The project resources will usually fall under 5 elements of the defined cost.

Element 1 – Staff

This will include the project management staff such as the project director / manager, site agent, supervisor, planner, commercial manager, quantity surveyor etc. These costs will not be related to a particular activity, instead they will be to manage the overall project, a collaboration of all activities.

The staff will usually be time related for example they will be allocated between 1-5 days of the week for the duration of the project, and in some instances up to 3 months after completion to carry out the final account process. Although the staff costs are allocated to the scheme, they are also attached to the overheads within the company. Whilst there are no live schemes, cost for staff will continue to be incurred by the company. Note, when allocating staff costs, it is wise to ensure the rate for each staff is inclusive of non-productive time such as holidays, sickness and period between live schemes.

Element 2 – Labour

The labour to carry out the works will usually include team leaders, foreman’s, skilled operatives, labourers, and plant operatives etc. This form of resource is allocated to individual activities and can be directly reclaimed on the activity schedule. Productivity levels for this type of resource is a tool commonly used by estimators for example, a kerb laying gang will lay 150m of kerbs in a day. It is important to consider restricted working hours or sporadic activities, during restricted hours productivity is also usually restricted. If the work is sporadic, again you could lose productivity due to mobilising and demobilising at different locations.

The rates for this resource will be impacted by working hours, commonly this resource will work between 8-10 hours a day, overtime / nights will be charged at time and a half, Sundays and Bank holidays may even by double time. This must be quantified and allowed for within the estimate (tender). Many companies will deploy subcontracted labour, this will reduce long term costs for when there are no live schemes. This will also alleviate the burden of holiday pay, sick pay, national insurances, pensions etc. However, subcontracted labour rates are usually at a premium and there are risks associated with skillset and workmanship. The alternative is to employ direct labour which will ensure quality and skill growth and usually come at a cheaper rate. The drawback of direct labour is that they are being paid whether they are working on a scheme or not.

Element 3 – Plant, Fleet & Equipment

Keeping it simple, plant, fleet & equipment are tools used to a scheme. Starting with fleet, this is the vehicles / modes of transport to get to and from site such as company cars and company vans. The plant will include larger items such as excavators, dumpers, telehandlers, cranes, welfare cabins etc. The equipment would relate to smaller items such as disc cutters, floor saws, wacker plates, drills, hand tools and small tools.

A lot of the above will have associated costs such as fuel, electricity and generators. You must also consider disposables such as drill bits and saw blades when allocating these costs. This form of resource can also be allocated to individual activities and can be directly reclaimed on the activity schedule.

These elements are generally hired, reducing maintenance and storage costs and easier to reclaim actual costs. Plant that are purchased may need regular maintenance / servicing / PAT testing / storage / handling / inventory management and this must be considered when allocating this resource to a scheme. It is better to invest in extended warranties and quality tools to ensure prolonged life cycle and a long term yield on that tool.

Element 4 – Materials

In terms of materials, this is self explanatory, these are the materials used to delivery a scheme such as sand, concrete, fuel, tarmac, bricks, kerbs, ironwork, cables, chemicals, cabinets and etc. These are usually purchased via purchase orders. A procurement team will usually agree rates with vendors / suppliers so the rate of material does not change for a fixed period of time ensuring best value (usually fixed for 12 months). This could be achieved by bulk buying discounts and will ensure cost assurity. Companies will have a credit account with vendors and suppliers so materials are delivered when required and paid at a later date.

Goods received notices (GRN’s) are proof delivery and reconciled with purchase orders. This is captured and monitored on the cost plan for reporting purposes. A call off order can also be placed where bulk material is ordered but delivered with different quantities at a time such as 100m3 of concrete is ordered but 10m3 is delivered at a time over the course of the activities.

Element 5 – Subcontractors

A subcontractor is a specialist company who can deliver a whole activity. A subcontractor will have their own set of resource whom they will be responsible for such labour, plant and materials. They will deliver the activity based on a quotation or lump sum price. An example of a subcontractor are Tarmac delivering carriageway surfacing or the supply and install of traffic signals by Swarco. Subcontractors can be set up on a framework agreement where the rates are pre-agreed and work packages are let, usually on large projects or structural maintenance schemes. In all cases, it will be the same activity but on multiple deliveries.

Subcontractors will hold their own liabilities, insurances, risks and accreditations, these documents are used by the contractor for the pre-qualification process. These documents prove the competency of the subcontractor. Subcontractors will always sign up to a contract with the contractor. This contract is usually back-to-back with the main contract. Within this contract, payment terms are agreed, schedule of rates are agreed and various terms and conditions are used. The most common contracts used in the civils industry are NEC, ICE and FIDIC where terms and conditions are standardised and pre-formatted. This ensures a deeper understanding of the T&C’s as they are regularly used on most projects. Amendments to the contracts can be made and agreed to suit specific schemes and deliverables. These amendments must be carefully considered and understood. Subcontract costs are easily identified on the tender documents with a mark up fee applied.