Estimates and Check on Estimates
Note: Replace the figures with the latest amounts please.
1.
What is an Estimate?
Estimate: An Estimate is a statement, showing the items of work, materials, required with its
cost and labour and other charges for carrying out a particular work. There
are seven kinds of estimates prepared on railway at different stages and for
different purposes.
2. Why
and how is an estimate prepared?
An estimate is prepared to arrive at
approximate total expenditure required to carry out a particular work and also
to get an idea of the expenditure to be
incurred on a work in order to obtain
the sanction of the competent authority and also to see that the work is financially justified. Through the estimate the authority competent to give administrative approval to the
expenditure proposed to be incurred is
determined who after thorough examination as to its necessity, utility and financial prospects, is also able to
find out if funds are available for
the work and when sanctioned , is to
control expenditure against the same.
There are seven kinds of estimates
prepared on railway at different stages and for different purposes. Different
forms are prescribed for them. In the estimate, items of work are shown, then
material required for the same along with its cost and then labour and other
charges are shown. The allocation is
also shown. Report and justification
for a work are also given at the bottom of an estimate. Remarks of the Accounts officer are also given.
3. For what works
estimates need be prepared?
All proposals for,
- The construction of new
works or purchase of new assets,
- The renewals and
replacements of existing works or assets chargeable to DRF/DF/RSF/SRSF and
Capital Fund when estimated to cost more than Rs.50,000/-,
- The renewals and
replacements of existing works or assets chargeable to Revenue when
estimated to cost more than Rs.2 lakhs,
- The scrapping, dismantlement
or abandonment of existing works or assets,
- Temporary and experimental works,
- Renewals of ballast,
should, ordinarily be scrutinized by the authority competent to
sanction them before any expenditure or liability is incurred thereon. This
scrutiny is exercised through what are called Estimates for the works.
4. Name the different kinds of Estimates
prepared for works on Railways?
The following are the different types of Estimates prepared
for works on Railways:
For Open Line Works:-
(a) Abstract Estimates.
(b) Detailed Estimates.
(c) Supplementary Estimates.
(d) Revised Estimates.
For
Construction of New Line Projects:-
(e) Project Abstract Estimates.
(f) Construction Estimates.
(g) Completion Estimates.
5. When can a work be commenced without
Estimate?
(i)
Works which are considered to be urgently necessary
to safeguard life or property or to repair
a damage to a line caused by
flood, accident or other unforeseen contingencies, so as to restore or maintain through communications.
(ii) a) For "New Minor Works" costing Rs.50,000/- and less,
b)
for renewals and replacement works chargeable
to Revenue costing Rs.2 lakhs and less and
c) for "Reconditioning Works" costing
Rs.1lakhs and less
detailed
estimates need not be prepared for formal sanction. Rough estimates should be
prepared and kept on record by the
Executive Engineer.
6. What
are the estimates prepared for open line works? Explain each of them in detail?
The following are
the different Estimates prepared in connection with Open Line works:
(a) Abstract Estimates.
(b) Detailed
Estimates.
(c) Supplementary
Estimates.
(d) Revised
Estimates.
Abstract Estimates: (AE) (702 E)
1. An
abstract estimate is prepared in order to enable the authority competent to
give administrative approval to the expenditure of the nature and magnitude
contemplated to form a reasonably
accurate idea of the probable expenditure and such other data sufficient to
enable authority to gauge adequately the
financial prospects of the proposal.
2. It avoids the expenses and delay of preparing
estimates for works in detail at a stage when the necessity and the general
desirability of the works proposed have not been decided upon by the competent
authority.
3. It
should contain a brief report and
justification for the work, specifically should mention whether funds are
required in the current FY and to what extent.
4. It
should also show the cost sub-divided
under main heads and sub-heads or specific items, the purpose being to
present a correct idea of the work and to indicate the nature of expenditure
involved.
5. The allocation of above items as between
Capital, DRF, DF etc., should be indicated.
6. Administrative
approval to a work should be accorded by the authority competent to do so after
a thorough examination as to its necessity, utility and financial prospects.
7. In
regard to works which are specified in the sanctioned budget of a year i.e., in the "Works,
Machinery and Rolling-stock Program" accompanying the Budget Orders, the
total estimated cost shown against each work should be regarded as the AE.
8.
The inclusion of a work in the sanctioned budget should be deemed
to carry with it the administrative approval of the Railway Board except that
in the case of structural works, other than track renewal works, costing more
than Rupees one crore each, the administrative approval of the RB should be
obtained by submission of separate AE notwithstanding their specific inclusion
in the sanctioned budget.
Detailed
Estimate:(DE) (703 E)
1. On receipt of administrative approval to a project or scheme other than
for the construction of new line, conveyed through the sanction to the AE
relating thereto, detailed estimates for
various works included in the AE should be prepared and submitted for technical sanction of the
competent authority.
