The total cost of ownership equals quality, service, delivery and price.
Would you pay a higher price if it bought a lower cost? For contractors and specifiers, there is a big difference between price and cost. While price is but one element of cost, it is the initial, most visible and the easier of the two to understand. Focusing on price is not a preferred strategy in any business, especially where high-quality, reliable manufactured goods are concerned. Instead, for precast concrete products, the focus should be on the Total Cost of Ownership (TCO).
How is TCO calculated? The Total Cost of Ownership is equal to the sum of the four cost components: quality, service, delivery and price.
In terms of cost elements, a distinct advantage of precast concrete over cast-in-place (CIP) is speed of delivery and ease of installation, or service. Both contribute directly to lower Total Cost of Ownership. Precast concrete, especially when produced in certified plants, boasts the additional benefit of higher quality. Controlled batch proportions placed under uniform conditions consistently creates a better product than can be cast in place. For illustration purposes, we will use an ordinary precast underground structure.
On the construction site, scheduling is an important, unpredictable and expensive risk. Nature stacks the cost odds against CIP concrete. It is a much quicker and less risky choice to have the precast delivered and installed the same day rather than excavate, form, pour and strip the CIP concrete, cure, damp proof and backfill. Given the cost matrix in Example 1, it could save six days in construction scheduling.
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Example 1 – Cost Comparison of Precast to Cast in Place Concrete
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||
| Operation |
Precast
|
CIP
|
|
Number of Days
|
Number of Days
|
|
| Excavate, Backfill, Connect, etc. |
Same
|
Same
|
| Pour, Cure, Strip Base |
1
|
2
|
| Pour, Cure, Strip Walls |
2
|
|
| Pour, Cure, Strip Top |
2
|
|
| Damp proof all Exterior Surfaces |
1
|
|
| Install on site |
Additional
|
Included
|
| Total Duration in Days |
1
|
7
|
| Price (Furnish and Install) |
$2,000.00
|
$1,400.00
|
| Total Cost of Ownership (TCO) |
$2,400.00
|
$1,400.00 + ???
|
For illustration purposes, consider a typical below-grade structure. For the inside dimensions of a 4-by-8-by-4-foot structure of either precast (6 inches thick) or CIP (8 inches thick), assume these facts:
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CIP requires three separate days to pour the base, walls and top. Curing and stripping adds one day to each step, requiring six days to cast on site.
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Damp proofing adds one day to the CIP process, totaling seven working days of open-hole time.
-
Allowing an average $350 per cubic yard for small jobs (ready mix, rebar, mastic, labor and equipment), the 4 cubic yards of CIP required prices out at $1,400.
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Precast takes only one day to deliver and install, including backfill of the pre-damp proofed unit.
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The precast alternative to produce and truck to the job site prices out at $2,000.
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Installing the precast requires a four-hour minimum charge of $400 for a 20-ton crane.
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Hardware costs for fittings, embedded items, etc., are identical for precast and CIP.
The TCO of precast is fixed at $2,400. However, the TCO of CIP is just beginning at $1,400. That raises the question among doubters as to why a contractor would spend more for precast. But many savvy contractors and specifiers recognize that their costs are actually less with precast.
The six days of additional scheduling are required by the mechanics of pouring and curing concrete on site. The work could be done off site in a quality controlled precast plant while other work on site progresses. Even if a contractor has a concrete crew doing multiple projects on site, the efficiency gained by substituting as much precast as possible cannot be ignored.
A contractor saves money for every minute he or she is ahead of schedule. If a $1 million contract yields a 10 percent profit margin and can be completed in 10 months, that equates to $10,000 per month, or $333 per day in profit. Saving six days means an additional profit of 6 x $333 or $2,000. Furthermore, that savings is compounded by the elimination of general conditions costs of about $500 per day for the burden of supervision, insurance, fixed and variable job site costs, etc.
