates for bituminous surface layers and bituminous double seal are
the highest. This significant difference may also due to specifications used for different
types of roads and the road usage which may require different thicknesses. Figure No.
4 below shows comparison of the unit rates for discussed activities.
18 Establishment of Unit Rates for Construction Works - PPRA
Figure No.4; Comparison of the Unit Rates for Road Surfacing Activities
In the comparison of the activity for excavation of the drains, as it can be seen in
figure 5 below, the built up rate is slightly higher than the unit rates from
TANROADS, Average collected and collected LGAs for excavation of side drains,
excavation of mitre/catch water drains and excavation for inlet/outlet of culvert.
There is a significant difference for activity of excavating and backfill for structures
where the LGAs collected is the highest and the built up rates is the lowest. The issue
of types of structures and where to excavate the material used to fill depend much
with the drawings and specifications given.
19 Establishment of Unit Rates for Construction Works - PPRA
Figure No.5: Comparison of the Unit Rates for Excavation of the Drains
The comparison for installing concrete pipe culverts of different sizes indicates that the
built-up unit rates are lower than the average unit rates collected, TANROADS rates
and the LGAs’ rate. This could be attributed by the haulage distance for materials
incorporated in the built-up. For this case built-up unit rates have considered that the
source of all materials is 10 km from the site. It should be noted that the unit rate for
installing the concrete pipe depends very much on the haulage distance of the
materials used. However, this also could be contributed by the specifications given in
the contract documents as it common to find that the activity for installing culvert
concrete pipe per metre includes construction of approach ramps, wing-walls, headwalls and bedding while in other BoQs these activities are separated. Figure No.6
below gives the details comparison for unit rates for installing concrete pipe culvert,
20 Establishment of Unit Rates for Construction Works - PPRA
Figure No.6: Comparison of the Unit Rates for Installing Concrete Pipe Culverts
Figure No.7 below shows that the unit rates for reinforced concrete classes 10, 15, 20
and 25 per cubic metre for built-up unit rates from first principle are higher than the
unit rates collected from TANROADS, LGAs as well as the average collected.
21 Establishment of Unit Rates for Construction Works - PPRA
Figure No.7; Comparison of the Unit Rates for Concrete Classes
The comparison of the unit rates for reinforcement bars for both mild and high yield
steel indicates that the unit rates from TANROADS for reinforcement with mild steel is
the lowest with the unit rate from LGAs being the highest followed by the built up
rate. For reinforcement with high yield steel the built up rate is the highest. During
data collection it was noted that in the industry reinforcement bars are treated the
same in terms of prices regardless of the strength i.e. mild or high tensile steel. Further
probing indicates that the reinforcement claimed to be high tensile bars in up country
their strengths when tested do not reach that of high tensile steel. The price of
reinforcement bars in Dar es Salaam revealed high tensile steel is 1,300,000 per tonne
while mild steel is 1,100,000 per tonne. Figure No.8 below shows details of
comparison.
22 Establishment of Unit Rates for Construction Works - PPRA
Figure No.8; Comparison of the Unit Rates for Reinforcement Bars
The comparison of the unit rates for stone masonry and grouted stone pitching
indicates that the built-up unit rates are higher than average collected TANROADS
and LGAs. There is no significant difference between the built up rates, average
collected, LGAs collected and TANROADS for loose stone pitching. The unit rates
form TANROADS for grouted stone pitching is the lowest. Figure No.9 below shows
details of comparison.
23 Establishment of Unit Rates for Construction Works - PPRA
Figure No.9; Comparison of the Unit Rates for Stone Masonry, Loose Stone
and Pitching, Grouted Stone Pitching
6.2
Building Works
6.2.1 Collected Vs Built-up
This comparison was made for sub-structure activities for the unit rate average
collected, Associations LGAs and the built-up unit rates. The built-up unit rates
for excavate earth surface, load up surplus excavated material and lay hardcore
of 300mmthick bed is the highest. Figure No.10 below gives details of the
comparison of sub-structure activities. This could be attributed to the haulage
distance of filling materials.
24 Establishment of Unit Rates for Construction Works - PPRA
Figure No.10; Comparison of the Unit Rates for Some of Sub-structure Activities
The comparison for blocks walling for 230mm thick indicates there is a significant
difference between built-up unit [Tshs.37,828.00] and collected unit rate [Tshs.
25,063.49] and from the associations [Tshs. 29,666]. Furthermore, no significant
difference for blocks walling for 150 mm & 100mm. Figure No.11 shows the details of
the comparison.
