ESTIMATING

Estimating is the process of forecasting the cost of a project to reduce financial impact of cost
overruns and hindrances to completion of a project.
It is the process of making a forecast, or educated ‘guess’ of the amount of labour in a
project, and the cost of materials and labour, and is a part of the process required in
developing a price to be offered to the client.

An estimate is an educated guess of the time and materials required to achieve a desired
outcome.
Project owners use cost estimates to determine a project`s scope and feasibility and to allocate
budgets.
Contractors use cost estimates when deciding whether to bid on a project

The most important function of estimating and the preparation of quotations is to ensure
that the job provides for a profit. Many uninformed electrical contractors operate at unrealistic
low prices, often not covering hidden costs such as overheads and ‘on costs’, leading to a high
level of business failure among electrical contractors.

Importance of cost estimates

 Help in the development projects which have budgets and timelines
 Facilitate generation of revenues as early as possible
 Increases accountability
 Provide transparency on public projects
 Enhances trust in one`s ability to manage the project properly

Factors that affect the accuracy of a project estimation

 The quality of the project
 The level to which the estimator defines a project
 The experience and skill of the estimator
 The accuracy of cost information
 The quality of any tools and procedures the estimator uses.

There are several methods used to estimate, but all should produce a forecast of the expected
labour hours required to perform the work, plus the cost of labour and the cost of materials.

Having determined the estimated costs, a separate process is followed to develop a sale price to
be offered to the client. This process involves adding a profit margin to the estimated direct
costs.
The primary purpose in estimating is to determine the cost to the contractor of carrying out
the work, which is an entirely different function to developing the price that will be offered to the
client.

ESTIMATED COST + PROFIT MARGIN = PRICE OFFERED TO THE CLIENT

Some terms to understand are

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  Estimate – a forecast of the expected labour and material components to perform a
specific project.
 Quote – the price offered to the client, for which the contractor is willing to carry out the
works.
 Bid – the contractors’ full offer, including all conditions attached to the offer.
 Tender – similar to a bid, but including the clients’ criteria, where the client requires the
contractors offer to be presented in a specified way

TAKE OFF
Refers to the scaling or transferring of critical dimensions of construction components from
drawings to paper or software that are quantified as units of measurement. Take off also includes
a description of works that are influenced by the appropriate measurement guide. OR
The measuring of quantities in which the dimensions are scaled or read from drawings and
entered in a recognized form or specially ruled paper called dimension paper.

The rule with taking off is to always use ink and not pencil as this shows integrity and
authenticity. Any errors should be struck through with a single line and not erased, so they are
disregarded yet leave a trace. If an entry is struck through, only to realise later it was correct in
the first place, the word Stet inserted close to the strike will advise the reader to refer back to the
original detail and ignore the striking. ‘Stet’ is a Latin word meaning ‘let it stand’; it is used by
proofreaders and report writers so is suitable for the takeoff process.

Take off sheet – a purpose designed form or spread sheet that is used to record the various
material and labour components of an estimate. The takeoff sheet may be a paper based form, or
part of a computer based spread sheet.

Query sheet – when taking off any doubts/queries will be forwarded to the architect on query
sheets normally divided down the center to accommodate the queries on the left-hand side and
the answers on the right hand side. During examinations the candidate will have to decide the
queries as they arise but it will often be desirable for him/her to indicate briefly in “waste” why
he has adopted a certain cause of action

 Counting the symbols

Counting symbols will allow you to identify the number of components required to complete the
job. The blueprints and drawings you are working from will use standardized symbols to
represent different elements such as fixtures, switches, and convenience receptacles. You will
need to familiarize yourself with these symbols and what components they denote. Other, non-
standard components may be identified by a key included on or with the drawings.
Count each component type individually. Some people do this using a handheld tally counter
that you click to add each unit. This can help ensure accuracy. You should also mark each
symbol with a colored pen or pencil to signify that it has been counted and to avoid counting it
again. As you complete the count for each component on each page, enter the quantities on a

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working scope sheet. After you have worked your way through every page of the blueprint, add
the totals for each different component.

