Indirects

User Manual
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Contents

Introduction ...................................................................................................................... 1
Requirements .................................................................................................................. 2
Setting up Candy Estimating for Indirects ........................................................................ 3
Start Up ........................................................................................................................... 4
Three methods to record Indirects ................................................................................... 7
Time Input ................................................................................................................ 7
Start and End Input ................................................................................................... 8
Bar-chart Input ........................................................................................................ 11
Applying Indirects to the tender ..................................................................................... 12
Spreading Indirects over the bill items ........................................................................... 13
Procedures ............................................................................................................. 13
Other points ............................................................................................................ 18
Conditions .............................................................................................................. 18
Blocking bill items ................................................................................................... 19
Copy the Indirects to a Bill page .................................................................................... 20
Manage Indirects Post contract ..................................................................................... 21
Basing the Indirect Costs ........................................................................................ 21
Variations ............................................................................................................... 22
Month end adjustment ............................................................................................ 22
Re-allocation .......................................................................................................... 23
Useful tips............................................................................................................... 24
The Time bar ................................................................................................................. 25
Cost & Allowables .......................................................................................................... 26

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Introduction
Indirect costs are costs not directly included in bill items. These are non-productive costs
or preliminary costs required in the project ie supervision, plant, site services etc.
The Indirects bill is a separate schedule of items which are predominantly time
related, but can also be value or fixed based items.
As the value of these items are not determined by a measured quantity they need
to be managed differently from direct bill items.
To establish the total value of Indirect costs required for a project, it is necessary to draw
up a schedule of these items. These could be summarised but not limited to the
following headings:
 Supervision
 Hoardings & Setting out
 Office accommodation
 Major Plant
 Minor Plant
 Scaffolding
 Transport
 Site Services
 Safety & Signage
 Insurance & Surety
These Indirect costs are managed within Candy for tender, forecast and post contract
purposes.
Each item included in the Indirect cost schedule has a Price code and worksheet, the
same as a Direct bill item.
The benefits of using the Indirect costs module are:
 Compilation of an accurate tender for non-productive or preliminary & general
costs
 An initial budget forecast to completion
 True values each month based upon the based Indirects and monthly
transactions (explained later in the manual)
 A huge saving in time to compile accurate monthly financial reports
 Forecast costs and allowables to completion updated monthly

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Requirements
In order to work with Indirect Costs, the user should have a good knowledge of Candy
Estimating as this manual will refer to:
 Price codes
 Trade codes
 Resource codes
 Resource types
 Work sheets
 Task codes
 Cost codes
The user working with the bar chart must have a workable knowledge of Candy’s Site
Plan as the manual will refer to:
 Creating and customising views
 Creating activities and level headings
 Moving activities and adjusting activity durations
 Linking activities
 Creating and linking Tied activities
 Creating and customising reports

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Setting up Candy Estimating for Indirects
First create the required Price codes, price their worksheets and allocate the required
Task & Cost codes. Plugged and Split rates are not recommended in Indirects, as they
will prevent the store of the base forecast and will not be included in the analysis of the
Indirects Cost Forecasts, etc.
Below is an example of a Price code and Resource code list with Task and Cost codes
and a typical Price code worksheet.
Note: The Contract Manager’s worksheet rate is a time related rate i.e. rate per Months
and the Site hoarding worksheet rate is a non-time related rate i.e. m.

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Start Up
Select the Estimating tab > Indirects > Indirect cost documents. This will open the
Indirect cost document manager.
The default documents displayed on the document manager are the most commonly
used documents, but there are more document templates available under the New
document button.
In the document manager select the button New document > Indirect cost > 1.1 Indirects
- Time input.
If this is a new Indirect job a selection of one of the choices must be made.