25 Establishment of Unit Rates for Construction Works - PPRA
Figure No.11; Comparison of the Unit Rates for Block Walling
The comparison of the unit rates for reinforcement bars for high yield steel indicates
that the the built up rates are significantly higher than the collected average.
Furthermore, it is noted that the high yield steel [25mm] the rate per kg is the highest
[ for the collected average i.e Tshs. 3,709.12 per kg]. For other sizes there is no much
differences between the unit rate per kg for the average collected. Figure No.12 shows
the details of the comparison.
26 Establishment of Unit Rates for Construction Works - PPRA
Figure No.12; Comparison of the Unit Rates for High Steel Bars
The comparison of the unit rates for reinforcement bars for mild steel indicates that
the built up rates are lower than the average collected except for 8mm, 10mm, 20mm
and 25 mm where the collected average are the highest. Figure No.13 shows the
details of the comparison.
27 Establishment of Unit Rates for Construction Works - PPRA
Figure No.13; Comparison of the Unit Rates for Mild Steel Bars
The comparison for concrete works shows that the unit rates for reinforced concrete
classes 10, 15, 20 and 25 per cubic metre for unit rates built-up from first principle are
higher than unit rates from the average collected and LGAs. This could be attributed
by the availability of materials incorporated in the activity in terms of haulage
distance and prices of materials such aggregate and sand. Figure No.14 shows the
details of the comparison.
28 Establishment of Unit Rates for Construction Works - PPRA
Figure No.14; Comparison of the Unit Rates for Reinforced Concrete Classes.
7.0
CHALLENGES FACED IN ESTABLISHING UNIT RATES
Establishing unit rates is a very complex undertaking. This is due to the fact that it
requires a number of input parameters which vary very much depending on the
details needed and available during the estimating process. It is a discrete process for
each project and for each piece of work. Embarking on establishing unit rates, poses
challenges which sometimes may affect the accuracy of the built-up rates. During this
exercise in particular, a number of challenges were encountered and are presented
here under:
7.1
Description of Work Items
The survey revealed that there is no consistence in the descriptions of work items
among the public entities. The significant difference was note in the LGAs compared
to the other public entities for both building and roadworks project. This affected the
process as the tool prepared to collect common activities couldn’t fit all public entities
visited. This led to missing some important activities in the Bills of Quantities [BoQ] as
the items works were compounded together i.e. supply and installation of culverts, in
29 Establishment of Unit Rates for Construction Works - PPRA
some of the BoQ this item meant to supply, installation, surrounding concrete,
masonry works and measured per linear metre while others the same item breakdown
to supply and installation, concreter and masonry works and measured separate. The
review of the contract documents revealed that this is attributed by lack of clear
specifications and different specifications on the same work item in the public entities.
7.2
Specifications
One of the important documents in the contract documents that ensure the public
entities achieve the required quality and value for money is specification. This is
document essential document in the contract which clearly and accurately describes
the essential technical requirements for items, materials, or services including the
procedures by which it can be determined that the requirements have been met. In
this study, however, it was observed that there lack of consistency in preparing
specifications with the public bodies in the same item of works. Some of the
specifications are weak to extent that it is difficult for PEs to ascertain the works have
been performed to the required quality. In LGAs it was revealed that there is a lack of
clear specifications in the contracts as well as lack uniformity in the same item works.
However, for case of TANROADS, it was observed that there are specifications
prepared head quarter office and are being used by the all regions.
To great extent inconsistency in specifications has been one of the major attributes to
have different unit rates in the same activities. Normally, specifications are available
for review before a contractor bids on a project, and are often relied upon by the
contractor in order to provide an accurate quote. For this matter, the clear and
unclear specifications will yield different unit rates.
7.3
Construction Materials
The Tanzania construction industry market is flooded with a variety of construction
materials. The materials in the market come from many different manufacturers
(countries) with great variations in quality and price. Material prices especially for
building works vary very much in the market leading to difficulties in selecting the
ones to base during the establishing unit rate process.
One of the important factors in establishing unit rate is the source of the materials as it
has direct impact on the rate in terms of transportation and handling charges. During
the study it was observed that the source of most of the materials is Dar es Salaam i.e.
cement, bitumen, fuel, building materials etc. In fact the referred materials are major
inputs in the project and account for significant portion of the project cost. The
transport and handling charges as well as varieties with different qualities can be
observed as major reasons of having significant different rates in the regions on the
same work items.
