Only one number in your rate is a price.

So let us build one. From nothing. One tonne of reinforcement, fixed in place.

Start with the only honest number

The steel costs $800 a tonne, delivered. That is a price. A supplier wrote it down, signed it, and will hold it for ninety days.

It is the last honest number you are going to see.

Because steel does not arrive as tonnes. It arrives as bars in stock lengths, and it leaves as bars cut to fit. The difference is offcuts, and offcuts are money you bought and then swept up. Call it five percent — $40 a tonne.

Then the things nobody draws: tying wire, plastic spacers, chairs to hold the top mat up. Eighteen dollars a tonne, and no drawing anywhere shows them.

Material: $858.00 a tonne. And we have not yet moved a single bar.

Now hire a gang

A chargehand, four steel fixers, two helpers. Twenty-eight dollars an hour, twenty-two, fourteen. Eight-hour day.

That gang costs you $1,152 a day and it costs you that whether they tie ten tonnes or nothing at all.

So the entire labour cost of your rate collapses into one question: how many tonnes will these seven men tie today?

The estimator wrote five.

Not because the drawing says five. Not because the contract says five. Because on a job in 2019 with a similar slab and a similar gang, it was about five, and he remembers it being about five.

$1,152 divided by 5 is $230.40 a tonne. There is your labour.

The plant nobody costs

The bars do not walk to the deck. The tower crane lifts them, and the tower crane is on the job whether it lifts them or not.

It costs $520 a day. Reinforcement is not the only thing it lifts — so the estimator allocates a quarter of it. $130 a day. Add the bar bending and cutting machine at $45.

$175 a day of plant, over five tonnes a day of output. $35.00 a tonne.

Notice what just happened. That number depends on the output too. The output is now in your rate twice.

The two coats of paint

Direct cost is $1,123.40 a tonne. That is what it costs to put a tonne of steel in the ground.

But there is a site around that gang. A site engineer, a foreman, an office, a fence, a generator, a security guard, a set of scaffolds, a first-aid room. None of that is in the rate yet, and all of it has to be paid for by the work — so it is spread across the rates. Twelve percent. $134.81.

And there is a company behind the site. Directors, estimators, accountants, a bond, an insurance policy, a bid you lost last month. Plus the reason anybody got out of bed: profit. Fifteen percent. $188.73.

$1,446.94 a tonne. That is the number that goes in the bill. That is the number the client accepts. That is the number that becomes your budget, your planned value, your valuation and, eventually, your CPI.

Which one will kill you

Go back to last week. The steel market moved $140 a tonne against us. Over 210 tonnes, that cost the project $29,400, and it was the headline of every cost meeting for a month.

Now leave the price alone. Leave the wages, the waste, the crane, the overheads — leave everything exactly where the estimator put it. Change one number.

The gang ties 3.5 tonnes a day instead of 5.

The rate goes from $1,446.94 to $1,593.44. Over the 200 tonnes in the bill, that is $29,300.

Read those two numbers again. A global steel market turning against you cost $29,400. A gang being a tonne and a half slower than one man's memory cost $29,300.

One of them was in the newspaper. The other one was not in any system you own.

Why this matters for a planner

You are going to spend the rest of this track being handed numbers that came out of a rate build-up like this one. A budget. A schedule of values. A planned value curve.

Every one of them is standing on that 5.

When your CPI drops in month four, there are only two possible explanations. Either the gang is underperforming against the estimate — or the estimate was a fantasy and the gang is doing perfectly well. You cannot tell the difference from a cost report. You can only tell it by knowing what output the rate assumed, and going out to the deck to count.

Almost nobody does. The rate build-up sits in a commercial folder, and the planner is told the budget is $289,388 and gets on with it.

Practical insight

Take the biggest work package on your job and ask the estimating team for one thing: the output assumption. Tonnes per day. Metres per shift. Cubic metres per pour.

Then stand on the deck for a day and count.

If you find a gap, you have found it in month two instead of month eight, and you still have a schedule left to change. If you find no gap, you have just turned your estimate into a measurement — and every forecast you make for the rest of the job gets better.

Either way it is the highest-value day you will spend all year, and it costs nothing but boots.

Key takeaways

✔ A unit rate is built, not looked up: material, labour, plant, then site overheads and margin.
✔ Steel at $800/t becomes $1,446.94/t once waste, gang, crane, prelims and profit are added.
✔ Only the $800 is a price. Waste %, gang mix, output, plant share and the two mark-ups are all opinions.
✔ Output is the killer: it divides labour and plant, so it lands in the rate twice.
✔ A 1.5 t/day productivity miss cost $29,300 — the same as the entire steel market moving $140/t.
✔ The rate is a bet on a gang. Nobody in the contract ever signed for it.
✔ Find the output assumption behind your biggest package, then go and count. It takes one day.

What is coming next

We just built a rate to the cent. $1,446.94. Two decimal places of complete confidence.

And it was priced off a drawing that said “reinforcement to engineer's detail” on a project where the foundations had not been designed.

Next week: how accurate an estimate is allowed to be, why a number carried to the cent can legitimately be wrong by half, and the costs that never appear on any drawing at all.