Average Basic Wages (ABW)

Dear Readers,

ABW means Average Basic Wages. ABW is playing vital role in costing and rate analysis of construction works.

To find an ABW we must know the Gang Composition. Gang means to execute the particular activity we need a workforce which comprise a set of manpower with different categories based on their skills.

Obviously, unit rate will not be same for each workman in the gang, since they are having different skills.

ABW is equal to Average Product of workmen and their wages.

ABW = {[Sum of (Manpower X Wages)] / No. Manpower}

Gang Composition is playing one of the important vital roles for rate analysis to get an optimum ABW. Gang Composition is directly related to productivity. A well-organized work, less labour is required.

ABW shall be calculated in two methods. One is if you know the gang composition and another one is without gang composition.

Following type can be used when we are identified a gang

Following type can be used when we could not identify a gang

Both Table shows different ABW for the same example. This is due to difference between Actual and Approximate. First table , we identified the gang composition. Second table is based on the approximate.

Man Day and Man Hour

Dear Readers,

Man Day (MD) is used in construction industry to estimate the manpower and costing purpose

MD refers Man Day; it is a unit of measurement for workforce. An industrial unit of production equal to the work one person can produce in a day.

Other Unit of Measurements are Man Hour and Man Month are commonly used in construction industry for the similar works depends upon the nature of work. It is used for estimation of the total amount of uninterrupted labour required to perform a task.

Man-hours exclude the breaks that people generally require from work, e.g. for rest, eating, and other bodily functions. They count only pure labour. Managers count the man-hours and add break time to estimate the amount of time a task will actually take to complete.

Eight Hour working is called One shift and one person working one shift (8 Hours) is called one-man day. Decide what constitutes a "man day." In most cases, a "man day" is eight hours, although that is up to a company to decide.

If the work gang comprises 10 workmen and working one shift is equal to 10 MD and if the gang works 6 days then it is 60MD.

In construction industry over time is exists. It is subject to the nature of job. Normally 3 Hours overtime is regular in all sites. However, benefits will not be applicable on overtime wages.

During MD rate calculations terminal benefits are subject to the duration and local site environment

MD rate arrives from

 ABW (Average Basic Wages)

 Over Time Wages

 PF & Admin. Charges of employer portion

 Terminal benefits

Reconciliation of Materials (Part-2)

Dear Readers,
This is continuation of previous post

• Wastage / Savings

o  Theoretical Consumption – Actual Consumption

• Percentage of wastage

o  Wastage / Theoretical consumption X 100

• Theoretical Consumption

o  Billable

•  Claimed from clients

•  Work in progress

o  Non Billable

•  Temporary structure

•  Enabling works

•  Due to drawing revision not useable

•  Laps, Chairs and Spacers

•  Splices and Lifting lugs

Actual Consumption = Total Receipt – Total Issue

Receipt

o  Purchases thru’ region / Head Office

o  Local purchases

o  Receipts from other sites

o  Receipts from other Agencies

o  Clients supply

Issues and Stocks

o  Physical stock (Including Cut Bits (Useable))

o  Issued to other sites

o  Issued to clients

o  Issued on chargeable basis

•  Interpretation

o  If Result is (- )ve means it is wastage

o  If Result is (+)ve means Savings

o  Results shall be compare with contractual limits

•Advantage of Material Reconciliation

o  To Minimize the wastage

o  Salvage of wastage / Scraps

o  For better planning on Material procurement

o  It is a Contractual Obligation