For this example select: ”Create a new bill,” and then basic programme information will
be required as follows:

Change the start date, Week start day and Working days per week as required. The
Financial calendar is automatically set up based upon this data and defaults to a period
of 36 months, if your programme is longer than the default period, select Tools >
Financial calendar > Tools > Extend the Financial calendar and change the periods or
end date accordingly.
The Indirects Cost programme calendar should be set up by going to the Indirect Cost
Document manager > Document 1.7 Program Calendar. This document works in the
same way as in Site Plan (See separate manual), enter Holidays and Non-working days
by use of the tabs at the bottom of the document.
Before adding any Price Codes ensure that the time-related Price code units relate to
the unit table in Indirects. Click on the menu Tools and then select the Unit table from
the menu. The default Time-unit Definitions will be displayed.

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Should any of the time units used against the Price codes differ from the default time-
unit names in the definitions (i.e. The Price code unit reads “wks” instead of “week” OR
“months” instead of “month”), it could be added or the existing unit name can be edited.

To add a new time unit select the New button and in the dialogue box that opens, type in
the same unit as used in the Price codes.

(Example: if the Price Code unit = “wks”, a new unit can be created with the unit name
“wks” and the Standard description “Week – 5 working days” as required).

An existing unit can also be edited as required by using Edit.

NB The unit name is spelling and case sensitive, so make sure that the spelling is the
same as used in the Price code list.

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Indirect cost items can be created by:
1. Typing in a Price code, description and unit.
2. Call up the Master Price code listing by Shift , drag and drop the Price codes
required on to the new Indirects bill as required. See below
3. Call up the Master Price code listing by Shift , select a range of Price codes
and drag and drop the them on to the new Indirects bill. See below.

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Three methods to record Indirects
There are 3 methods of creating / recording Indirects: (in sequence of Easy to difficult)
1. Time Input
2. Start and End input
3. Barchart Input.

Time Input
Time input is the simplest way to record indirects, the allowable is determined by the
Price code rate x Utilisation (No.) x time or quantity.
NB THIS METHOD IS USED TO OBTAIN A QUICK ESTIMATE, IT IS NOT THE
RECOMMENDED METHOD AS ALL PRICE CODES WILL COMMENCE ON DAY 1
AND CANNOT BE REVISED.
Use Document 1.1.1 Indirects - Time input and the following entries can now be made
(Refer to example below)

 Number column = The number is required. Example: One Contracts Manager is

required.
 Factor column = The factor used to multiply the number (default always one and
not shown in column). Example: The Contracts Manager is working on four
projects simultaneously therefore factor = 0.25.
 Price code Time = The time in units required for a Price Code. Example: The
Contract Manager will be on site for 10 months, the Engineer will be on site for 7
months.
 Note that Price code A0201 Site hoardings is not time related and thus no Price
code Time value can be typed in.
Once all the required Price Codes and Price code time have been entered the final total
can be displayed. From the menu, select Tools and then Display total amount.

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Start and End Input
This method calculates time as the difference between the start month and the end
month and then establishes the value by multiplying time by the Price code rate. This
provides for, and can display monthly forecasts, which enables post contract Indirect
cost analysis to be used (see later in the manual).
For this method we use the default document “1.2.1 Indirects-Start and End months” or
1.2.2 Indirects – Start and End weeks from the Indirects document manager.
With the “Spread input” method the money value is spread over time to calculate the
value for each cost period. The financial month end of the cost periods must therefore
be set as required.
Select Indirects > Customise the programme.

Select the “Start Date” tab on the dialogue displayed, then set the programme start date.
Select the “Financial Periods” tab on the dialogue displayed, then set the required
financial month end.
For this example the start date is 1 July 2014 and financial end period will be the 25th of
each month to illustrate the calculation method used.
Select “OK”

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Notice that the month columns are now displayed on the right hand side of the screen.
Use the Tab key to display the rest of the month columns not visible on the current
screen. Use the arrow buttons on the bottom of the screen to navigate and display the
months not shown on the screen.

Select 2.1 Indirects – Monthly Spread to display the monthly Indirects forecast.