 Measuring the circuits

You will also need to measure the circuits shown in the drawings. First, check the scale used for
each page that you measure, the scale dimensions are listed in the title block of the drawing.
Confirm the scale is accurate been copied at a reduced size (there may be a 1 inch or 1 cm scale
marker) or contact the architects/designers if you have any doubts.
There are a number of tools you can utilize to take measurements from drawings. These include
an architectural ruler, scaled measuring tapes, and mechanical and electronic measuring wheels.
Rules and measuring tapes are fine for quick measurements in small dimensions, but a
measuring wheel is both convenient and accurate.
You can now measure the branch circuit for each component in the drawing — remember to
allow for and add in the drops at each switch. Some electronic scale wheel devices allow you to
press a key to add a set distance for drops. This is fine if all the drops are standardized, but you
will have to reset the constant each time if they are of different sizes.
There may be different circuits (two-, three- or four-wire) marked on the same drawing. Trace
each one with a colored pen or pencil once you have finished measuring, using the same color
for the same type of circuit.

 Measuring length

 Calculating the takeoff

You can now use your counts and measurements to produce a takeoff figure on the dimension
paper. Using trade market values you can provide a relatively accurate estimate of the cost of the
materials involved. With the right time and motion data required, you can also gauge the scale of
the job to project approximate labor and other associated costs.

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Note: The take-off sheet is one of the most important components of any contracting operation

Three important functions of a correctly formatted and utilized take off sheet in the
management of any contracting operation.

(a) Estimating with a well formatted sheet will help the estimator in detailing the job
components and developing a reliable cost for the job. If the sheet has provision for full
itemising of the parts of the estimate, it assists the estimator to break down the separate parts
of the job into individual material and labour components.

In addition to this, the full detailing of the work allows the estimator (or someone else) to
check back through the estimate to see if anything has been missed or doubled up.

(b) Managing the job – once the estimate has been completed, and the job won, the take off
sheet can be used as a useful guide in running the job.

Using the take off sheet as a job production plan means that the details of the job do not need
to be retained in the contractor’s memory, thus freeing them to think about other profitable
matters.

As a part of managing the job, the contractor can use the detailed take off sheet as an advance
organizer to buy in equipment required for the job. If the contractor can spend a few minutes
each day to advance order the equipment for forthcoming jobs, the hours lost obtaining
supplies on a day to day basis, can be reduced to a minimum.

(c) Job cost reconciliation – in this function the take off sheet forms the record of the expected
costs of the job, to be accompanied with the costing system, which is the record of the actual
costs of the job.

Unless the take off sheet has sufficient details to allow the comparison of the two records, the
analysis of the costs cannot be performed with any detailed accuracy.

METHODS OF TAKE OFF SHEET

In estimating, there are two general methods used:

(a) Estimating using practical experience, where the estimator breaks the job down into its
various parts, and estimates the labour (hours) by using personal experience to predict the
quantities of labour for each part. Estimating is done in an order that parallels the way in
which the job is expected to progress to allow for the reconciliation process that occurs once
the project has been completed.

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 Since, in most small and medium operations, the contractor is also the estimator, and is often
involved in the site work, this method is the most commonly used.

(b) Estimating using a unit rate method, where the estimator simply calculates the quantities
of items from the plans and other job information, and then allocates costs from a labour unit
rate list to these items. Many larger well established contractors have developed a unit rate
list, in which the labour components for many common tasks been detailed.

This method relies on the development of an accurate list, which can only be developed after
the work rates of the labour force have been carefully analyzed and rechecked over a long
period.
The primary benefit of unit rate manuals is that they allow relatively inexperienced staff to
use the collective wisdom of experienced estimators to estimate from a given set of plans.

Other methods of estimating are

(c) Estimating using a schedule of rates. This method breaks the project down into a number
of tasks, and allocates a set cost to each task. This is a development of pricing on a “per
point” basis, and can be successfully applied to projects such as multi domestic (home units
etc.), commercial fit outs in high rise buildings, and single domestic (cottage) wiring, where
the projects involve a high number of identical tasks.

Using this system, the estimator separates the repetitive tasks such as lighting points, switch
points, and power outlets from those items such as switchboards, mains, data, and other
specialized circuitry. The specialized items are estimated on a quantity method (as in (b)
above), and the remainder of the work is costed on a “per point” basis, using costs that have
been developed over a long period of averaging prices arrived at through quantity estimates.
This method allows for rapid estimating of projects, but creates difficulties in the
reconciliation of actual job costs to estimated costs.
This method relies on the estimate containing all the points in a project, allowing an
“average” to occur across the project. Note that it is unsuitable for small projects and “one
off” estimates.

(d) Historical estimates. This method uses a broad based average of costs for specific types of
work. While it is not commonly used among electrical contractors, it is widely used in the
building industry to supply builders with an allowance for electrical work. The costs are
based on the average electrical price for a specific type of work, such as new cottage
construction, high rise commercial, etc. These costs are usually expressed as a number of
dollars per square metre of floor space, or per cubic metre of building space.

