What is Analysis of Rate and Why it is Required

The method of determination of rate per unit of a particular item of work considering the cost of quantities of materials, the cost of labourers, hire of tools and plants, overhead charges, water charges, contractors profit etc., is known as rate analysis or analysis of rate. Rates of materials are usually taken as the rates delivered at the site of work and include the first cost (cost at origin), cost of transport, railway freight (if any), taxes etc. It the materials are to be carried from a distant place, more than 8 kms, additional cost of transport may be added. A contractor's profit is added on all items of the particular work which have been arranged by him. The rates of materials and labour vary from place to place and therefore the rate of work derived stands for that place.

PURPOSES OF RATE ANALYSIS

The main purposes of rate analysis are as follows.

1. To determine the current rate per unit of an item of work at the locality.
2. To examine the viability of rates quoted by contractors. 
3. To ascertain the quantity of materials and labour strengths required to complete the project.
4. To revise the schedule of rates due to increase in the cost of materials and labour or due to changed situations.