NB. WE RECOMMEND THAT NON-PLANNERS USE THIS METHOD AS IT IS EASY

TO USE AND DOES NOT REQUIRE SITE PLAN SKILLS.

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Bar-chart Input
This is the advanced method and requires Site Plan skills. The time required is
calculated based on the link to a bar in the bar-chart. This is a very accurate measure of
time and money, but sometimes is perceived as too accurate.
• Reason – If the bar which the Opcode is linked to, has a duration of say five
months and eighteen days then the money is calculated for 5 months and 18
days (portion of the month). This might be “too accurate” for allowable calculation
as you might want to round up the allowable to 6 months.
• If you do not want this level of accuracy, rather use the Start and End input
method.
This method allows the user to create a linked programme and tie the Price codes
(Activities) to the programme.
In the screenshot opposite Indirects document 1.3.1 Indirects - Barchart input has been
used to demonstrate how Indirects can be linked to the Indirects programme. This
method computes to an accurate forecast and allows for post contract indirect
forecasting and cost to completion.

The Indirects programme uses the same functionality as Site Plan (see separate
manual).
Non-time related items (example “CAR insurance) are displayed as blue striped bars
adjusting the length and or position will only change the
allocation / spread of the Nett amount value but the total Net amount will remain the
same.
Time related items are displayed as red striped bars,
adjusting the length and or position will change the allocation / spread and the total Net
amount.

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Applying Indirects to the tender
Now we have established the value of Indirects, we are able to obtain Trade Totals of
the complete job. Select
In the dialogue box, select “Net” and “Direct and Indirect costs” as below.

The Trade Totals display below now includes the Direct costs (Priced bill items) and the
Indirect costs.

Most Resource analysis documents and reports are available with the option to include
or exclude Indirect costs.

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Spreading Indirects over the bill items
If you require the Indirect costs to be included in bill items, they can be spread over bill
items in a controlled manner. What has to be spread and where is set-up by the User
early in the bid process. At finalisation the spread can be re-done at the last minute with
confidence.
The Indirect spread amount is recorded against the bill items. This amount is divided by
the Bill quantity to calculate a “spread rate”. The Spread rate is added to the bill item’s
Gross rate and stored as its Selling rate. The User can elect to calculate the Spread rate
using the Final quantity if required.
The basic prerequisite for using the Candy Indirect spreading is that the Price codes
must be unique – this is because the Selling rates are manipulated for individual items.
Procedures
There are a variety of ways to organise spreading and limit or prevent certain bill items
receiving spread from the Indirects.
The Indirect spreading is controlled through named “Procedures”.
Named procedures1 are created to spread groups of Indirect costs over groups of bill
items.
Each procedure has a list of Indirect items2 assigned to it, and the percentage of their
value to be spread3. The procedure must also have a list of bill items over which to
spread the amount4.

The Procedures have no effect until the Indirect Spreading calculation is invoked by the
User.

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Set up procedures by following this example:
1. Create a procedure by entering a descriptive name1.
2. Select the Indirect items that are required and drag them onto the procedure 2.
3. Enter the percentage of the Indirect amounts to be spread by this Procedure3.

Select the bill items over which the Indirect items have to be spread1. Drag these onto
the Procedure2.

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In this example we have specified 70% of the value of ten Indirect items to be spread
over one bill item. This is termed as a specific spread – one or more Indirect items
targeted at one or more specific bill items.
Each Indirect item records the spread by keeping the name of the Procedure and the
percentage of its amount that is contributed to the spread1.
The Indirect items have no knowledge about the destination of the spread – only the
Procedure knows this.

To enable the spreading, select “Spread Indirect costs”1.

In a view of the bill, the bill items record the contributing Procedures and amounts2.
In addition, the bill items record the type of spread used by a procedure3 – Specific,
Trade and/or Balance. In this case the procedure was a Specific spread4 and is shown in
the Specific spread column3.

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Another example is to allocate the Batch plant1 over the concrete trade.

