Remember: Striving for construction cost reliability and transparency in your construction estimating process, rather than absolute accuracy, will lead to more effective project management and ultimately, better results.
Achieving 100% accuracy is generally impossible due to numerous variables affecting final costs and the lack of a verifiable reference point (a datum). The goal should be to create reliable and verifiable constructon Estimating Process based on the best available data.
Here are some key aspects of acquiring and using construction cost data:
1. Focus on Local vs. Localized Data:
- Local market labor, material, and equipment costs are paramount.
- Using national averages or outdated data can lead to inaccuracies. The use of location factors or areas cost factors cannot meet the cost visibility levels of locally research labor, material, and equipment costs.
- Contacting local suppliers, subcontractors, or other contractors can provide up-to-date information, 9r procure locally researched construction cost data.
2. Cost Data Providers:
- RSMeans Data (Gordian): Widely used in the industry available in various formats including an online platform, however, provided as a national average dataset and localized using the City Construction Index.
- Four BT, LLC: Offers a local market cost database focused on detailed construction tasks, emphasizing curent, objective, and verifiable granular data. 90,000+ line items.
- Xactware: Specializes in cost data for insurance and restoration, but also provides general construction databases.
- Craftsman Book Company: Provides resources like the “National Construction Estimator,” often used as a starter.
- BNI – National average cost data.
3. Construction Cost Indices:
- These indices track price changes over time and can help adjust historical data for current market conditions, however, best used for gross budgetary purposed.
- Examples include the Mortenson Construction Cost Index (by city), indices provided by the US Army Corps of Engineers and the Bureau of Reclamation, and RSMeans City Cost Index.
- Note that location factors and cost indexes are primarily used for preliminary estimates and may not be sufficient for detailed cost visibility.
4. Keep Data Updated:
- Construction costs fluctuate frequently due to market conditions, inflation, and other factors.
- Regularly update your cost data, quarterly is recommended, and monitor trends to ensure appropriate changes.
6. Use Construction Estimating Software:
- Software platforms can integrate cost data, streamline the estimating process, and improve accuracy.
- Cloud-based / SaaS access to the cost data can assist in improving collaboration and information sharing among owners, designers, and builders as well as proper oversight.
7. Understand Cost Components:
- Break down project costs into major groups like materials, labor, equipment, associated with productivity for granular construction tasks.
Why “accurate” applied to cost estimates is problematic:
- Lack of a True Datum: To determine accuracy, you need a known, fixed point of reference or “datum”. Construction projects, with their inherent complexities, fluctuating market conditions, and potential for unforeseen issues, lack such a definitive datum.
- Variable Factors: Numerous variables influence the final cost of a construction project, including planning, procurement, project delivery methodology, site-specific challenges, unforeseen conditions, and scope changes. These factors make it impossible to predict the exact final cost with absolute certainty at the outset.
- Misleading Comparison to As-Built Costs: Comparing an estimate to the final as-built cost is not a reliable measure of accuracy because the as-built cost is influenced by many factors that go beyond the initial estimate.
Focusing on Reliability and Verifiability:
Instead of aiming for unattainable “accuracy,” the focus should be on creating objective, reliable and verifiable construction cost data and estimates based upon local market conditions.
- Reliability: A reliable estimate is trustworthy and consistently produced with high quality data and methods.
- Verifiability: A verifiable estimate can be validated based on the information used to create it, including objective, granular, and locally researched cost data.
Key Characteristics of Reliable and Verifiable Cost Data and Estimates:
- Objective: Based on factual information and independent research, rather than subjective opinions or hidden factors or indeterminate calculations.
- Verifiable: Allows for validation of costs by providing documentation and data supporting the estimates.
- Detailed/Granular: Broken down into specific line items for individual construction tasks with an associated unit of measure (UoM) providing transparency and visibility into cost components.
- Current: Reflects current local market labor, material, and equipment costs.
- Locally Researched: Specific to the project’s geographic location, considering local market conditions and factors.
- Consistent Data Architecture: Organized using standardized classification systems like enhanced CSI MasterFormat, as well as enhanced UNIFORMAT as appropriate, which enhances consistency, communication, and overall project management, as well as lowering ongoing data reuse and maintenance costs.
By focusing on these characteristics, you can develop cost data and estimates that are more reliable and actionable, even if they cannot be “accurate” in the strictest sense of the word. This shift in perspective is crucial for better cost visibility, management, and ultimately, more successful construction outcomes.
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