Current, objective, verifiable, and detailed construction cost data is critical to achieving any useful level of cost visibility and cost management. The fact that detailed unit price cost estimates using this type of information is rarely used and shared among owners and design/builders is largely responsible for cost overruns.
“National average price books” are wide used by both owners and design/builders, however, cannot provide an adequate representation of local market conditions. Attempts to localize information using “location indexes” have be proven to be insufficient. As a result, users of national average price books generally attempt to compensate by attempting to add extra hours to the work to be performed. This practice is of course problematic, especially when JOC/SABER and related contracts are involved and being managed properly. Unfortunately, alternative methods of compensating for a national average cost book include inflate quantities and/or to adding unnecessary activities.
The benefits of using a standardized unit price book however are clear. They provide a method to simplify and accelerate estimating and negotiating of construction work orders by locking in certain variables, such as crew mix, labor hours, equipment types and hours to perform various activities. This helps define some level of fair and reasonableness.
Solution
Current, locally researched unit price books (UPBs) are now available that are updated quarterly and organized using expanded CSI MasterFormat. These local market UPBs improve cost visibility by 30%-40%+ thus providing a significant benefit to both owners and design/builders. As both owners and design/builders now have greater cost visibility and risk is lowers, overall project costs can be reduced.
Furthermore as material, labor, and equipment costs can vary widely, the concept of have a UPB that is updated quarterly again significantly reduces risk to all parties involved.
Notwithstanding the abovie, using generic equipment types and output often represent only one solution and don’t necessarily reflect an organization’s owned equipment inventory or what they might actually rent. Firms such as Four BT, LLC (4BT) are responsive in this regard and provide for the ability to research and update a UPB in a timely manner.
Summary
While historically using a “national average cost book” with or without location factoring has proven ineffective, generally resulting in over priced work, performance, and cooperation issues, the availability on current, objective, locally researched cost data has significant mitigated these issues. These locally researched unit price cost databases greatly improve cost visibility and cost management capabilities for all parties. They can even be used to validate subconstractor quotes.
