Replacement Cost

With regard to Section 6.1b of this IRR, the Replacement Cost of a structure or improvement affected by the ROW shall be based on the current market prices of materials, equipment's, labour, contractors profit and overhead, and all other attendant costs associated with the acquisition and installation of a similar asset in place of the affected asset.

If the affected structure has been damaged, then the Replacement Cost should be based on the pre-damaged condition of that structure, The Replacement Cost of the structure may be vary from the market value of the existing structure since the structure that would actually replace it may have a different cost at current market prices. The replacement structure has to perform the same functions and meet the performance specifications as the original structure.

The IA may engage the services of a GFI or an IPA to determine the appropriate price offer, consistent with the guidelines set forth in Section 6.2 of this IRR. The IA may also request the assistance of the DPWH to determine such Replacement Cost.

If the IA shall directly determine the Replacement Cost of structure or improvement, the following guidelines derived from DPWH standards for estimating civil works costs shall be used:

  1. The IA shall prepare the basic plan and performance-type specifications for the structure to be replaced generally considering its original condition. These shall indicate, among other things, the following:

    (1) Main function or purpose of the structure - e.g., residential;
    (2) Basic configuration and dimension of the structure - e.g., two-storey house with a total floor area of 150 square meters; and
    (3)Major structural features - e.g., concrete and wooden structure, with galvanized iron (GI) roof.

  2. Based on the basic plan and specification prepared in Section 6.6a of this IRR, the IA shall prepare the Replacement Cost of the structure. The Replacement Cost is the price that the IA will pay the owner to replace the existing structure or asset with a similar asset at current market place.
  3. The Replacement Cost shall be composed of the Estimated Direct Cost and the Estimated Indirect Cost of the replacement structure. These components shall be calculated in accordance with the succeeding items.



Back / Next