Category: Quantities & pricing
Prepared by Eng. Ahmed Fathy, Projects Manager ·
Definition
A unit rate is the cost of one unit of an item including materials, labour, plant, overheads and profit, such as the rate per cubic metre of placed concrete.
Why it matters on a project
Analysing the unit rate shows whether a price is realistic or loss-making, and it is the basis for pricing any extra quantity later.
Measurement and pricing
Unit rate = (materials + labour + plant) × (1 + indirect %) × (1 + profit %).
Worked example
Direct cost 300 SAR per m³, indirect 10% and profit 8%: 300 × 1.10 × 1.08 = 356.4, so 356 SAR per m³.
Common mistake
Pricing from a going market rate without analysis, so something like formwork, lifting or waste is forgotten.
Frequently asked questions
Why do unit rates differ between contractors?
Different material sources, labour productivity, overheads, profit margin and risk allowance.
Should unit rates be rounded?
Rounding to whole riyals keeps totals clear and easy to check.
Related terms
- Direct costThe sum of material, labour and equipment cost of an item excluding overheads.
- Indirect costs (overheads)Site and head-office costs not attributable to a single item, added as a percentage.
- Bill of quantities (BOQ)A list of work items with description, unit and quantity, priced item by item.
- Waste allowanceA percentage added to material quantities to cover cutting, damage and site loss.
Read next
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