2. It should be prepared in sufficient detail to enable the competent
authority to make sure that the abstract estimate sanctioned by a higher
authority is not likely to be exceeded.
3. No work included in an abstract estimate should be commenced till a
detailed estimate for the same is prepared and sanctioned and adequate funds
are allotted by the competent authority.
4.
The detailed estimate of an open line
work will comprise
(i) Statement is showing
details of estimated cost and
(ii) An outer sheet giving
the abstract of cost of work, the report, the financial justification
and the allocation.
5. Technical Sanction – The sanction of the competent authority to the
detailed estimate of a work is called the “technical sanction”. The authority
according technical sanction should satisfy itself that
(i) the
details of the scheme as worked out are satisfactory,
(ii)
the method proposed for the
execution off the work are adequate; and
(iii) the
cost has been estimated from reliable data and likely to be reasonably accurate.
6.
6.
In the case of works within his power of sanction,
the General Manager may, in lieu of the
procedure of preparing Abstract Estimates for administrative approval, prescribe that both the administrative approval and the technical sanction should be
accorded on the detailed estimates.
Supplementary Estimate: (SE)
(707 E)
1.
A supplementary estimate should be prepared for any item of work, which
ought to have been included in the first instance in an estimate already
sanctioned but has not been so included, or which it is found later, should be
considered as being a part of an estimate already prepared and sanctioned, if it cannot be met out of contingencies.
2.
Such a supplementary estimate should be prepared in
the same form and the same degree of detail as the main estimate and for all
purposes be treated as a part of the main
estimate.
Revised Estimate: (RE)
(708 E & 1136 E)
1.
As soon as it becomes apparent that the expenditure on a work or Project is likely
to exceed the amount provided there for in the detailed estimate or
construction estimate a revised estimate should be prepared and submitted for
the sanction of the competent authority.
2. It
should, unless otherwise ordered by the sanctioning authority, be prepared in
the same form and the same degree of detail as the original estimate, and
should be accompanied by a comparative
statement showing the excess or saving under each sub-head of account against
the latest sanction.
3.
In cases where a supplementary estimate or a
previous revised estimate has been sanctioned by the Railway Board, it should
be made clear how the original sanction has been modified by such further
sanctions.
4.
In cases where the work is in an advanced stage and is likely to be completed before a
revised estimate can be got out, the excess may, with the prior approval of
the competent authority, be dealt with in
the completion report of the work.
5.
The fact that a competent authority has permitted
the regularization of excess over an estimate through the completion report
should invariably be intimated to the Accounts Officer.
7. What are the estimates which are prepared in
connection with New Line, or construction
project? Explain each in detail.
The following are the
estimates prepared for construction of new line projects:
a)
Project Abstract Estimate,
b)
Construction Estimate and
c)
Completion Estimate.
Project Abstract Estimate: (PAE) (709 E)
1. This is
an abstract estimate for a Construction
project. It should be prepared in Form E. 554 and submitted for the approval
of the Railway Board.
2. It
should show the Abstract cost of
Railway, for the whole line by each
section of the line. It should be accompanied by
(i) an abstract estimate of junction arrangements,
(ii) a narrative report explaining the salient
features and major items of
expenditure
(iii) detailed
estimates on Form E. 553 showing the cost
of construction of the projected railway under various heads of Capital classification viz. –
a) Capital-1120-Land
b) Structural Engineering Works :-
1132--Tunnels, 1151 & 1152-Major Bridges, 1153
& 1154Minor Bridges, 1140 Ballast and Permanent-Way (Detailed estimate for
one Kilometre).
c) 2000
--- Rolling Stock
d) 1180
& 1190-General Charges - Establishment and General charges - Other than
Establishment.
Ø Note(i)
:- Head shown above are for plan
Head `New Lines' as an example.
These detailed estimates
should be prepared from an engineering
survey report.
Ø Note
(ii):- The abstract estimate of an
unremunerative project chargeable to Development
fund will be prepared in the same detail as the abstract estimate for a construction project chargeable to
Capital.
Construction Estimate: (CE)
( 710 E)
When
it is decided to undertake the execution of a new line, gauge conversion or
doubling of lines, a final location
survey should be made; and based on
the information collected in that survey detailed estimates of all the works included in the project as a
whole should be prepared. These detailed estimates are collectively called the "Construction Estimate" of the
project.
1.
It should be prepared after a careful examination of the various details of construction involved
in the project.
2.
It should be in such detail as to render it possible to dispense with working estimates or any
other further estimating after the construction estimate has been sanctioned
(except when supplementary or revised estimates are necessary).
3. It should
provide for the buildings and equipment
of the railway up to a standard that will be sufficient for working such
traffic as may be expected during the first year or two after opening of the
line.
