Build Up Costs (Plant Costs)

Question 1

what plant materials are usually bought in?

Answer 1

• Basic tools such as screwdrivers, chisels,
cordless drills, trowels etc are normally
purchased and carried by the various skilled
tradesmen as part of their equipment

• Other tools such as angle grinders and power
sanders are so keenly priced that they are
generally bought by a contractor without much
thought or calculation

Question 2

what plant materials are bought depending on workload?

Answer 2

• “Middle ground” plant such as mixers etc tend

to be bought on the basis of workload

Question 3

what plant materials are usually hired and out of budget for most contractors?

Answer 3

Larger items of plant such as mini diggers and
access platforms are likely to sit outside most
contractors budgets

Question 4

factors to consider whether to buy or hire?

Answer 4

Other factors however will also come into play
with such equipment such as:-
- Transportation to and from site
- Storage on site
- Security of plant on and off site
- Labour capabilities to operate the plant
- Maintenance of plant

Question 5

when is usually better to hire?

Answer 5

• For extremely large, bulky and costly items of
plant it is usually best to hire them

but exceptions can be made for specialist items

Question 6

advantages of buying plant materials?

Answer 6

• Buying Plant items outright can be advantages
for many reasons including:-
- Your Company will own the machine outright
- You will have more flexibility in how to deploy it on site
- You will have equipment ready at little notice
- You will have no paperwork to deal with
- If you are VAT registered you can claim the VAT back in the period you buy the equipment

Question 7

advantages of hiring plant materials?

Answer 7

• There are also many arguments for hiring
equipment over buying and these include:-
- Only paying for the machinery when you need it

• No Initial high upfront capitol outlay
• Money, time and resources will be saved on maintenance
• You can be certain all equipment has been
  serviced and is in full working order
• The benefit of being able to offset hiring costs
  against taxes
• You can benefit from the knowledge of a
  company that work with the equipment every day

Question 8

what 5 factors must be considered in the hire and buy scenario?

Answer 8

• 1. Current Financial Situation
• 2. Cost of ownership vs cost of hiring
• 3. Length of project or job frequency
• 4. Equipment availability & usage
• 5. Fleet management & inventory control

Question 9

further considerations to consider?

Answer 9

• How well did past hire/buy decisions work?
• Were they profitable?
• Were safety issues covered?
• Is ongoing support part of the deal?
• Can the equipment be shared with other parts
of the company to make more efficient use of
funds?

Question 10

how are plant costs covered?

Answer 10

to the job when delivered to site & credited (less
depreciation) when removed

• Hourly or weekly + delivery collection fee

Question 11

how must over heads and profits be dealt with?

Answer 11

• The contractor will have to decide at tender
submission stage how he is going to apportion
overheads & profit to his rates in the Bill
• Up front loading
• Profit in preliminaries
• distribution among unit rates

Question 12

how must preliminaries be dealt with?

Answer 12

It is normal that the contractor prices for
preliminary items within the preliminary section
of the Bill

• Some contractors do not price the preliminary
section of the bill, but apportion the cost of the
preliminaries among the unit rates within the
measured section of the bill