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 While this system is not suitable for electrical contractors preparing competitive tenders, it is
useful as a general guide as to the probable price range that may be expected for a specific
type of project.

COMPONENTS OF A TAKE OFF SHEET

To suit the optimum use of the take off sheet in the operations activities, there are a minimum
number of items of information that need to be included in the design of the take off sheet. Each
of these items performs at least one (often more) important functions, and are as follows :

(a) A title, such as ‘TAKE OFF SHEET”, OR “QUOTATION FORM” etc., to clearly identify
the sheet and its function. This ensures that the sheet will not be confused with other forms,
and is readily identifiable to all staff concerned in the operation.

(b) A general job information section, which will include a number of information items that
relate directly to the job. This information would include items such as :

(1) JOB NAME – The job needs to be clearly identified in order to avoid confusing it
with other jobs. This is especially so in the case where more than one job is carried
out for the same client, often in the same premises.

Where the client has allocated a specific name to the job, the adoption of this job name
by the contractor will reduce confusion during the production phase, and especially in
the invoicing and payment phase.

(2) JOB DESCRIPTION – Here the estimator notes a brief, but accurately detailed,
description of the job to be estimated. This performs several functions, the most
important being that it forces the estimator to form an accurate idea of the job, before
the estimate is begun. Other functions are to
(i) further identify the job,
(ii) simplify the entry of the job, once won, into the job book, by supplying a
ready made description, and
(iii) use the estimators job description sheet as a site staff instruction, so that the
site staff have an understanding of the estimators concept of the job.

(3) QUOTE OR JOB NUMBER – This allows the contractor to keep a quote record by
numbering the quotes in a sequences, not unlike a job book. This allows the client a
reference number to identify the quote, and simplifies the method by which the quote
is referred to, and included in, any contract documents associated with the job.
Should the quote be successful, the job number can also be entered onto the sheet,
thereby permanently linking the estimate to the job.

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(4) DATE OF ESTIMATE – It is a common occurrence for a client to postpone a job
until a later date, and then telephone the contractor, asking for an on the spot
adjustment to the price before issuing a work order. This means the contractor needs
to be in a position to quickly adjust the overall price, depending on the percentage
CPI changes that have occurred since the date of the estimate. The contractor can
then offer the immediately revised price as a provisional price pending a full check of
the estimate. This allows the negotiating process to begin, and often results in the
winning of the job.

Another useful facet of dating the estimate is where previous estimates are used as a
technical reference when designing another job prior to estimating it. The
estimator/designer can gain an approximate idea of the costs, so that a decision on the
best way of doing the job can be determined.

(5) SHEET NUMBER – This is usually detailed as “sheet … of …”. As most estimates
will involve the use of more than one sheet to detail the costs, it becomes important to
number the sheets for totaling the costs of the individual sheets in a summary page.

(6) THE ESTIMATORS NAME – Provision such as “Costed by …” allows for the
estimators name or initials to be entered on the sheet. This serves two important
functions.

(i) Having the estimator permanently identify himself with the product of his
work tends to ensure a degree of care that may not always be present if the
estimator remains unaccountable
(ii) Once a job is won, and production staff are issued with the job instructions,
any matters that are unclear can be referred to the easily identified estimator.

(7) NAMING OF THE PERSON THAT CHECKS THE ESTIMATE – This is usually
provided for with an entry such as “checked by …”. Since even the best estimator
can overlook items, or misread specification clauses, it is an important practice in any
contracting operation to have a second party check the estimators work.

This second party should, where possible, be experienced in estimating or production

techniques to ensure the best checking of the estimate. In a partnership based
operation, all partners share a joint responsibility for any errors or miscalculations in
the estimate, thus safeguarding any one partner against recriminations.

Where the operation is very small, and the contractor is also the estimator, and the
production staff, then it is still a wise practice to have someone else, such as a wife or
other involved person, check through the estimate. An unskilled person can often
detect errors or ask questions that prompt the estimator to re evaluate parts of the
estimate.

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(8) COLUMNS FOR TAKING OFF THE JOB QUANTITIES – The take off sheet needs
to be arranged in a series of columns in which the various items of the estimate are
arranged.
While there is perhaps no maximum number of columns, there is a minimum number to
allow the take off sheet to be developed to its full potential.

For the sake of the exercise, and in line with the philosophy of minimising the time
used on paperwork, only a minimum number of columns will be developed in the
information to follow.

