Cost Estimation and Pricing in Construction
Estimation basis
Cost estimation in Belarus uses normative resource and index methods. Candidates must understand the structure of construction cost: direct costs (materials, labour, machinery), overheads, planned profit, and taxes. Know the role of the normative base (resource estimate norms), current price indices, and the procedure for agreeing contract prices.
Contract price types
Distinguish fixed contract price from open (adjustable) price. A fixed price shifts inflation risk to the contractor; an adjustable price permits recalculation on defined indices. Understand the rules for additional works: they require justification, customer approval, and often a price adjustment annex.
Traps
- Confusing overheads with planned profit - they are separate components.
- Assuming any additional work is automatically payable; it needs prior approval.
- Mixing up the base index date with the date of actual work performance.
- Forgetting that VAT treatment depends on the contract and the tax regime.
Worked example
Direct costs total 100,000 BYN; overheads are 15% and planned profit 8%, both applied to direct costs. Overheads = 15,000; profit = 8,000; subtotal = 123,000 BYN. VAT at 20% adds 24,600, giving 147,600 BYN. Always check whether the norm base applies overheads to direct costs or to labour only - the base changes the result.
Rule of thumb
Before accepting any price, identify the normative base, the index date, and the overhead/profit base. These three determine the number.