SUMMARY OF
THE TOTAL
PROJECT COST
COL
CHUA
ELUDO
OPPUS
INTRODUCTION
A summary of total project cost typically entails compiling all
expenses associated with a project, including direct costs like
materials, labor, equipment, and overhead, as well as indirect
costs like administrative expenses, marketing, and contingencies.
This summary provides stakeholders with a comprehensive view of
the financial implications of the project from start to finish. It's
crucial for budgeting, resource allocation, and assessing the
project's financial viability.
LABOR COSTS
·Definition: Labor costs refer to the expenses associated with the workforce
involved in the construction project. This includes wages, salaries, benefits,
and any other compensation paid to workers.
·Composition: Labor costs cover various types of workers, including skilled
labor such as carpenters, electricians, plumbers, and masons, as well as
unskilled laborers who assist with tasks like carrying materials, cleaning, and
basic construction work.
·Calculation: Labor costs are typically calculated based on the number of
hours worked by each worker multiplied by their respective wage rates.
Overtime pays, holiday pay, and other allowances may also contribute to
labor costs.
MATERIAL COSTS
·Definition: Material costs represent the expenses incurred in procuring
construction materials required for the project. These materials include
concrete, steel, wood, bricks, roofing materials, plumbing fixtures,
electrical components, and finishing materials.
·Variability: Material costs can vary significantly depending on factors
such as material quality, quantity required, market prices,
transportation costs, and any tariffs or taxes applicable to specific
materials.
·Procurement: Effective procurement management involves sourcing
materials from reliable suppliers at competitive prices while ensuring
quality and timely delivery to the construction site.
EQUIPMENT COSTS
·Definition: Equipment costs pertain to the expenses associated with
the use of machinery, tools, and equipment required for construction
activities. This includes both heavy machinery and smaller tools used
by workers.
·Types of Equipment: Common construction equipment includes
excavators, bulldozers, cranes, concrete mixers, scaffolding, power
tools, and safety equipment.
·Rental vs. Ownership: Construction companies may choose to either
rent or purchase equipment based on factors such as project duration,
frequency of use, maintenance costs, and availability of capital.
SUBCONTRACTOR COSTS
·Definition: Subcontractor costs refer to the expenses incurred by
hiring external firms or individuals to perform specialized tasks or
services within the construction project.
·Specialized Services: Subcontractors may be hired for various
specialized tasks such as electrical work, plumbing, HVAC installation,
roofing, painting, and landscaping.
·Management: Effective subcontractor management involves
selecting reputable subcontractors, negotiating contracts, monitoring
performance, ensuring compliance with specifications and
regulations, and coordinating their work with the overall project
schedule.
TAXES
Withholding Taxes Local Taxes Import Duties and
Value-Added Tax Excise Taxes
(VAT):
Construction contracts Local governments may Construction materials
In the Philippines, often involve payments impose additional taxes and equipment imported
construction projects are to subcontractors, or fees on construction into the Philippines may
subject to VAT, which is a consultants, and activities, such as be subject to import
consumption tax levied on the suppliers. The Philippine business permits, real duties and excise taxes.
value added to goods and government requires the property taxes, and other These taxes can
services at each stage of
withholding of taxes on local assessments. These
production or distribution. significantly impact the
these payments. The
The current VAT rate in the taxes can vary depending cost of imported goods
withholding tax rates
Philippines is 12%. on the location of the and must be considered
Construction companies must vary depending on the
construction project and when procuring materials
account for VAT on both the nature of the payment
the local government and equipment from
purchase of construction and the tax status of the
materials and the provision of ordinances. foreign suppliers.
recipient.
construction services.
INSURANCE COSTS
CONSTRUCTION ALL-RISK (CAR) INSURANCE WORKER'S COMPENSATION INSURANCE
CAR INSURANCE PROVIDES COMPREHENSIVE COVERAGE
FOR CONSTRUCTION PROJECTS, INCLUDING COVERAGE Construction companies are required to
FOR PROPERTY DAMAGE, THIRD-PARTY LIABILITY, AND provide worker's compensation insurance to
OTHER CONSTRUCTION-RELATED RISKS. CAR INSURANCE
cover medical expenses, disability benefits,
TYPICALLY COVERS RISKS SUCH AS FIRE, THEFT,
VANDALISM, NATURAL DISASTERS, AND ACCIDENTS ON THE and death benefits for employees who are
CONSTRUCTION SITE. injured or killed on the job.
THE COST OF CAR INSURANCE VARIES DEPENDING ON
FACTORS SUCH AS THE SIZE AND SCOPE OF THE PROJECT,
THE CONSTRUCTION METHOD, THE LOCATION OF THE
PROJECT, AND THE INSURANCE PROVIDER.
MATERIALS AND EQUIPMENT TAXES
In the Philippines, taxes on materials and equipment used in construction projects can
vary depending on various factors including the type of material or equipment, its
intended use, and any applicable government regulations.
Value-Added Tax (VAT) Local Taxes and Fees
Customs Duties and Environmental Taxes and
Import Taxes Fees
Documentary Stamp Tax
Excise Taxes (DST)
Other Taxes and Charges
BONDS AND INSURANCE COST
Bonds in construction projects are financial
instruments that provide a form of guarantee or
security to ensure that certain obligations are
fulfilled. There are several types of bonds
commonly used in construction: Performance
Bonds, Bid Bonds, Payment Bonds, and
Maintenance Bonds
The cost of bonds is typically borne by the
contractor and is often expressed as a
percentage of the contract value. The specific
rate depends on factors such as the contractor's
creditworthiness, project complexity, and
duration.
BONDS AND INSURANCE COST
Insurance costs in construction projects refer to
the expenses associated with purchasing various
types of insurance coverage to protect against
risks and liabilities. Common types of insurance
coverage in construction projects include:
Construction All-Risk (CAR) Insurance, Worker's
Compensation Insurance, General Liability
Insurance, and Professional Liability Insurance
The cost of insurance coverage varies depending
on factors such as the size and scope of the
construction project, the company's risk profile,
and the insurance provider.
OVERHEAD AND PROFIT
Overhead and Profit are essential components of project
cost estimation in construction. Overhead represents the
indirect costs necessary to run the business, while profit
represents the financial return earned by the company
for its services and expertise. By accurately accounting
for overhead and profit, construction companies can
ensure that projects are priced competitively while still
generating a satisfactory return on investment.
OVERHEAD COST
Overhead costs are typically
allocated to projects based on a
predetermined overhead rate or
as a percentage of direct costs.
This allocation ensures that each
project bears its fair share of the
company's indirect expenses.
Profit is the financial return earned
by a construction company for its
services and expertise in completing
a project successfully. Profit
represents the reward for the risks
taken, the investments made, and the
value added by the company's
management, workforce, and
resources. Profit margins vary
depending on factors such as project
size, complexity, duration,
competition, market conditions, and
the company's reputation and
expertise.
Profit is typically expressed as a
percentage of total project costs and
is added to cover the company's.
