The storage excavation ratio is a measure of the unit cost of the stored water. It is the ratio between the total storage and total earth moved. See Section 1.4 for different types of farm storages.
3.6 ESTIMATE OF COSTS
The term ‘estimate of costs’ means an estimate of the contract cost of construction of physical works and the purchase of items of equipment. Cost estimates are an essential part of the process of decision making in farm projects. They are used by:
• the designer in deciding which option is the best design solution;
• the owner/client in deciding whether the proposed dam is likely to be profitable; and
• the contractor, who prepares estimates on the basis of how much to charge for the work. A contractor has to estimate very accurately to stay in business.
In some circumstances cost estimates may also be used by finance organisations to decide on the approval of money for the scheme. They have also been used as a convenient method of calculating charges for planning work, particularly subsidised charges made by Government services.
The accuracy of the estimate is often determined by the proposed use. Very rough approximations may be quite suitable for comparing different solutions to a design problem. In fact, if very accurate estimates are needed to choose between options, then they are so close in cost that the choice may be made on other factors. Similarly, very close estimates may not be warranted for decision making on profitability, especially when the part of the project being estimated is not a major part of the total cost, as is often the case with farm dams. Generally, estimates to arrange finance for a project should be fairly accurate and will usually be finalised only after agreement is reached on details of the design. The most accurate estimates are those prepared for contract purposes by the contractor to determine a quotation figure and by the designer for comparison with contract prices. The contractor has to be accurate – too low and a loss is incurred, too high and the contractor does not get the project. Both scenarios relate to the viability of the business. The design estimate needs to be accurate, and not disclosed to contractors, so that quotation prices may be compared on an objective basis. Quotations well below a design estimate should be examined very closely to sort out, in advance, problems that are likely to arise during construction.
3.6.1 Economics
The value of land occupied by the work may be important and may influence the design. It will usually be necessary to include land value in farm dam estimates only when comparisons are being made between different design options.
A farmer’s decision to build a small and deep tank when a large shallow tank would have much cheaper earthworks will usually be determined by the value of the additional land which is occupied or disrupted by the lower cost storage.
Design 73
Table 3.8 Schedule of rates contract.
Item Description Rate Quantity Amount
1 Site Engineers Fees 10% …………. ………….
2 Soil Testing Sum …………. ………….
3 Land Survey Sum …………. ………….
4 Licensing Authorities Fees Sum …………. ………….
5 Vegetation & Topsoil Stripping −$/m3 …………. ………….
6 Excavate Core Trench −$/m3 …………. ………….
7 Earthworks–Bank/Core Trench −$/m …………. ………….
8 Outlet Structures −$/m …………. ………….
9 Embankment – Construct −$/m3 …………. ………….
10 Levee Banks −$/m3 …………. ………….
11 Bywash – Spillway Construction −$/m3 …………. ………….
12 Replacement of Topsoil on Bank −$/m3 …………. ………….
13 Gravel on Access Track −$/m3 …………. ………….
14 Seed and Plants −$/m2 …………. ………….
15 Fence Out Areas Sum …………. ………….
16 Gauge Boards Sum …………. ………….
17 Other(s) Sum …………. ………….
Sum Total GST@…... Extras@x..% Total$……
Farmers may seek to save money by building dams themselves, either with their own machinery or with hired plant, particularly if the farmer has time available which would otherwise not be used to earn more than the savings on a contract construction price. This has the advantage that the dam builder has a direct interest in achieving a good result. However, these potential savings should not be deducted from the cost estimate.
The estimate of costs should be based on rates which would reasonably be expected to cover construction and materials. Should the client be able to obtain a quotation at a cost lower than the design estimate, there is no reason why it should not be accepted, provided the contractor has suitable equipment and agrees to carry out the work in accordance with the plans and specifications.
For many purposes the future annual cost of a dam is important. This cost deter- mines whether the project is profitable (compared with the annual value of increased production). It is also needed to combine with other annual costs to determine the best project design. For example, a dam built at low capital cost, but which had high annual cost for repairs and maintenance, might well cost more than one built to a higher standard and initial cost with minimal maintenance cost. The objective is an optimal combination of annual costs of capital and recurring items. Comparison of all options should be considered before proceeding with a choice of project.
Contractors generally work on an hourly rate of hire for each piece of construction plant. The hire charge is negotiated between the landowner and contractor before work commences.
74 Small Dams
Other forms of contract can be used:
i Schedule of rates contract
When using this method of contract the actual measurement of each item becomes very important.
ii Lump sum contract
The contractor estimates the cost of construction making allowances for any unknown factors that may affect the cost. This form of contract, while common in structural engineering jobs, is not used to any great extent for earthmoving works because of the greater number of unknown factors, including water and the inconsistency in earth materials (SCA, 1983).
A mixture of the above forms of contract may sometimes be used, for example, an hourly rate for the core and a lump sum for the embankment.