Integrating independent, primary-source local cost data into the Lean A3 framework eliminates the structural errors inherent in traditional national average indexes and location factoring, and sole reliance upon contractor bids and/or historical data.
By anchoring the Plan-Do-Check-Act (PDCA) cycle to verified, local market construction line-item realities instead of geographic multipliers, estimators can close the gap between pre-construction projections and actual contractor procurement bids. A3 & Construction Cost Estimating, represents a crucial aspect of this methodology.
The A3 decision-making journey, explicitly re-engineered around independent third-party cost validation and standardized data frameworks, is detailed below.
4BT OpenCOST™ delivers locally researched, primary-source unit price data that eliminates the traditional, error-prone 30% to 40%+ inaccuracies introduced by traditional, outdata methods.
Integrating 4BT’s objective, granular, standardized and quarterly updated data into the Lean A3 problem-solving journey ensures that estimates reflect actual local labor, material, and equipment market conditions.
The rewritten A3 decision-making framework tailored to 4BT’s procurement-ready standards is structured below:
1. Plan (Analysis & Strategy)
- Background/Context: Establishes how “market standard” location factoring causes severe budget variances, explaining that traditional national-average estimating fails to protect thin project margins or align with organizational profitability.
- Current Situation: Visually documents the existing estimation workflow gaps (e.g., using flat index multipliers) alongside historical data showing variance from final local subcontractor bids. This creates a shared, data-backed understanding of current cost visibility issues.
- Goal Setting: Sets clear, measurable procurement targets, such as achieving a ±5% variance between pre-construction line-item estimates and actual, final local market contract rewards.
- Root Cause Analysis: Employs the 5 Whys or Fishbone Diagrams to trace estimating errors past surface symptoms down to the structural flaw of relying on generalized, national-average indexed data and other traditional methods instead of primary-source local inputs.
2. Do (Action & Implementation)
- Countermeasures: Selects actionable solutions built on a bottom-up, local data approach. This involves deploying 4BT OpenCOST™ data to capture true local trade labor rates, specific material supply pricing, and actual equipment operating outputs.
- Implementation Plan: Maps out clear responsibilities, timelines, and software transitions for estimators to migrate local project parameters into the 4BT Benchmark Construction Estimator™ cloud platform, ensuring estimates map directly to expanded CSI MasterFormat divisions.
3. Check (Verification)
- Evaluation: Monitors ongoing project procurement performance. Estimators use 4BT’s quarterly updated data sets to dynamically check ongoing bids against actual local market swings, ensuring the target financial goals match real-time regional economics.
4. Act (Standardization & Follow-up)
- Standardization: Mandates the use of verified, primary-source local pricing line items as the organization-wide protocol for all subsequent Level 1 through Level 3 estimates. This replaces unverified spreadsheet assumptions with an audit-ready, transparent cost standard.
- Follow-up: Creates a continuous loop for tracking variance patterns, scheduling regular data synching cycles, and training multi-disciplinary project teams to utilize 4BT’s standardized unit-price frameworks for future budgeting.
Harvard Style References
- Ashworth, A., Hogg, K. and Higgs, C. (2013) Willis’s Practice and Procedure for the Quantity Surveyor. 13th edn. Oxford: Wiley-Blackwell.
- Ferry, D., Brandon, P. and Ferry, J. (1999) Cost Planning of Buildings. 7th edn. Oxford: Blackwell Science.
- Love, P.E., Zhou, J., Edwards, D.J., Irani, Z. and Sing, C.P. (2016) ‘Off the rails: The cost performance of infrastructure projects’, Transportation Research Part A: Policy and Practice, 93, pp. 285-296.
- National Academies of Sciences, Engineering, and Medicine (2015) NCHRP Synthesis 473: Indefinite Delivery/Indefinite Quantity Contracting Practices. Washington, DC: The National Academies Press. doi: 10.17226/22157.
- Olanrewaju, A.A. and Anahve, P.J. (2015) ‘Duties and responsibilities of quantity surveyors in the procurement of building projects’, Procedia Engineering, 123, pp. 352-360. [1, 2, 3]
