In the schedule of rate break down, we have % breakup of Material, labor, plant and overhead & profit. For Ex: item “A”: Material – 70%, Labor-15%, Plant-15%, OHP-15% Totaling 100%.
Now we have a variation for a similar item as “A”.
We got the new quotation for the materials.
We submitted our variation to the consultant, saying that since the material cost is 70%. The new rate for the item will be (material cost / 0.7).
They replied back to us stating that such a calculation is unacceptable, since in doing so we will be getting 15% of the total rate as our OHP. Since the OHP is 15% of (Material + Labor + Plant).we will have to resubmit the variation in this format.
In such a case how will one work out the Labor & Plant component using the schedule of rate breakdown.
Your suggestions are welcome.
Now we have a variation for a similar item as “A”.
We got the new quotation for the materials.
We submitted our variation to the consultant, saying that since the material cost is 70%. The new rate for the item will be (material cost / 0.7).
They replied back to us stating that such a calculation is unacceptable, since in doing so we will be getting 15% of the total rate as our OHP. Since the OHP is 15% of (Material + Labor + Plant).we will have to resubmit the variation in this format.
In such a case how will one work out the Labor & Plant component using the schedule of rate breakdown.
Your suggestions are welcome.