(a) A DETAILS column in which a brief description of the item of work and its
associated materials is entered. Note that this description and materials details
may be used for other purposes, such as ordering materials for the job or site
instructions for production staff, and so should be detailed enough to provide clear
information to people other than the estimator.

(b) A QUANTITY column in which the quantity of materials measured from the job
plans is entered. This column can be used later as a source of information for
materials ordering and job instruction for site staff, as an adjunct to the details
column. The site staff can be supplied with a photocopy of the take off sheet
showing this and the details column, with all other columns (where costs appear)
blanked out. This will inform the site staff of quantities and types of materials
allowed for on individual parts of the job, without disclosing the materials costs or
labour hours allowed.

(c) UNITS columns – this will involve two columns :

(i) A column to detail the units in which the individual items are costed, eg.
Cable per metre, switches per each, clips per 100, etc. This column is
generally titled “PER” at the top of the column.

(ii) A second column to detail THE UNIT COST of the item of material. eg.
$1.80 per metre for cable, $3.10 for a switch, $5.60 per packet of 100 clips,
etc. These column are used to establish the base price for the material item
being costed.

(d) COST EXTENSION column – in which the information developed in the three
previous columns is extended to form a cost (in dollars) for the particular item of
the estimate. This column is totaled to provide a final estimated cost for materials
to be used in the job.

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 (e) A LABOUR HOURS column – in this column the labour, estimated in hours, to
carry out the item of work is entered. The labour is always estimated in hours,
rather than dollars, for several reasons :

(i) The totalled labour hours can be used to carry out project viability
considerations, with respect to both the sales budget and the capacity of the
workforce to perform the work.

(ii) Simplicity in comparing the take off sheet and the cost sheet hours when
analysing discrepancies during a job cost reconciliation.

(9) A TOTALLING AREA - where the material costs and labour hours can be totaled,
then developed into an estimated cost for the job. If the take off sheet is to be used to
develop the estimate into a quote or bid, then a further provision needs to be made for
adding a profit percentage to the costs to form a quote. This area should also allow for
the inclusion of any special costs, such as mileage, abnormal delivery costs, etc

(10) “B FACTOR – this is an allowance as a safety margin for suspected but undefined
problems that may occur.

“B Factor” is not always used, and is based on a matter of experience and any
“hunches” that the estimator or manager may feel apply to the project being
estimated. Remember – when using a take off sheet, you should enter the materials and labour
quantities in such a fashion that the take off sheet can be used as :

(i) a job planner, to reduce the time required to refresh your memory or instruct site staff on
the work required for the project

(ii) a materials lit, to reduce the time required to purchase and organise the stock needed to
carry out the work

(iii) a job cost reconciliation document, where the estimated labour and materials can be
compared with the actual costs incurred and recorded on the job cost card. This is an
essential process that provides feedback on the accuracy of the estimate, and the
productivity of the site activities.

DOING THE PAPERWORK CORRECTLY = LESS MISTAKES

= BUSINESS PROFIT
= LESS STRESS
= BETTER BUSINESS
= MORE TIME FOR LEISURE

DOING DUPLICATED PAPERWORK = LESS TIME FOR BUSINESS

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 = MORE STRESS
= LESS PROFIT
= LOST LEISURE TIME

POOR PAPERWORK = MORE MISTAKES

= NO PROFIT OR A LOSS!!!
= LOTS OF STRESS
= POOR BUSINESS
= EVEN LESS LEISURE TIME

PROCESSES FOR DETERMINING DIRECT COSTS OF LABOUR

THE DIRECT COST OF LABOUR

The direct cost of labour is the cost of employing a person on an hourly basis. This cost must
include all ‘on costs’ such as paid leave, public holidays, workers compensation insurance,
superannuation, etc.
As on costs are determined by employment conditions, it is best to develop the on costs margin
as a percentage of wages paid so that it remains stable unless there is a change to working
conditions. Where a salary increase occurs, without a change in working conditions, the fixed
percentage margin is easily applied to the new wage rate to determine the new direct cost of
labour.
As wage increases are a regular occurrence, but working conditions rarely change, most
contracting operations use the percentage method as a means of avoiding constant recalculation
of on costs for labour.

THE DIRECT COST OF MATERIAL

The direct cost of materials for an estimate is that cost born by the contractor to supply the
materials to the project. It is not the price or sale value provided to the customer.
As the purpose of estimating is to determine the cost to the contractor to perform the work, the
direct cost of materials is that cost that includes regular discounts, but also includes expected
wastage, such as cable off cuts, short ends from cable drums, etc.

