Preparing accurate day works accounts is a critical task for Quantity Surveyors managing construction projects in Kenya. Day works arise when work is ordered by the client or their agent on a time and materials basis rather than a fixed price, often due to unforeseen circumstances or variations. Proper determination of plant, materials, and labour costs ensures fair compensation while controlling project expenditure. This chapter focuses on how to systematically evaluate these costs to produce reliable day works accounts that support transparent contract management.

2.1 Determination of Plant, Materials and Labour Costs

Determining costs for plant, materials, and labour is fundamental in preparing day works accounts, as these elements constitute the core inputs to the work performed. Quantity Surveyors in Kenya must adopt precise methods to assess the actual consumption and usage rates, ensuring that costs reflect the true value of resources deployed on site. This process involves understanding contract provisions, market rates, and site conditions to avoid disputes and maintain financial control.

2.1.1 Establishing Plant Costs for Day Works

Plant costs refer to the expenses related to the use of machinery and equipment required to execute construction activities under day works. In Kenya, plant hire rates can vary significantly based on availability, type, and operational efficiency, making accurate cost determination vital to reflect actual usage.

Components Influencing Plant Costs

• Hire Charges: This is the basic cost paid to rent the equipment, usually expressed as a daily or hourly rate. For example, a contractor working on a county government road project must verify prevailing hire rates for excavators to avoid overcharging.
• Operating Costs: Includes fuel, lubricants, and operator wages directly linked to the plant’s operation during day works. These costs fluctuate with machine efficiency and site conditions.
• Maintenance and Repairs: Costs incurred to keep the plant in working order during usage periods, which must be apportioned fairly for day works.
• Depreciation: Represents the wear and tear or reduction in value of owned plant over time, calculated proportionally for the period used in day works.
• Idle Time Charges: Sometimes plant may be on site but not in use due to delays; contracts often specify whether idle time is chargeable, requiring careful documentation.

Methods to Calculate Plant Costs

Plant costs are commonly calculated using either the Actual Cost Method, where all expenses are tracked and allocated, or the Schedule of Rates Method, which uses pre-agreed daily or hourly rates. The Quantity Surveyor must ensure that whichever method is applied aligns with contract terms and that records such as logbooks, fuel receipts, and maintenance invoices are maintained.

2.1.2 Assessing Materials Costs in Day Works

Materials used in day works must be valued accurately to reflect the true cost to the project without inflating expenses. Kenyan construction sites often face challenges such as price volatility and supply delays, making careful cost assessment crucial.

Factors Affecting Material Cost Determination

• Purchase Price Verification: The Quantity Surveyor must confirm actual purchase prices from supplier invoices rather than relying on estimated or catalogue prices.
• Waste and Loss Allowance: Materials inevitably incur wastage during handling and use; contracts typically specify a percentage allowance that must be applied to avoid overpayment.
• Transportation and Handling: Costs to deliver materials to site and move them to the point of use are part of the materials cost and must be included in day works accounts.
• Storage Costs: If materials are stored on site before use, costs such as security and protection from weather should be considered.
• Quality and Specification Compliance: Materials must meet contract specifications; substandard materials may reduce cost claims or require replacement, impacting the day works valuation.

The Quantity Surveyor should maintain a detailed bill of materials issued for day works with supporting delivery notes and supplier invoices to substantiate costs.

2.1.3 Calculating Labour Costs for Day Works

Labour costs typically constitute a significant portion of day works accounts and require thorough documentation and validation. In Kenya, labour rates can vary by region, skill levels, and union agreements, impacting the final cost determination.

Elements of Labour Cost Calculation

• Basic Wages: The agreed daily or hourly wage rates for different categories of workers, from skilled artisans to general labourers, must be accurately recorded.
• Overtime and Shift Allowances: Additional payments for overtime work or night shifts must be included if applicable and supported by time sheets.
• Social Security and Statutory Contributions: Employers’ contributions to NSSF, NHIF, and other statutory deductions form part of the labour cost and must be accounted for.
• Subsistence and Transport Allowances: Some contracts allow reimbursement for worker meals and transport, which should be included if expressly provided.
• Supervision and Management Labour: Costs for supervisory staff directly involved in day works, such as site foremen, must be apportioned appropriately.

Labour costs are generally supported by attendance registers, pay slips, and payroll records. The Quantity Surveyor must ensure that these documents are consistent and reflect actual hours worked on day works activities.

2.1.4 Integrating Plant, Materials, and Labour Costs into Day Works Accounts

Accurate day works accounts require integrating costs of plant, materials, and labour into a coherent and verifiable document that aligns with contract requirements. This integration is essential for transparent contract administration and dispute avoidance.

Steps in Preparing Integrated Day Works Accounts

1. Collect Supporting Documentation: Gather invoices, hire agreements, payroll records, delivery notes, and site diaries related to day works.
2. Verify Quantities and Usage: Cross-check quantities of materials issued, plant hours logged, and labour hours recorded against site records and supervision reports.
3. Apply Contract Rates and Allowances: Use contract-specific rates, allowances for waste, idle time, and statutory contributions as stipulated.
4. Calculate Individual Cost Components: Compute plant, materials, and labour costs separately using verified data and agreed formulas.
5. Summarise Total Day Works Cost: Aggregate the individual components into a final day works account, ensuring all calculations are transparent and traceable.
6. Present for Approval and Payment: Submit the day works account to the client or contract administrator for review and approval, accompanied by supporting evidence.

Example: At a county hospital expansion project, the Quantity Surveyor compiled day works accounts for unforeseen drainage repairs by meticulously recording plant usage from excavator logbooks, material deliveries from supplier invoices, and labour attendance from site registers, ensuring the client paid only for verified work.

Chapter Summary

This chapter focused on the preparation of day works accounts within project contracts management. It began by examining the determination of plant, materials and labour costs, highlighting how accurate cost assessment ensures fair compensation for resources used on site. The chapter then explored the calculation of profits and overheads, emphasizing the importance of including these elements to maintain the financial viability of the contractor. Understanding how to quantify both direct costs and indirect expenses allows for transparent and justifiable day works claims. The content underscored the need for precise record-keeping and cost allocation in managing day works effectively. By mastering these processes, project managers and contractors can safeguard project budgets while ensuring timely payment for additional work executed.