Construction economics, estimating, and contract management
Construction economics, estimating, and contract management
This domain tests how quantities, unit rates, overheads, profit, VAT and contract terms produce a tender price and how changes are managed. Mongolian projects commonly use bills of quantities, unit-rate contracts and 10% VAT; the exam expects clean arithmetic and correct cost structure.
Core rules
- Direct cost includes labour, materials, equipment and subcontracts. Indirect cost includes site overhead, head-office overhead, insurance and financing.
- Markup is applied to the correct base; state whether overhead and profit are calculated on direct cost or on the accumulating subtotal.
- VAT is added after the pre-tax price; do not charge VAT on VAT.
- Measure quantities from drawings and specified rules; remeasurement clauses matter when quantities change.
- Contract administration: notices, variation orders, delay claims and payment certificates must be timely and documented.
Worked example For 1 m³ of concrete work: labour 20,000 MNT, material 55,000 MNT, equipment 10,000 MNT. Direct cost = 85,000 MNT. Overhead at 15% of direct = 12,750 MNT. Profit at 10% of direct plus overhead = 0.10 × 97,750 = 9,775 MNT. Pre-tax rate = 107,525 MNT. VAT at 10% = 10,752.5 MNT. Total unit rate = 118,277.5 MNT/m³. If the contract says overhead is on labour only, the answer changes; the stated basis controls.
Traps that cost marks
- Applying overhead and profit to different bases without saying so.
- Charging VAT before profit or charging VAT on VAT.
- Ignoring remeasurement and variation clauses.
- Missing notice deadlines for delay or extra work.