Materal Analysis_slides

8/19/2019 Materal Analysis_slides

1/13

Lecture 3-1

© Dr. Farrukh Arif, Assistant Professor, NED UET

CE-591-Construction CostEngineering and Control

Lecture 3

Material Analysis

____________________ Dr. Farrukh Arif,

Assistant Professor, NED UET

Lecture 3-2


Overview Commodities

−Iron ores, precious metals, timber, etc.

−Traded on the commodities exchanges

−Price is volatile

Engineering Materials (This course’s concern)

−Commodities that have undergone substantialmanufacturing process (ex: I-beams)

−Price is steady

Semi-engineering Materials

−Behaving either as engineering or commoditymaterials as far as their cost is concerned ( ex: copper)


2/13

Lecture 3-3


Overview We are concerned only with engineering materials,

because they are used in construction and havereasonable price stability.

Lecture 3-4


Role of Material

Manufacturing Changes Material

−The Change Adds Value

−Results in a Product

−Product May Become Material to the

Next EnterpriseMaterial Is the Substance Being

Altered


3/13

Lecture 3-5


Definitions (1/2)

Material−Purchased, Not Manufactured

−Accounts for Up to 50% of Product Cost

Product−Completed, Suitable for Delivery

Customer

−User of the Product

−External or Internal to the Company

Lecture 3-6


Definitions (2/2) Direct Material

−Becomes Part of the Product

−Included in the Design

−Major portion of quantity take-off

−Subdivisions

Raw (constructed, fabricated or processed materials ina condition that will receive direct labor)

Standard commercial or bulk (accepted in ready state,

concrete used by sub-contractor/costing by eitherengineering or buying through bill of materials)

Subcontract (assemblies, intermediate materials,equipment produced by supplier as per specifications)

Indirect Material

−Used to Facilitate Manufacturing Process


4/13

Lecture 3-7


Material Calculations (1/9)

Two Parts

−Cost of Material (per Unit)

−Amount of Material (Number of Units)

Calculated

Includes Allowances for Waste, etc.

Lecture 3-8



Cost of Material

−Historical Cost

−Contracted Cost

−Formal Quotes

−Other with Varying Degrees of Accuracy Informal Quotes/Estimates from Suppliers

Catalogs

Estimates, “Guess-timates”


5/13

Lecture 3-9



Other Cost Variations

−Price Changes

−Market Conditions

−Volume Price Breaks

−Discounts

Lecture 3-10



Direct material cost can be calculatedas

unit.perdollarscost,salvage unit.perdollars,tounitscompatibleinmaterialsof cost

unit.perdollarsmaterials,directof cost

etc.volumemass,length,feet,boardarea,of unitsinshapeactualSWhere a

=

=

=

=

−=

s

ams

dm

smsa

dm

V

S C

C

V C S C


6/13

Lecture 3-11



Amount of Material (through Quantity Take-off)

−Bill of Material

Material Required for the Design

Specified by the Designer

−Specifications

Additional Information About the Material

Defines Detailed Requirements−Need Correct Quantity of Material

Lecture 3-12



Other Designations

−Subcontract Items

Made to Specific Designs

Not Sold to Others

Not Catalog Items

−Interdivisional Transfer

“Sold” to Another Division of the Company


7/13

Lecture 3-13


Material Calculations (7/9) Allowances for waste/Losses are lumped into

−Waste

Determined by Design & Raw Material

Difference Between Raw Material Dimensionsand Part Shape

−Scrap

Material Lost Due to Mistakes/Errors

−

ShrinkageMaterial Lost Due to Physical Deterioration

Lecture 3-14



Allowances/Losses

decimalscrap,toduelossL

decimalshrinkage,toduelossL

decimalwaste,toduelossL

etc.lengtharea,of unitsindesignforrequiredshapealtheoriticS

etc.volumemass,length,feet,boardarea,of unitsinshapeactualSWhere

)1(

3

2

1

t

a

321

=

=

=

=

=

+++= L L LS S t

a


8/13

Lecture 3-15



Example 1

Lecture 3-16


Material Analysis (1/4)

Efficiency of Material Usage (Shape Yield)

Material Cost Yield

Comparative Analysis Example


9/13

Lecture 3-17



Efficiency of conversion of raw material isthe Ratio of Useful Material (St) toPurchased Material (Sa)

percentyield,shapeEWhere

100

s =

×=

a

t

s

S

S E

Lecture 3-18



Material Cost Yield

Em = material cost yield, percent

NP= number of pieces constructed

Ns = number of salvage units

Cms = Material cost

Vs = salvage cost, dollars per unit

100×−

=

msaP

ssmsaP

m

C S N

V N C S N E


10/13

Lecture 3-19



Example 2

Example 3

Lecture 3-20


Pricing Measured Quantities(1/4)

Pricing of material is different from measuring, interms of information required

Determining an accurate cost value is not simple

Key points to consider are

−Variation of Materials

−80/20 rule−Computer and database lookup and entry


11/13

Lecture 3-21


Pricing Measured Quantities

(2/4)Variation of Material

−Ordinary to complex

−Specialized items (subject to price wide variation)

− Bulk materials (lumber, piping, concrete etc) Usually available “off the shelf”

Price behaviors are relatively stable

Lecture 3-22


Pricing Measured Quantities(3/4)

80/20 rule

−The rule says “80% of the cost of theproject come from about 20% of thenumber of items in cost estimate”

− Therefore, it’s reasonable to have costof minor critical items from current quoteswhile 80% of the items can be estimatedfrom estimator’s database


12/13

Lecture 3-23


Pricing Measured Quantities

(4/4)Computer and Database

−Pricing of measured quantities

−Resource management

−Inventory control

−Purchasing

Lecture 3-24


Coding & Specifications (1/2)

Coding−Required for having some sort of order and to contrive a scheme

−Advantages

Estimate preparation

Cost control and assurance

Data management

−Characteristics of Coding

Tied to execution of project

Detailed

Descriptive

Encourages project job control

−See CSI Master Format


13/13

Lecture 3-25


Coding & Specifications (2/2)

Specifications

−Specifications refer to the technicalrequirement of the project

Materials

Workmanship

Operating characteristics or performance

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