The basis and cost attribution of the equipment-versus-material division in construction pricing (GB/T 50531-2009 general provisions, including process-type principal materials treated as equipment)

Topic Positioning

The basis, definitions and boundaries of the equipment / material division in construction pricing, the scope of items supplied with equipment, and the cost attribution that follows (permanent equipment procurement versus building-works versus installation-works costs). For classification when compiling cost documents.

Core Conclusions

1. Purpose and attribution (clause 1.0.3)

"The equipment-material division underlies construction pricing; when compiling cost documents, costs in the equipment class shall enter permanent equipment procurement per this standard, and costs in the material class shall enter building-works or installation-works costs by discipline." Clause 3.2.2 adds: equipment-class costs, the equipment price and its incidental charges such as transport , all enter permanent equipment procurement; material-class costs, including transport and custody charges , may enter building-works or installation-works costs by discipline.

2. The first principle (clause 3.1.1)

"Equipment and material are divided by their supply scope, character and the definitions of this standard - never by article name alone." Neither the label "pump / switchgear / fan" makes equipment, nor a BOQ line reading "XX material" makes material - look to function and supply form.

3. Statutory definitions (clauses 2.0.1, 2.0.7)

• Equipment (2.0.1): "machines, vessels and complete sets, made by processing and fabrication of multiple parts into a unique structure by respective function, serving production, power, transmission, storage, transport, research, containment and energy transfer or conversion."
• Material (2.0.7): "industrially processed raw materials, and the parts, fittings, products and semi-products outside the equipment body, required to complete the building and installation works." The key line: parts, fittings, products and semi-products OUTSIDE the equipment body are material.

4. Companion terms (2.0.2, 2.0.4, 2.0.6)

• Building services equipment (2.0.2): the building and its ancillary installation works form one whole; on asset trading the works are realty priced as a whole - the electrical, heating, ventilation and air-conditioning, water and drainage, communications and building-intelligence equipment serving the building and its ancillary works are all building services equipment.
• Standard equipment (2.0.4): batch-produced to national or sector product standards; also called catalogue (type-fixed) equipment.
• Process-type principal materials (2.0.6): principal materials classed as equipment for pricing - in industrial, agricultural, transport, communications, power and storage projects, of high value share and constituting the process: long-distance pipelines, long-distance power cables and optical cables, and special valves and units meeting stated size, pressure or material requirements.

5. Composition of equipment (clause 3.1.4)

"Equipment in this standard comprises building services equipment, process equipment and process-type principal materials." Process equipment spans both catalogue items made to national or sector standards and special equipment designed and made (wholly or partly) by manufacturers, or fabricated by contractors.

6. Scope = body + 5 supplied-with items (clause 3.1.5)

1 fittings and spare parts bought with the equipment; 2 pipes, wiring and instruments attached to or supplied complete with the equipment; 3 ladders, platforms, railings and guards attached to the body and supplied by the maker; 4 dedicated devices, tackle and instruments supplied with the equipment for its inspection, repair, maintenance and metering; 5 oils, chemicals and packing attached to the body and ordered with it. The test is "supplied with the equipment": pipes, platforms, railings, ladders and instruments supplied complete ride into permanent equipment procurement, however material-like or steelwork-like they look alone.

7. Fallback (clause 3.1.7)

"Where this standard still cannot decide: what is NOT fabricated on site may be classed as equipment; what is partly fabricated off site and assembled on site shall be classed as equipment; catalogue products fabricated on site may be classed as material."

8. Attribution of building services equipment (3.2.3, 3.2.4)

• 3.2.3: "in industrial and transport projects, building-services equipment purchase costs enter building-works costs" - for uniform techno-economic indicators.
• 3.2.4: "in standalone building projects they preferably enter building-works costs." Commentary: the building and its services are one whole, realty priced as a whole on trading, so building-works costs are the sound home; yet given current practice, civil standalone projects may also enter permanent equipment procurement per local rules and habits.

9. Classification tables

Clause 4.1.2: the division for general services installation works follows table 4.1.2.

10. Highway refinement (JTG 3830-2018 Annex C)

• C.0.1: the division bears directly on investment composition, estimate compiling and output value; where a later State rule conflicts, the State rule governs.
• C.0.2: scope - the division of electromechanical equipment and building materials in highway projects.
• C.0.3 principle: "whatever is made by processing into machines, vessels, other plant and complete sets serving production, power, transmission, storage, transport and research is equipment." Equipment splits standard (catalogue, general and special) and non-standard (undocumented, non-batch, made to design drawings by makers or contractors on or off site).
• Equipment generally includes: bodies plus delivered spares and fittings, attached ladders platforms railings and piping; meters, instruments and automatic controls, test instruments and body-mounted instruments; body-attached oils and chemicals; pumps, boilers, water-treatment, electrical and ventilation plant attached to buildings for production or living.
• Material: industrially processed raw stock and the parts, fittings, products and semi-products outside the equipment body not serving a unit process.

Applicability Boundaries

1. The conclusions rest on GB/T 50531-2009 and its commentary plus JTG 3830-2018 Annex C; sectors with their own annexes (railway, water, power, communications) follow their current rules (Annex C itself defers to later State rules).
2. The division serves PRICING (equipment procurement versus building / installation works); it is neither the accounting fixed- versus current-asset split nor the tendering goods-versus-works classes - never interchangeable.
3. Attribution of building-services equipment varies: industrial and transport projects - building-works costs; standalone building projects "preferably" building-works costs, civil projects optionally equipment procurement per local rules - confirm the sector and local regime first.
4. The five supplied-with items turn on the order contract / supply scope (supplied complete with the maker, ordered with the equipment) as fact - never on drawing appearance.
5. Process-type principal materials carry preconditions: industrial, agricultural, transport, communications, power or storage projects, high value share, constituting the process (long-distance pipelines, cables, optical cables, or special valves and units of stated size / pressure / material).

Further Reading

• GB/T 50531-2009 Standard for Division of Equipment and Materials in Construction Pricing: clause 1.0.3; chapter 2 terms (2.0.1, 2.0.2, 2.0.4, 2.0.6, 2.0.7); section 3.1 (3.1.1, 3.1.4, 3.1.5, 3.1.7); section 3.2 (3.2.2, 3.2.3, 3.2.4); clause 4.1.2 and table 4.1.2.
• JTG 3830-2018 Measures for Compiling Estimates and Budgets of Highway Projects, Annex C, C.0.1 to C.0.3.
• Use together with the sector estimate-compiling annex and the chapter-4 tables, item by item.