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To spread the Batch plant procedure over the Concrete items we select only the
Concrete trade. This will spread the Indirect Batch plant procedure only to the bill items
in the Concrete trade.
Select the tab “Select a destination Trade”1 and then select CONCRETE2 from the
dialogue box that is displayed.

The Concrete trade is now marked as the destination for the spread1, and the procedure
name is recorded against the Indirect cost2.

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The batch plant running costs have now been spread over all the concrete items in the
bill1, note that they are displayed in the Trade spread column.

The Gross amount1 and the Total Spread amount2 for each bill item are added to make
a new Selling amount3. This amount is converted to the Selling rate by dividing by the
Bill quantity.
Note: Any bill item receiving Indirect spread will have its Selling rate changed in the
process. Items that are Blocked and have no Specific spread will be unchanged.

During the spreading calculation, the Specific and Trade related spreads are done first.
Any amounts remaining against Indirect items are spread proportionally over the entire
bill, except for items that have been marked as “blocked”. This Balancing spread is
proportional to the spread already allocated to each item and displayed in the Balance
column2, this Balance spread ensures that the entire Indirects are spread over the bill.
Other points
Bill items with negative rates have their rates reduced during the spreading – ie: made
less negative.
Conditions
Please note that bill items and the Indirects must be marked-up prior to spreading.

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Blocking bill items
There are situations where bill items should not receive any Indirect spread, such as PC
sum items.
In the example below, we want to exclude the Wood float finish item from the spreading
of the Batch plant running costs, it could be marked as Blocked. Right click on the bill
item Total amount column and select “Block Trade and Balance spreads”1.

This will prevent the Blocked item from Indirect spread from any Trade or Balancing
spreads. However, Specific spreads would be accepted by a Blocked item. This allows
you to put a specific amount against particular items.
Blocked items are marked with the word Blocked1. Note how the Selling rate is the same
as the Gross rate in Blocked items2.

Items with zero quantity will not be included in the Indirects spread, if there are items
with a zero quantity you will be notified before the Indirects are spread1.

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Copy the Indirects to a Bill page
From the Indirects document select Tools > Copy indirects to bill page > Add items at
end of bill, this will copy the entire Indirect schedule to the end of the measured bill.

As these bill items have already been priced and are now incorporated in the bill, you
can check your trade totals as before but this time select Direct cost bill only, the result
will be the same.

These new bill items can now be progressed each month in the valuation and will be
incorporated in all documents and reports.

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Manage Indirects Post contract
It is no longer necessary to copy the indirects as internal bill items in order to include
them in Cost & Allowables, by following this procedure you can achieve the same result,
saving a great deal of time over the contract period.
Each time you progress to Next valuation the Indirects will update to reflect the previous,
period, current and remaining allowables based upon the based indirects.
Each month the based indirects can be updated to take into account variations, re-
allocations and month end adjustments and the time based activities can be extended or
reduced as required.
Basing the Indirect Costs
Recording the Indirect Costs base locks the Indirect costs forecast which enables Candy
to progress the allowable (using the net worksheets, transactions and Indirects program)
and forecast the cost to completion (using the cost worksheets, cost resources,
transactions and Indirects program).
To base the Indirects from the Estimating Tab1 > Indirects2 > Select “Record Indirect
Costs base”3.

There are three methods used to update the based Indirects each month, these are
termed “Transactions” which are entered against an activity each month as required.
There are three types of transactions:
1. Variations.
2. Month-end adjustment.
3. Re-allocations.
To commence the Transactions select “Indirect Cost documents”4 and then Document
3.1 Indirects – Post-tender transaction entry.

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Variations
Enter the net variation amount of 1000001 against activity code A210 Contract Manager.
This will bring up a dialogue box2, select “Allocation from a Variation order”3 and enter
the reference 0034.
In the following screen shot, notice that the Transaction type, VO reference and user
stamp have been displayed. There is also a column for remarks.