PROCESSES FOR DEVELOPING A MARGIN TO COVER OVERHEADS

The following pages provide information on the processes involved in developing a price to be
offered to the client.
This price must include provision for all direct costs (labour and materials), an amount to cover
overheads for the duration of the job, and an amount for nett profit.

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The method for overheads allowance is development of an amount allocated for each working
hour of a job, ensuring that each job carries its’ share of the overhead burden. The overhead
margin, once developed, can be simply applied to each estimated job based on the hours in that
job.
Service work rates are developed in a similar manner to estimated work

FORMULATING A BID PRICE

BID PRICE - The sale value of the offer to the client.

This sum must include -
(a) the total direct costs for materials and labour
(b) the gross profit margin, comprised of hourly overhead costs and nett profit

DIRECT COSTS
Material - the expected cost to supply the materials for the project
Labour - the cost of labour - being hourly costs based on wages plus on costs
On costs include those costs, other than wages, that can be directly attributed to the hourly cost
of labour. This includes, but is not limited to, sick leave, paid public holidays, annual leave,
annual leave loading, workers compensation insurance, redundancy funds, long service, and any
other paid non productive events that are directly attributable to employed labour hours. On
costs are calculated as a percentage of the hourly labour rate. By determining a percentage
value, the on costs do not need to be recalculated in the event of a change to the hourly wage
rate.
Where a change to employment/working conditions occurs, the on cost percentage must be re
calculated.

HOURLY OVERHEAD COSTS

The hourly overhead cost for an operation is the annual overhead costs divided by the annual
productive working hours.
By calculating an hourly loading for the coverage of the overheads, the overhead cost burden can
be allocated to each project, based on the estimated labour hours in the project.

GROSS PROFIT MARGIN

The gross profit margin is expressed as a percentage of the sale value (not as a mark up on the
costs). This allows easy comparison to the final result of the job, where actual costs determine
the resultant gross profit margin, when compared to the sale value. Actual gross profit margins
are compared to estimated gross profit margins and costs during the job cost reconciliation
process that should occur for each project.

Sale value - direct costs = gross profit percentage

Sale value

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NET PROFIT
The net profit is the final profit, after all direct costs and hourly overhead costs for the project
have been deducted from the sale value.

OVERHEADS

The overheads are those operating costs of a business that cannot be directly attributed to a
specific job, but must be covered by all jobs, over the current financial year.

In order to ensure that the overheads are covered, a portion of the overheads must be covered by
each job. The simplest way to achieve this is to determine a set amount, in dollars per productive
working hour that is required to cover the total overheads.

Overheads include items such as:

• phone/fax costs
• wages for supervisory staff
• wages for administrative staff
• rent of premises
• accountancy costs
• advertising
• insurance (public liability, fire, theft, etc.)

Note that workers compensation insurance is not an overhead. It is a component of the ‘on cost’
part of labour costs.

Research has demonstrated that poor management of overheads is a common contributor

to failure of small business.

In order to determine the amount of cost to allow for overheads, on an hourly basis, determine :

(a) the total annual overhead costs

(b) The total number of productive hours

Hourly overhead burden = Total Overhead Costs_

Annual Productive Hours

GROSS PROFIT EXPRESSED AS A MARGIN FOR THE PURPOSES OF

RECONCILLIATION OF ESTIMATED VALUES TO ACTUAL OUTCOME VALUES

Definitions :

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Margin – an amount expressed as a percentage of the sale value
Mark up – an amount expressed as a percentage of the cost

Margin = profit
sale value

Mark up = profit
value of costs

To add a margin to a cost

Sale value = direct costs

100 – margin%

Gross profit – a profit margin that must include funds to cover overheads, plus net profit
Net profit – the profit realized after all costs, being direct costs and overheads, have been
covered. For the purposes of project management, it is best to determine the anticipated profit
as a margin to allow easy reconciliation of estimated profit to actual profit at the end of the
project.

Reconciliation is the comparison of estimated profit to the actual profit produced at the end of
the project. This project is vital in order to provide feedback to the estimator on the accuracy of
estimates. It also allows easy reference to the sales budget requirements for the time frames
covered during the progress of the job.
Further study in both business and project management is recommended if you wish to pursue a
career in contracting management or self employment.

Margin versus mark up

Mark up, where a percentage profit is expressed against the costs is unsuitable for the
reconciliation process.