And these are just actual costs. Add to this the avoidance of liquidated damages, and the cost advantage of precast concrete becomes the overwhelming choice. The cost advantages are summarized in Example 2.
| Example 2 – TCO of Precast vs. Cast-in-Place Concrete | ||
|
Cost Element
|
Precast
|
CIP
|
| Price |
$2,400.00
|
$1,400.00
|
| Cost of Additional Time (Delivery) 6 days at $333 Discounted 50% for conservatism Cost Savings Additional Time |
$0
-$0 $0 |
$2,000.00
-$1,000.00 $1,000.00 |
| Cost of General Conditions (Service) 6 days at $500 Discounted 50% for conservatism Cost Savings Additional Time |
$0
-$0 $0 |
$3,000.00
-$1,500.00 $1,500.00 |
| Total Cost of Ownership (TCO) |
$2,400.00
|
$3,900.00
|
The price of precast concrete may have been 75 percent higher than CIP, but its Total Cost of Ownership was actually about 45 percent lower, making it the clear low-cost choice.
This cost comparison offers a best-case scenario for CIP. Some of its built-in problems include the coordination of trades required to pour concrete on site, especially in union-intensive areas. Four separate trades could be involved, thereby adding cost, confusion and unnecessary risk of downtime to accommodate carpenters to form and strip, rod busters to place rebar, laborers to pour concrete and finishers to damp proof. Other problems associated with CIP concrete are poor quality control associated with additional water, untimely deliveries and placement problems, all of which are eliminated by the precast option. Add to all this the problems associated with keeping a hole open – such as water infiltration, accidents, frozen ground and temporary heat in cold weather – and the choice of precast looks even better.
A proven strategy for increased sales, growth in market share and greater profitability is to capitalize on the low-cost advantages. Precast is the better mousetrap at a lower cost. Make the TCO strategy a part of every contract. You are seeking the best value, and by definition the best value is the lowest Total Cost of Ownership.
Robert Menard is a construction industry expert and a professional speaker. Reach him at 214-513-8484 or visit his website at www.RobertMenard.com.
please reply me or send a complete details of precast concrete ….what is the machinary cost in india?,when making or manufacturing ,the plant of precast concrete .
please suggest me.i am intrested and purchase this machine and produced…so plzzz
i am an civil engineer…
Precast doesn’t require a tremendous investment to get started, just a fair amount of space (preferably covered space. Most of the cost is in the casting tools, cranes and the cement plant. Feel free to contact me and we set up JV partnerships around the globe with serious builders.
Kind Regards,
Andrew Bales
I am just starting to venture into construction to bring innovative technology to reduce cost /Sq ft of construction in INDIA for residential and Commercial buildings. Pl reply and will be willing to work in partnership. Thanks
I have looked at your website please contact me at your earliest convenience at: [email protected]
I am interested in low budget precast boundarywall …please provide formulation formu
india in
Siddhartha,
Our members can provide a variety of walls to meet this need. To find NPCA members in your area that manufacture precast wall products, go to precast.org/find. You can search by both location and product type to filter your results. If you have any questions, give us a call at (800) 366-7731.
Hi Neeraj, thank you for your comment!
You are welcome to use our “Find Precast Products Now” feature – located at the top of the website – to search for the products or machinery in which you are interested.
Once on the search page, you will want to select “A Supplier,” then use the “Select a Product” drop-down menu to locate the equipment you are interested in. If you have further questions, please don’t hesitate to contact us.
I want to have detail information on manufacturing processes and its manufacturing cost. I will be pleased to you if you forward me the details. Thank you in advance
OK, means it is understood by it that there is 30% extra price by using precast & 60% time saving by using it. so by taking opportunity cost contractor may be earning . BUT What is the benefit to CLIENT here apart from saving time. Certainly more amount of money is going from his pocket.
Precast thus may be beneficial in case of commercial towers, but how to justify profit making in residential tower.
OR
Basically how to convince client, as certainly there is 30% more charge in material + processing than CIP.
PLEASE Clearify.
Also please mention Industry cost structure of precast plant.
Your opinion on why Precast is not gaining importance in India ??? And it is so popular in Europe.
