Analysis of Rates (AoR)

Analysis of Rates (AoR) is the detailed cost breakdown document that shows how each unit rate in a Bill of Quantities (BOQ) is built up from its component costs: materials, labour, tools and plant (T&P), contractor overhead, and profit. AoR is both a pricing tool for contractors preparing bids and a verification tool for government engineers checking whether quoted rates are reasonable.

What is Analysis of Rates in government procurement?

In government construction procurement, every BOQ item has a "rate", the price the contractor quotes to execute one unit of that work item (per cubic meter of concrete, per metric tonne of steel, per square meter of plastering, etc.). The AoR breaks down how that rate is composed.

A standard AoR for a construction item follows this structure:

Materials: Each material required per unit of work, with quantity and current market rate. For example, for 1 cubic meter of M25 concrete: 8.5 bags of OPC 53 cement at Rs 380/bag, 0.88 cum of 20mm aggregate at Rs 1,200/cum, 0.44 cum of fine sand at Rs 1,800/cum.

Labour: Each category of labour required, with productivity norms (how many cubic meters per skilled mason per day) and applicable wage rates (state government notified minimum wages). For M25 concrete: 0.5 mason-day at Rs 900/day, 2 helper-days at Rs 600/day, 0.5 mazdoor-days at Rs 600/day.

Tools and Plant (T&P): Equipment costs, mixer, vibrator, transit mixer, calculated as hourly hire rate times usage hours per unit.

Sub-total (materials + labour + T&P): The prime cost.

Overhead (12-15 percent): Site overhead (site office, watchman, water supply) and head office overhead applied as a percentage of prime cost.

Profit (5-10 percent): Contractor's return on capital, applied after overhead.

Total rate per unit: The sum of prime cost + overhead + profit.

The CPWD publishes its AoR alongside the Delhi Schedule of Rates (DSR), providing the government's own AoR for every DSR item. MoRTH publishes the Standard Data Book (SDB) for highway items. These government AoRs serve as benchmarks, if a contractor's quoted rate is significantly above the government's AoR, the TEC will seek justification.

Why it matters for bidders

Building a correct AoR for each BOQ item is the foundation of competitive and profitable bidding. Contractors who rely on thumb-rule pricing ("bid 15 percent below my last similar contract rate") without AoR discipline consistently misprice, some items at a loss, others leaving money on the table.

The AoR also reveals which cost inputs are volatile (diesel, steel, bitumen) versus stable (labour, sand), informing which items benefit most from Price Variation Clause (PVC) protection.

Some government contracts require AoR submission as part of the financial bid, or the government may request AoR for specific high-value items post-bid. Having a defensible AoR for every item strengthens negotiation during contract discussions and arbitration of extra items.

Example

A contractor preparing to bid on a CPWD building contract prices the reinforced concrete BOQ item "Providing M30 grade RCC for column" at Rs 9,800 per cum. The AoR shows: cement Rs 3,200, aggregates Rs 2,100, steel formwork Rs 600, concrete mixer Rs 450, labour Rs 1,200, total prime cost Rs 7,550, overhead 15 percent Rs 1,133, profit 10 percent Rs 869, total Rs 9,552. The contractor rounds to Rs 9,800, building in a small buffer. The CPWD DSR AoR for the equivalent item is Rs 9,200, the quoted rate is within an acceptable margin and is not flagged as excessively priced.

Key rules / thresholds

• CPWD AoR (accompanying the DSR) is the benchmark for building works items; MoRTH SDB serves the same purpose for highway items.
• AoR for extra items (items not in the original BOQ that arise during execution) is the basis for pricing variation orders.
• For arbitration proceedings on rate disputes, AoR prepared at the time of bidding is primary evidence of the contractor's cost basis.
• Government engineers are trained to check AoR against current market rates and SOR rates during rate scrutiny.