Margin – an amount expressed as a percentage of the sale value

Mark up – an amount expressed as a percentage of the cost
The Reconciliation Process

Where the gross profit outcome of a project is not the same as the estimated value, the estimator
should compare the estimated materials and labour values to the actual values, using the take off
sheet and costs records

PREPARING A QUOTE TO BE OFFERED TO THE CLIENT

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The quotation to be offered to the client includes the bid price and all the trading conditions that
apply to the contractors’ offer.
The following pages provide guidance in the formulation of a quotation to be offered to a client.
By definition, a contract is based on the acceptance of an offer, which means that a poorly
constructed offer leads to a weak contract, leaving the contractor vulnerable to non-payment.

OFFER + ACCEPTANCE = CONTRACT

The quote or offer to the client
The quote should include at least the following items:

• the price in words and numbers, the clients name, company, title etc.
• the date of the offer
• a description of the works
• details of drawings, plans etc., including plan and revision numbers from which the
quotation has been derived
• items specific to the work, especially variations to the plans and specification
• reference to the standard conditions of tender, ensuring that they become an integral part
of the contract
• name of the contracting operation, with address, phone, fax etc.
• provision for a signature by the contractor

For smaller projects, where the quotation may be used as the contract, provision must also
be made for:

• the clients name and title

• the client company name (if applicable)
• the date of signing
• signatures of all parties to the contract

USING A STANDARD FORM OF QUOTATION

A standard quotation form can be developed, for use with most quotations, thereby reducing the
work and time required to formulate the offer to the client.
Since the quotation (or offer) to the client is likely to become the basis of any contract formed
between the contractor and the client, the document must include all items designed to provide a
safe trading environment for the contractor.

Items that must be included in the offer include at least the following –

• the contractors name and details (address, license number, phone numbers etc)
• the clients name and details
• the date of the offer
• a description of the work to be performed under the contract

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 • the price, in both words and figures
• reference to trading conditions such as those in a standard conditions statement
• any variations between the offer and plans/specifications belonging to the job
• a date fixing the duration of the works, where the offer is a fixed price
• sales wording, designed to promote the offer to the client

FORMS OF CONTRACT
A contract occurs when two or more parties agree to perform tasks or provide a service for
reward. It occurs when a party accepts the offer of another party to perform a service foe a
specified reward.

OFFER + ACCEPTANCE = CONTRACT

The purpose of a contract is to formalise the agreement between two or more parties that
involves the provision of a service for payment.

For electrical contracting, as with most other contracting trades, the agreement usually involves
the creation of a functioning new installation, or the repair of an existing installation. In building
work the contract is usually between the builder and the sub-contractor, and is entirely
unconnected to the contract that is made between the builder and the head client

Once the job is finished, the contractor is wholly reliant on the goodwill of the client to secure
payment for the work.

Since the purpose of a written contract is to protect each party against failure of the other party to
perform the required function, the contract must be suitable for use as a legal document in the
event of dispute. It must include at least the following parts – •
 The names of all parties to the contract
 The signatures of all parties to the contract
 The date on which the contract is formed
 Details of the service to be provided
 Value of monies to be paid
 All conditions associated with the offers of all parties (refer to Section 6 Part 1)

In addition to the basic components listed above, contracts may also contain items such as –
• Time frames for completion of the works
• Fixed or cost variation adjustable price
• Provision for variation to the contracted work
• Use of sub contractors
• Retention monies
• Public liability insurance
• Provisional sums

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• Site requirements
• OHS requirements
• Working hours
• Details of documents forming part of the contracted works (drawings and specifications,
etc.)
• Defects liability
• Liquidated damages
• Method of progress claims
• Payment schedules
• Method for dispute resolution
• Liability for damage to areas outside the work.
Service work, and ‘do and charge’ or ‘cost plus’ work should not be undertaken without the
use of a written contract that details the agreed rates of charge, and the rate at which materials
will be supplied by the contractor to the job.

A contract used for service work, or ‘do and charge’ work should include at least the following
details –

• The names of all parties to the contract

• The signatures of all parties to the contract
• The date on which the contract is formed
• Details of the service to be provided
• Rates at which labour will be supplied (there may be variables for out of hours work,
service charge, apprentice labour, etc.)
• Rate at which materials will be supplied (generally ‘trade list price plus ....%)
• Payment schedules (COD, 7 days, 30 days)
• All conditions associated with the offer of the contractor (a ‘standard conditions of
work’, on the reverse side of the contract is suitable in most cases .

Electrical Design, Estimation and Tendering lecture notes

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