A reliable Construction Cost Analysis requires objectivity, currency, and detailed research of the local market.
Analytical review of available information clearly demonstates the importance of current, locally researched cost data when compared to national market average cost data and the associated use of cost factors. Using verifiable, current, and granular local market cost data is a proven methodology and a strategic benefit to both owners and design builders that allows for defensible cost estimates with improved cost visbility and cost management capability.
Objective comparsions of locally researched cost data and issues associated with national average cost data and location factoring are shown below.
#1. – “Location factors are used during preliminary project evaluations. They are not intended to be used when preparing appropriation-quality estimates. They often are applied to conceptual estimates for identifying “go/no-go” projects at an early stage.” (Peitlock, B.A., ccc, Developing Location Factors Using a Factoring Method, International Cost Engineering Council, ICEC International Cost Management Journal (ICMJ), 1998.)
#2. Location factors are primarily used in class 4 and 5 estimates and are not intended to be used for higher quality estimates, such as class 3, 2, or 1. The RSMeans city cost index (CCI) and the Department of Defense area cost factor (ACF) index are two primary examples of location factor publications. (Martinez, A., Validation of methods for adjusting construction cost estimates by project location , University of New Mexico UNM Digital Repository, 2010)
#3. “Despite its potential weaknesses, estimation by adjustment factors is a very common approach for all types of construction. A very common approach for performing quick-order-of-magnitude estimates is based on using Location Cost Adjustment Factors (LCAFs). The accuracy of cost estimates in the early phases varies within an expected range that spans from -100% to +200% ” “Using the results of this study, various commercial entities (e.g., RS Means) could enhance their online tools by uploading publicly available socio-economic variables and allowing users to perform geostatistical analysis. As a result, a cost engineer could input the location of a project and obtain the most accurate location adjustment factor through a mix of interpolation and geostatistical prediction techniques.” (Migliaccio, G., Empirical Assessment of Spatial Prediction Methods for Location Cost Adjustment Factors, J Constr Eng Manag. 2013)
#4. “Problems within the methodology, unfortunately, will continue to arise as standardized estimation tools (CCI) simply cannot account for the unique characteristics of individual states. Unfortunately, the accuracy of program-wide CCIs occasionally led to swings of ±20 percent after projects had gone through the bidding process. Additionally, no direct application of market or economic conditions existed in this conventional CCI process, which was theorized by FHWA to potentially be a significant influence on resulting project estimate accuracy. ” (University of Colorado Denver College of Engineering and Applied Science Department of Civil Engineering, Validation of Project-level Construction Cost Index Estimation Methodology, 2017
Construction Cost Analysis
Join us as we pave the way toward a new future for public and private sector efficient project delivery using Job Order Contracting, Integrated Project Delivery, and objective, verifiable, current local market cost data. Help shape an innovative yet provn approach to repair, renovation, maintenance, and new build planning, procurement, and projecdt delivery where empowerment and choice fuels collaboration and mutually beneficial outcomes. Established in 2016, Four BT, LLC. (“4BT”) is a certified veteran-owned small business (VOSB) focused upon providing objective, verifiable, and current local market construction cost data, associated secure cloud-based technology for construction cost estimating and full related support services. Data is organized via expanded CSI MasterFormat.
We are championing a future where everyone can make informed choices about the quality of the data that powers your repair, renovation, planning, and new build Planning, Procurement, and Project Delivery Process. To unlock the full potential of efficient lifecycle management of the built environment and achieve the economic and environmental benefits, we must prioritize openness, reliability and set the highest standards for cost and techincal data and associated information sharing. We must prioritize TRUST.
- Estimate project costs comprehensively – Ensure budgets reflect the actual current local market labor, material, and equipment costs for successful project delivery.
- Create detailed and realistic project timelines – Identify key milestones, task dependencies, and critical paths.
- Minimize risks associated with delays and budget overruns – Provide a clear project roadmap and cost control mechanisms.
- Enhance resource allocation and utilization – Align resources and scheduling with budget constraints.
www.4bt.us
