PPA2007 Chapter-2, Section 5, sub-section (2) page 7

5. Cost Estimate to be Prepared:

(1) A Public Entity shall have to prepare a cost estimate as prescribed for any procurement whatsoever. Provided that a cost estimate shall not be required for any procurement valuing up to twenty five thousand rupees.

(2) A Public Entity shall update as prescribed the cost estimate prepared pursuant to Sub-section (1).

PPR 2007, Rule 9, Sub-Rule(1) and (2), and Rule 10, Sub-Rule (1) to (7) pages 8 to 10

9. Matters to be Taken into Account in Preparing Cost Estimate:

(1) A Public Entity shall have to take the following matters into account in preparing cost estimate of any procurement:-

• Whether the whole procurement works may be carried out through a single contract or a separate contract requires to be concluded for each work,
• Whether the procurement contract requires to be renewed or not,
• Other procurement options , if any,
• Maximum cost and time that may require to complete the work under the procurement contract; and
• Other matters prescribed by the Public Procurement Monitoring Office as required to be taken into account by the Public Entity in preparing cost estimates.

(2) While preparing cost estimates, the Public Entity shall have to prepare and include separate items for mobilization and demobilization cost, insurance, facilities to be provided to the consultant, quality testing, profession related health and safety as built drawing, commission cost for performance security etc

10. Cost Estimate of Construction Works:

(1) A Public Entity shall have to prepare the cost estimate of construction works, subject to Rule 9.

(2) While preparing the cost estimate of a construction work for construction related works items like , archaeological excavation, underground works such as tunneling, deep tube-well, petroleum exploration, where there exist norms these to be used and where there are no such norms, the required norms shall be prepared, and get approved from the Government of Nepal, Council of Ministers and the cost estimates shall be prepared accordingly.
Provided that while carrying out the work according to such norms, if a specific type of norm is required for a specific work, the chief of the concerned Public Entity shall get the required norms prepared from the technician of such entity and if the entity does not have such a technician, from the concerned technician of other Public Entities and may cause such norms to be approved from the Departmental head. The norms so approved shall be sent to the Construction Entrepreneur Development Council within one year.

(3) While preparing cost estimate pursuant to this Rule, the Public Entity shall have to fix time period required to complete construction work having studied whether the goods are available at the site or not.

(4) In the course of preparing cost estimate, the Public Entity shall have to fix the rate and price of cement, iron rod, bricks, stone, soil, corrugated sheet, bitumen, and emulsion, fuel, polythene pipe, G.I. pipe, D.I. pipe, sanitary goods, electrical goods, G.I. wire and such other construction materials, rent of machine and equipment or the wages of laborer on the basis of the rates fixed by the Rate Fixation Committee.
Provided that if the rate of Rate Fixation Committee is not available, the rate shall be fixed on the basis of the rate fixed by the concerned nearby government office or an institution, authority, corporation of government undertaking or other organization of similar nature or the rate, rent or wage provided by the Chamber of Industry and Commerce.

(5) In cases where the rate and price, rent or wage under Sub-rule (4) too is not available, such rate shall be fixed on the basis of the rate, rent or wages specified by the Departmental head.

(6) The Public Entity shall have to get the cost estimate including the drawing and design of construction work prepared pursuant to this Rule, examined from the technician or a group of technician one level higher in rank than that of the technician who has prepared such cost estimate and if an error is found, they shall have such error corrected. If such entity does not have such higher level technician, the Departmental head shall have to make arrangement for the examination of such cost estimate.

(7) The cost estimate of a construction work shall have to be prepared in the format of Schedule-1.

PWD Part II,Procedural Dirdctives, Chapter 7 Engineering Design page 7-6,

Step 7. Preparation of Engineering Cost Estimate

For large projects blind adoption of official prices of materials and labourers is discouraged
while the realistic market prices are encouraged. For small projects and User's Committees
official rates may be adopted. The following guidelines shall apply to the engineering designlevel
cost estimate:

• The quantities of the civil works should be computed on the basis of the detailed plan, design profiles and cross-sections following the standard methods of measurement.
• The quantities of metal work, electrical and mechanical parts will be as per the schedule contained in the design drawings, plans and their specifications.
• The rate analysis for the civil engineering items will be made following the unified norms and market prices of construction materials, labour and equipment hiring rates.
• The rates for civil engineering items shall be verified with the mean rates of prevailing contract prices of the last 5 years in the sector and geographical region.
• The rates of metal parts, electrical and mechanical parts will be based on the quotations from reputed prospective suppliers as per detailed specifications.
• The costs will be broken down into local and foreign currency components. It will also be further broken down into direct cost, taxes, physical and price contingencies.
• Detailed schedules of rates of labour and material, analysed equipment hiring rates, analysed item rates, quoted equipment prices etc. shall be properly documented as the engineer’s cost estimate. These shall be kept confidential during the procurement of works and goods.
• The engineer’s cost estimate shall be approved by the responsible authority under FAR before proceeding with procurement of works and goods.
• The engineer's rate analysis shall be kept confidential during tender evaluation process. However, total estimated cost may be disclosed to bidders.