30 Establishment of Unit Rates for Construction Works - PPRA
7.4
Labour Productivity
Establishing unit rates for performing a piece of construction work, depends very
much on labour productivity. Estimating labour production rates is subject to many
diverse and unpredictable factors. The labour effort needed to perform a particular
task varies with many factors, such as the relative experience, capability, morale of the
workers, the size and complexity of the job, the climatic and topographic conditions,
the degree of mechanization, amount of similar task repetition, etc. The complexity of
these variables affecting productivity makes it difficult to estimate common
production rates.
During the study it was difficulties locate one stop centre for obtaining the labour
productivities for various activities. The interviews with the contractors and clients
also revealed that everyone has own production rates and there is no common
agreement rates. It was also noted that productivity depends on the method use by
the contractor in executing the works as methods differ from one to another.
7.5
Equipment /Plant
Construction projects, especially civil engineering works are normally heavy
equipment oriented as the cost of equipment/plants can range from 25 to 40% of the
total project cost. Establishing unit rates for both building and roadworks projects
depend much on equipment availability, production rate, capacity, condition,
availability and the skills of equipment operators. These factors are among the
determining factors of the unit rate for the activities involving equipment/plants.
This study has revealed that there is a different hiring rate of equipment/plants within
the region itself due to the scarcity of the equipment. Moreover, there is a significant
different hiring rates one region to another and other regions there is no supplier of
equipment/plants which necessitate to acquire the same from neighbour region. Most
contractors who owned equipment/plants are not leasing out their equipment to
other contractors primarily because the capacity of their fleet is engaged in executing
their own projects and if it happen they normally leasing hiring rate higher than the
market rate.
8.0
CONCLUSIONS AND RECOMMENDATIONS
8.1
Conclusions
The survey has established lists of common activities in both building and road works
with their average unit rates. This is pursuant to Section 7(1)(m) of the Public
Procurement Act No. 21 of 2004 [PPA, CAP 410] which requires PPRA to establish a
list of works, services and supplies in common use by more than one procuring
entities. The prices of different common construction material have also been
31 Establishment of Unit Rates for Construction Works - PPRA
obtained as well as average hiring prices for different plant and equipment. This
database will be published to assist the government and suppliers, service providers,
contractors and consultants to have access to the prevailing unit rates in common
activities in construction works. Furthermore, the information may be used as basis or
indicative figures by Procuring Entities when preparing engineers estimates. Some of
the common activities we built up their rates from 1st principle. Some of these rates
are noted to be on higher side and others on lower side of the collected average
prices. This may be due to lack of proper description of work activities as well as
specifications.
8.2
Recommendations
The following recommendations include those from the Survey Team as well as
recommendations which were given during the stakeholders’ workshop held on 21st
April 2010.
a)
PPRA should publish historical average unit rates for common construction
activities at regular intervals. PEs should submit the relevant data as
required from time to time.
b)
There should be standard descriptions of activities in construction works as
much as possible and to be harmonized by the relevant institutions i.e.
LGAs Vs TANROADS for road works, TBA, LGAs and others for buildings
works.
c)
Comparison of unit rates between TANROADS and LGAs to be based on
the same standard of roads and specifications.
d)
PPRA should emphasize on PEs to use standardized or harmonised
specifications for common activities.
e)
Survey should also be conducted for big projects since the scope of the
current survey was limited to small projects and maintenance works.
f)
PPRA should collaborate with NCC in preparing indices for the construction
industry due to NCC’s experience in establishing unit rates in the past.
g)
Research should be done on equipment/plants and labour productivity in
order to establish credible data which will be used in the model while
establishing unit rates for the activities.
32 Establishment of Unit Rates for Construction Works - PPRA
h)
The results should be compared with the studies already done by TACECA
on equipment productivity and NCC on the labour productivity.
i)
PPRA should conduct studies on best practices from the countries that
already established average unit rate for common activities in the
construction industry to gain experience and if possible to benchmark.
j)
PPRA should prepare a model for establishment of unit rates for common
activities. The model should allow users to enter their inputs based on the
requirement of the projects such as materials prices, haulage distance,
equipment/plants hiring rates and other inputs required for the activity in
question and model to produce unit cost for executing the activity without
including the overhead costs and profit margin.
k)
PPRA should prepare guidelines for use of the model by PEs.
l)
PPRA should review the threshold for exclusive preference for construction
works to be in harmony with the Construction Industry Policy (CIP)
threshold.
m)
To improve the quality of construction works, drafting of specifications for
materials and products as well as workmanship should be enhanced and
quality assurance and enforcement strengthened.
n)
There should be a well established and maintained database for
construction labour and equipment productivity.
o)
PEs are obliged to ensure all procurement/ contracts related information is
kept properly for future use.
33