What Does Schedule of Rates (SOR) Means?

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SOR means Schedule of Rates.

Normally for arriving at cost of building two basic things are required:

01. Quantity of each and every item of work

02. Prevailing market rates of each particular item.

The quantities can be easily worked out by an engineer based on the drawings and specifications. The rates would however, vary from place to place depending upon the rates of construction materials, labour, working environment etc.

e.g. One institution wants to buy chairs. So first they will have to determine the specifications i.e. whether they would have of Plastic, metal etc., its dimensions, finishes. After finalising the same, its best possible rates are estimated and the offers will be compared with estimated rates.

Also Read: Principles for Valuation of Cost of Construction

Any Government or Public authority including Public Trusts and NGOs cannot award the work to any contractor directly. The process of awarding any work has to be competitive and at the same time transparent. Hence inviting offers from different bidders is must both from having competitive offers and maintaining transparency in the system. Again whenever the Government authority wants to construct any building it has to work out the estimated cost for providing budget and financial provisions.

While working out the estimate of construction cost the engineer works out the detailed Bill of Quantities for each and every items of construction. But how to arrive at market rate to each particular item?

All building items are complex one involving more than one materials and number of activities. e.g. when you want to construct a brick masonry wall the rates of bricks, sand, mortar, labour, scaffolding, curing etc., would determine the rate of brick masonry per cubic meter.

The process of arriving at a rate of such construction items called “Rate Analysis”. All the departments work out the rates of different construction items after carrying out rate analysis after assessing contribution of each item of materials, labour, plant & equipment, tools, scaffolding, site overheads etc., to the completed item.

Further in order to serve the above objects, offers / tenders are invited. Once the tenders are invited, how do we decide the best and right offer? How do we compare the offers and rates submitted by each bidder among themselves? In order to compare the offers, one therefore needs to have a basic estimated rate with which the offers can be compared with.

Hence all government departments publish standard rates for all building items collectively and all the estimates have to be worked out based on those rates only.  It would thus be very easy to compare offers / quotes from different contractors.

All the Governments / Departments every year prepare and update rates of normally used building items / Materials / works item. Number of such items may range from 500 to 1000. This is called Schedule of Rates.

This will curtail the discretionary power of officers and will act as a check on their powers.

Also Read: What is the Difference Between Cost, Price and Value?

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