The effect of this Transaction is to increase the revised amount by R 100,000 and
spread the increased allowable over the period of the activity, commencing at the start of
the current period, previous period allowables will not be changed.
Month end adjustment
The second Transaction type is the Month end adjustment. There can be numerous
reasons as to why you will need to make this type of adjustment:
 The crane was due to be commissioned on the 4th of the month but was only
commissioned on the 18th.
 Due to adverse weather conditions there was 6 days lost time in the month,
which affects all time related activities.
 The hoarding was due to be complete but was only 60% at month end.
In this example the Engineer was due to commence during the month but will only
commence the beginning of next month. The month end adjustment will be 0.
Enter the month end adjustment amount of 01 against activity code A300 Engineer. This
will bring up a dialogue box2, select “Month end adjustment”3.

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.

The effect of this Transaction is to adjust the current allowable as required. The
remaining allowable will be adjusted based upon the Revised total allowable less the To-
date allowable, this will be spread proportionally over the remaining period of the activity.
This transaction will not make any adjustment to the base allowable.
Re-allocation
A re-allocation of allowable is typically used when there is an adjustment of method.
In this example we are reducing the allowable of the Site Agent (Activity No.A220) by
163,000.00 (three months) and increasing the allowable of the Foreman (Activity
No.A250).
Enter 165,000.00 in the amount column of Activity A2201, select Re-allocation to another
indirect costs item2 and enter A250 as the reciprocal Activity3.
NB Always enter the amount in the activity from which you are reducing, the reciprocal
amount will increase the other activity.

The effect of this type of Transaction moves an allowable amount from on Activity to
another, thus revising the base allowable of both Activities.

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It is important to note that the three transaction types referred to previously only adjust
the allowable and have no effect on the remaining cost.
Current transactions can be deleted by using <Control Delete>, a dialogue box will ask if
the activity is to be deleted select “No” if only the transaction is to be deleted.

Another dialogue box will be displayed, select “Yes” to delete the transaction.

Transactions finalised in previous months cannot be deleted.

If there is more than one transaction for an activity, insert a line below the activity by
using <Control Insert>.
Useful tips
When you create a variation or re-allocation the programme re-calculates the monthly
allowable from the beginning of the current period to the end of the time bar. If there is a
need to maintain the current month based allowable, and spread the revised allowable
from the end of the current period to the end of the time bar, first make a month end
adjustment to the same value as the base before adding the variation or re-allocation.
This effectively adjusts the “to completion” allowable from the end of the current period
and not from the beginning of the current period.

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The Time bar
The remaining time of each activity may be adjusted each month by changing the Finish
date. If the base activity had not commenced prior to the beginning of the current month
the Start date of the Activity can also be changed.
These changes are effected from Valuations tab > Indirects > Indirect Cost documents >
1.1 Indirects – Barchart Input.

As an alternative the bars can be extended, reduced and moved using the same
functionality as Site Plan (see separate manual).
Changing the Start or End date of an activity has the effect of:
1. Adjusting the remaining cost of the activity, (Remaining time x the cost rate of the
activity
2. The remaining allowable will be spread over the beginning of the current period
until the end of the time bar, there will be no adjustment to the revised allowable
only a re-spread of the allowable. If you wish to extend or reduce the time bar but
retain the current period allowable of an activity, first do a month end adjustment
to fix the current allowable and then move the time bar.
It is important to note that adjustments to the time bars do not change the total allowable
of the activities, but change the spread of the remaining allowable proportional over
time, (Final Allowable – To Date Allowable) / Duration.

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Cost & Allowables
To enable Indirects to be included in Cost & Allowables from the Main tab > Cost &
Allowable settings and tick “Include Indirects program”, see below.

The allowables and Costs to completion for Indirect costs will now be included in Cost &
Allowables documents and reports, by using the Indirects program as described above.
For more information on Cost & Allowables, please look at the Cost & Allowables User
Manual.

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