DPWH Revised Approved Budget for Contract Guidelines

ABC to be prepared according to designs approved by authorized officials.
Items of work must conform to the 2004 Standard Specifications for Highways and Bridges, 1995 Standard Specifications for Public Works, and any approved Special Specifications.

Cost of Materials: Includes cost at source (processing, crushing, royalties, local taxes, haul road construction/maintenance), hauling to site, handling, storage, and allowance for waste/losses (max 5%).
Cost of Labor: Includes salaries and wages as authorized by the Department of Labor and Employment, plus fringe benefits (vacation, sick leave, Workmen's Compensation, GSIS/SSS contributions, allowances, 13th month pay, bonuses).
Equipment Expenses: Rental based on ACEL rates, preferably operated rates inclusive of operator wages and maintenance; detailed unit cost analysis to include make, model, and capacity.
Mobilization and demobilization expenses treated as separate pay items; these costs cannot exceed 1% of the Estimated Direct Cost.

Overhead Expenses: Range from 5% to 8% of Estimated Direct Cost (EDC), covering supervision, transportation allowances, office expenses, Contractor's All Risk Insurance premiums, and financing costs (bid security, performance security, advance payment surety, warranty bond).
Contingencies: Range from 0.5% to 3% of EDC; covers meetings, coordination, billboards, ceremonies, and unforeseen events.
Miscellaneous Expenses: Range from 0.5% to 1% of EDC; includes laboratory tests and plan preparation.
Contractor's Profit Margin: 8% of EDC for projects over P5 million; 12% for projects up to P5 million.
Value Added Tax (VAT): 12% of the sum of EDC, OCM (Overhead, Contingencies, Miscellaneous), and Profit.

Estimated Direct Cost (EDC)	OCM % of EDC	Profit % of EDC	Total Indirect Cost %
Up to P5 Million	12%	12%	24%
Above P5M to P50M	9%	8%	17%
Above P50M to P150M	7%	8%	15%
Above P150M	6%	8%	14%

Prescribed format for ABC calculation provided (Attachment "A").
Columns 1-4: Descriptive info; Columns 5: Estimated Direct Cost (EDC) by estimator.
Columns 6-7: Percentage mark-ups for Overhead, Contingencies, Miscellaneous (OCM) and Profit.
Column 8: Total mark-up percentage (sum of columns 6 and 7).
Column 9: Value of total mark-up (total mark-up % times EDC).
Column 10: VAT component (12% of sum of EDC and total mark-up).
Column 11: Total estimated Indirect Cost (sum of mark-up value and VAT).
Column 12: Total Estimated Cost (EDC plus Indirect Cost).
Column 13: Unit cost per item (total estimated cost divided by quantity).

Columns 1-5 filled by Implementing Office officials (e.g., Head of Project Management Office, Chief of Construction Division).
These officials ensure integrity and reasonableness of estimates regarding current market prices, cost-effectiveness, production rates, etc.
Columns 6-13 completed by Bureau of Construction or corresponding Regional/District authorities within delegated power.
These officials can revise estimates for reasonableness and compliance with policy.
Final approving officials may also revise estimates as part of their authority.

ABC serves as a ceiling for acceptable bid prices under R.A. 9184.
Must be based on approved bidding documents containing identical work items and quantities as contractors’ bids.
Estimators required to update market price information continuously to avoid guesswork.
Cost analyses must disclose assumptions used.
Special items require plans, specs, methods, measurements, and payments approvals.

Conflicting Department Orders, circulars, and memoranda are revoked or amended by this Department Order.
The Department Order takes effect immediately upon adoption.