4. It is the basis on which technical sanction
to the various works included in the construction of a project is accorded.
5. In
special cases where works are required to be commenced before the earliest date
by which detailed estimates for the project as a whole could be prepared and
sanctioned, part estimates for sub- works
may be prepared. To enable the commencement of work on such works forming a
part of the project, part estimates for the following sub-works may be
sanctioned progressively by the authority competent to sanction the detailed
estimate for the whole project :
(i)
Preliminary
works including final location survey etc.
(ii)
Setting
up of project offices and organisation including office accommodation, construction equipment minimum vehicles
and provision for gazetted and non- gazetted
staff etc.
(iii) Land acquisition
(iv) Formation and bridge works for whole or
part of the project where survey has been
done and alignment determined.
(v)
Minimum
service buildings in case of new line works required to meet immediate needs of construction
organisation and subsequently required for operation
of the project.
(vi) Minimum residential quarters required to
meet immediate needs of construction staff.
The number and location of quarters should be within the overall requirement of Open Line for operation of
the project.
6. Before
forwarding part estimates duly concurred by FA & CAO and approved by
General Manager for sanction to the Rly. Board, it should be certified that no works included in the part estimates are likely to
become redundant when estimate for the whole project is prepared.
7.
The Construction Estimate of project should be
prepared in Form E. 553 prescribed for the purpose. It should be divided into convenient
sections in accordance with the following principles:
a)
When, as is usually the case, certain works within
the limits of a junction station are incidental to the project, these works
should form a distinct section;
b)
When a project comprises a "main line" and
a "branch", the "branch" should form at least one distinct
section;
c)
Where the country traversed by a line is such that
it may readily be divided into tracts of distinctive topographical character,
the length through each class of country may comprise a section or a project
may be divided into "engine runs" or into lengths suitable for
"construction divisions".
d)
Where there is likelihood of different sections of a
project being opened to traffic at different intervals, the estimate for each
such section should be kept distinct;
e)
When an estimate for any alternative alignment of
importance is included, the estimate for the alternative alignment and for the
length which it would supersede, if adopted, should each be comprised in a distinct
section.
1. A completion Estimate is prepared
in supersession of a construction estimate.
2.
In the case of Railway Projects costing over rupees one crore, the
Construction or Abstract Estimate should be closed at the end of one of the first three financial half years after the
date of "opening" as may be convenient and a "completion
estimate" prepared.
3.
The completion estimate is a "stock taking estimate", and all works not started on that date are
excluded from the scope of the project and are to be dealt with separately.
The financial half year in which the project is opened should be excluded for determining the date of closing of
project estimate and preparation of completion estimate.
4. Completion estimate should show in a tabular form (E. 713) the following particulars in
respect of all the works included in the construction estimate :
(i) amount
of sanctioned estimate;
(ii) actual
expenditure on all works up to the date of closing of the construction estimate;
(iii) commitments
on that date;
(iv) anticipated
further outlay;
(v) total
estimated cost [ (ii) to (iv) ]; and
(vi) difference
between the sanctioned estimate and the estimated cost [ (v) – (i) ].
5. It is accompanied by
an Abstract under Capital classification of heads if there is any Material
Modification, requiring Rly. Board’s sanction. Explanations for excesses
of not less than Rs. 10,000 or 10 per cent over the provision under sub-heads
of account and for savings of 20 per cent or one lakh, whichever is less,
occurring under any main head of account.
6. Provision for further outlay should be made in completion estimate only
for those works which are in progress or completed on the date of closing of
the construction estimate.
8. What are the main points to be seen in the
verification of estimates for works by the Accounts?
(741 E to 748 E)
One phase of the control of expenditure on railways is a
regular check by the Accounts Officer of all the estimates before they are
sanctioned by the competent authority. The object
of this preliminary check of estimates is to avoid irregular sanction to
expenditure and the main points which require consideration are:
(i)
The propriety of
the expenditure;
(ii)
The incidence and
classification of charges;
(iii)
The existence of
budget provision to meet the proposed expenditure during the FY
(iv)
Freedom from
errors and omissions and
(v)
Competency of
sanction.
Propriety of Expenditure.
1.
It
is the duty of the Accounts Officer, in his capacity as Financial Adviser, to examine
zealously all proposals for expenditure with a view to see
(i)
that
the expenditure proposed to be charged to railway funds in the estimate, is properly
and legitimately so chargeable;
(ii)
that
proper financial justification is
forthcoming in the case of all works requiring such financial justification; and
(iii) that in the case of estimates for
staff quarters and other rent returning building, the anticipated yield
of rent as shown in the `Rent Statement' will not have the effect of reducing the return on the cost
(excluding cost of land) of each class of Quarters
to less than 6 per cent per annum.
Incidence
and Classification of Charges.
1.
