Steel is an important constituent of any construction. We can draw a parallel to the skeletal structure of the human body that lasts throughout the life of a human being. Similarly, any construction can undergo any number of interior or exterior changes but the basic structure of steel and cement always remains the same.
The cost of construction greatly depends on the land cost, quality of Construction materials, and quality of finishing any consumer wishes to attain. The end finish of any construction can be broadly classified as Premium class / Medium class / Economy class finish and comprises primarily of Flooring, Electrical works, Sanitations and fittings, Paints, Furniture, etc. The end finish of construction varies greatly and depends greatly on the budget of the consumer. Typically, a Premium class finish can be as much as 100 – 300% higher than an Economy class finish.
Construction costs can be broadly classified into two heads namely –
- Land Cost: Land cost includes the actual land cost, registration, and stamp duty expenses and can greatly vary from area to area, state to state, and region to region. It cannot be standardized.
- Civil Construction Cost: Civil construction costs are standardized across regions and the typical break up of expenses are as under:-
The above pie chart clearly indicates that TMT steel bars comprise only 15% of the value of the civil construction expenses. TMT steel bars are one of the few commodities amongst civil construction heads that cannot be replaced. Thus NO COMPROMISE in quality should be made and we should purchase only good quality TMT steel bars.
Good quality of TMT steel bars can be slightly expensive as compared to ordinary TMT bars because of use of superior raw material, better quenching technology, robust rolling equipments etc. The following example clearly shows that the use of good quality TMT steel bars is the SMART way to purchase TMT steel bars:
| PARTICULARS | |
| Approximate Civil Construction area (A) | 5,000 sq. ft. |
| Approximate civil cost (B) | Rs.1,000/- per sq. ft. |
| Approximate Economy class finish cost (C) | Rs. 1,000/- per sq. ft. |
| Total Civil Construction Cost (D = A X (B+C) ) | Rs.1,00,00,000/- |
| % of TMT steel cost (as per pie chart) | 15% |
| Value of TMT steel consumed | Rs.15,00,000/- |
| Approximate TMT Steel cost including labour and handling | Rs.50,000/- per M.T. |
| Approximate Quantity of TMT steel bars consumed | 30 M.T. |
| Assume price premium for good quality TMT steel bars | Rs.5,000/- per M.T. |
| Excess value spent for good quality TMT steel bars | Rs.1,50,000/- |
| Extra cost as %age of total civil construction cost for Economy class finish construction | 1.5% |
The above example clearly shows that the use of good quality TMT steel bars can result in a maximum increase of only 1.5% expenses of the total civil construction expenses for an Economy class finish which is meager considering that any construction is done to last for at least 50 – 80 years.
Even if we assume the cost of Premium class finish construction to cost only 100% more than an Economy class finish construction, the use of good quality TMT steel bars can result in only a marginal 1% increase in total civil construction expenses for a Premium class finish construction.
The use of good quality TMT steel bars can result in other miscellaneous benefits and savings which are not even factored in the above sheet. Good quality TMT steel bars have higher strength, higher elongation, better bonding with cement concrete, higher earthquake and corrosion resistance, more length per kg of steel etc. that results in savings in civil construction costs by a reduction in steel consumption.
In the end, I would like to urge all the users to be SMART in the procurement of TMT steel bars as it is an important purchase decision lasting throughout the life of the construction. It is thoroughly advisable to purchase TMT steel of the right brand from a manufacturer having robust equipment, right technology, quality culture, and management ethics as TMT steel bars can not only enhance the life of the construction but also result in substantial savings in the civil construction costs.
By
Girish Somani
Director, RHL Profiles Limited
(Makers of RHL GOLD TMT Bars)