Even industries like Precast India is not finding great market in real Estate apart from commercial buildings.
PLZ REPLY TO ALL 3 QUESTIONS. You may even mail me at [email protected].
Swapnil, thank you for your questions. There are a wide range of benefits of using precast, but it varies from job to job. Time savings is a big one. Quality control is another major benefit. On some jobsites, it eliminates clutter with timed deliveries and no staging needed. Some precasters can build in efficiencies like plumbing or wiring into a utility building or restroom, insulation into wall panels or customizations. These examples are really just the tip of the iceberg. Our magazines highlight countless examples of how precast saves the client time and money and provides many other benefits.
Regarding the cost structure of a precast plant, I don’t know if you mean the cost of building one or running one. Either way, that is dependent on many factors such as location, management, etc. The best way to get a feel for this is to talk to existing precast plants in your country.
Lastly, precast gains traction based on the success of the diversification, research, sales and marketing efforts of those in the business. In North America, more types of projects are using precast every day because precasters here are innovating new products and actively working with customers to convert jobs to precast by sharing the benefits. The same holds true for Europe.
I hope this helps and I will send these answers to your email address as well.
please give me any case study of precast vs cast in pace in pune
which gives cost compassion on same.which gives detail information @ how precast is cost less.
Thank you for the comment Wagheshwar. We actually do not have a specific case study written that relates to Pune, India. I would recommend that you contact a precast association or business near you in India. However, if you are still interested in reading case studies about precast concrete versus cast-in-place concrete, check out our blog. We have many posts written about precasters changing specifications or highlighting the cost savings precast concrete offers in construction. Regarding specific costs, as a trade association we cannot discuss pricing. Again, contacting a business in your area may help with this.
I would like to know, from the manufacturer point of view, how margins vary. How pre-cast manufacturers get higher margins due to lower production costs vs CIP manufactures, or the opposite.
Thank you.
A friend of mine was telling me a little bit about precast concrete, and I was curious about how it helps. It’s interesting that it’s actually very easy to install. Since construction is all about speed, this must be a great option.
sir
Im an architecture student…i would like to know the cost of pre cast construction for small individual house for BPL people….
Hi Spandana,
Thank you for your comment. As a trade association, we cannot discuss pricing. However, a local precast manufacturer in your area may be able to assist you in obtaining the information you need. Please let us know if you have any other questions.
Hi,
Am Ranjitha m tech student can you please provide me the cost details of precast ,like manufacturing cost maintenance cost.it will very useful for my project.
Thank you.
Thank you for your comment Ranjitha. As a trade association, we cannot discuss pricing. However, a local precast manufacturer in your area may be able to assist you in obtaining the information you need. Please let us know if you have any other questions.
What do you use for a roof ? Precast concrete? How about metal roof? If you use cement blocs and extr rebar and fill all the walls holes with concrete, how does it compare ?
My first house I asked for waterproofing to be mixed into my concrete befor pouring the pad. I am so glad, because I could not smell the concrete after few weeks
what is the cost for 1 cum of precast concrete
Thank you for your comment! We cannot provide the cost information that you are looking for; however, you can use our website’s find feature to get in touch with an NPCA member who can discuss pricing options with you.
I have a question .
how can we keep a Yonolite inside a concrete piece
Thank you for your question Ali. I recommend visiting the “Find Precast Products & Supplies” search feature on our website to contact either a precast manufacturer or engineering service to help you with your project. NPCA cannot give out specific project design or engineering advice. However, if you do have questions during the production process, our technical services engineers would gladly be able to provide help and support. Thank you.
Wow, precast concrete is really a great low-cost choice! Why pay high costs if it is possible to buy precast concrete at lower price. Thanks for sharing the great writing!
Wow, precast concrete is really a great low-cost choice! Why pay high costs if it is possible to buy precast concrete at lower price. Thanks for sharing the great writing!
Thank you for the article about the precast plants are very less because now a days its trends in residential and industrial buildings worldwide and shows what is architecturally possible nowadays.