These should be verified in an estimate in
accordance with the rules of incidence
and
the
classification of expenditure prescribed in the Indian Railway Financial Code. In
his verification certificate, the
Accounts Officer should clearly state that incidence and allocation have been so verified.
2. The
submission of an estimate to the sanctioning authority should not be delayed
when there arises any doubt as to the correct allocation of estimated cost and
the question at issue will take time to settle. In such cases, the approximate
allocation between Capital or Development Fund, Open Line Works-Revenue,
Depreciation Reserve Fund and Revenue may be certified by the Accounts Officer,
as far as it is possible for him to do so, and the sanctioning authority may
sanction the estimate, if otherwise in order, leaving over the question of
allocation for subsequent consideration.
If the estimate of the work is
altered as a result of verification of the estimate by the Accounts officer, the previous
sanction should be revised.
Budget
Provision:
1.
The existence of budget provision for a proposed
work should be verified from the
sanctioned budget allotments for the year.
2.
In case no funds exists, competent authority should
be asked to arrange for funds before the work is actually taken in hand.
Freedom
from Errors and omissions:
1. Errors and omissions noted in the
course of the accounts Verification of estimates should be got corrected by the executive authority responsible for the
preparation of the estimate.
2. The
Accounts Officer may, in case where this becomes necessary, append to his verification certificate, a
check note specifying such items of errors or omissions as have been pointed out by him, but have not
been accepted by the executive authority and any other matter of importance.
Competency
of Sanction:
The
previous sanction of an authority higher than the General Managers of Indian Railways is necessary :
(i) To
expenditure on new lines or rolling stock or surveys not provided in the
sanctioned budget for the year or
carried forward from the sanctioned budget of the previous year;
(ii) To expenditure on other works not provided
in the sanctioned budget or carried forward from
the sanctioned budget of any previous year except :
(a) (i) Track renewal works costing not more
than Rupees two lakhs;
(ii) Other
works costing not more than Rupees one lakh;
(iii)
Machinery & Plant-costing not more
than Rupees fifty thousands.
Provided
that the total lump-sum provision made in the budget for such works is not exceeded;
(b) (i) On line capacity works costing above
Rupees one lakh but not more than Rupees ten lakhs each;
(ii) On
track renewal works costing above Rupees two lakhs but not more than Rupees
five lakhs each;
(iii)
On other than line capacity and
track renewal- works costing above Rupees one lakh but not more than Rupees five
lakhs each;
Subject
to ceiling of Rupees one crore in all in a financial year provided that the sanctioned budget (other than lumpsum) for
works in these categories is not exceeded.
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Closing the Accounts
of a Project:-
Those
items of work which were in progress at the time of closing of Construction of
Abstract estimate should be got completed and the accounts of the project should
be closed as soon as possible. Executive Engineers in charge of project should
therefore take prompt action to bring to
account all charges and credits pertaining to the projects. They should before closing the accounts of a
project, take steps to liquidate all outstanding liabilities, clear suspense
balances, pay up all outstanding contractor’s claims and dispose of all surplus
stores and tools and plants
returned from works. After all charges and credits relating to the project have
been booked in the accounts of the project a Completion Report of the
project should be prepared.
Project Completion Report:-
a) The object of a Completion
Report is to compare the cost of work actually constructed with those provided
in the last sanctioned estimate.
b) The completion report of a project duly
verified by the Accounts Officer, should be submitted to the
Railway Board within 18 months after the end of the financial half year in
which the completion estimate is submitted. It
should state the expenditure in the same details as the abstract
estimate sanctioned by the Railway Board and should indicate any material
modifications thereto.
The
Completion Report should be prepared in the following form and brief
explanations should be furnished for: -
(i) excess of not less than 10 per cent or
Rs. 25,000 whichever is less over the estimated provision under each sub work;
(ii) saving of not
less than 20 per cent or Rs.1 lakh whichever is less, occurring under any
sub-work.
Excess Over Estimate:
Sanction to an estimate means
that Competent Authority has permitted to spend specific amount on a particular
work. During the course of execution of a work when it appears that estimated
cost is likely to exceed, steps should be taken to revise the estimate if the
work is not at advance stage and further expenditure should be restricted to
the extent possible until revised estimate is sanctioned or sanction for the
excess is obtained from the Competent Authority. In case work is at advanced stage,
the excess expenditure may be regularized by preparation of variation Statement
(revised cum completion statement ) and obtain the sanction of Competent
Authority. In such cases the expenditure to be computed on the basis of gross
estimated cost and gross expenditure on the scheme as a whole.
On deposit works and M.
Remittance works, if it is noticed that the expenditure is likely to exceed the
estimated cost and also deposit made by the parties, and the amount accepted by
other Government departments, the expenditure should forthwith stopped until
and unless the requisite amount is deposited by private bodies or amount
accepted by other Government Departments.
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