Digital Transformation Begins with Better Cost Information:
Why Real Property Owners Must Modernize Construction Cost Management
Global construction spending continues to grow at an unprecedented pace. McKinsey & Company projects that worldwide construction output could reach approximately US$22 trillion by 2040, placing increasing pressure on owners to make better investment decisions while controlling cost, schedule and project risk (McKinsey & Company, 2020).
Yet despite advances in facility management software, Building Information Modeling (BIM), Computerized Maintenance Management Systems (CMMS), Enterprise Asset Management (EAM), Integrated Workplace Management Systems (IWMS), artificial intelligence (AI), and digital twins, one fundamental problem remains largely unresolved:
Most organizations still do not know what construction work should objectively cost before procurement begins.
Instead, capital planning and project budgeting frequently rely upon one or more of the following:
- National average cost databases adjusted using city or regional location factors;
- Historical project costs escalated using economic indices;
- Contractor quotations that reflect each bidder’s individual business model, workload, overhead, profit and risk allocation; or
- Budget estimates developed from conceptual assemblies rather than detailed local market data.
While each of these approaches has legitimate applications, none provides an independently researched, objective representation of current local construction costs. As a result, owners often struggle with inconsistent budgets, difficult bid evaluations, change-order disputes, and limited transparency throughout project delivery.
Technology Alone Cannot Solve Poor Cost Information
Many organizations invest heavily in digital platforms hoping to improve project outcomes. However, technology can only process the information it receives.
Poor cost data simply produces poor digital decisions faster.
Whether utilizing an IWMS, CMMS, ERP, CAFM, BIM platform or AI-powered estimating tool, decision quality ultimately depends upon the quality, consistency and traceability of the underlying construction cost information.
As the well-known principle states:
People, Process and Information must come before Technology.
Technology helps to enable better decisions—it cannot compensate for inaccurate or non-standardized data.
The Missing “Single Source of Truth”
Unlike accounting, there is no universally accepted “single source of truth” for construction costs.
Labor rates vary between subcontractors.
Material pricing changes continuously.
Crew productivity differs by contractor.
Equipment costs fluctuate regionally.
Market competition shifts monthly.
Consequently, owner organizations often find themselves comparing contractor proposals against historical costs or national averages that may bear little resemblance to current local market conditions.
The result is uncertainty rather than transparency.
From Indexed Cost Books to Cost Engineering
Independent cost engineering guidance has increasingly emphasized that reliable estimating depends upon project-and location specific information, well-defined scope, transparent assumptions and current market conditions, not simply applying geographic adjustment factors to national averages (AACE International, 2020; NIST, 2015).
Recognizing these limitations, 4BT developed the OpenCOST™ methodology using a fundamentally different approach.
Rather than beginning with national averages and applying location multipliers, 4BT states that OpenCOST™ is developed through direct bottom-up research of local labor, materials, equipment costs and crew productivity within individual construction markets.
The 4BT database includes:
- More than 90,000 detailed construction line items;
- Quarterly local market updates;
- Separate reporting of labor, materials, equipment, crew composition and productivity;
- Standardization using the 50-division CSI MasterFormat® classification system; and
- Auditable, traceable unit-cost data suitable for budgeting, procurement and cost validation.
- A separate database for frequency-based preventive maintenance tasks including costs and associated checklists.
This approach provides owners with an independently researched benchmark that can be used alongside contractor pricing, rather than relying solely upon historical expenditures or indexed national averages.
Better Information Creates Better Governance
For facility owners and asset managers, objective construction cost data supports far more than estimating.
Reliable local cost information can improve:
- Capital improvement planning;
- Deferred maintenance forecasting;
- Facility condition assessments;
- Job Order Contracting (JOC), SABER, IDIQ, MATOC, SATOC, IPD;
- Public procurement evaluations;
- Independent government estimates;
- Value engineering;
- Change-order validation;
- Contractor negotiations;
- Budget confidence;
- Portfolio benchmarking; and
- Lifecycle asset management.
Instead of asking whether a contractor’s bid is simply lower than budget, owners can ask a more important question:
Does this work reasonably reflect current local market costs?
That distinction fundamentally changes procurement from price comparison to cost management.
Digital Transformation Requires Better Information
Artificial intelligence, cloud platforms and digital twins will continue transforming the built environment. However, these technologies are only as reliable as the information that supports them.
Real property owners seeking better capital planning, greater financial accountability and improved project outcomes should view construction cost data as critical infrastructure—not merely an estimating reference.
Objective standardized and locally researched cost information provides the foundation upon which better decisions, stronger governance and more transparent procurement can be built.
Digital transformation does not begin with software.
It begins with trustworthy information.
References
AACE International (2020) Cost Estimate Classification System – As Applied in Engineering, Procurement and Construction. Recommended Practice 18R-97. Morgantown, WV: AACE International.
McKinsey & Company (2020) The Next Normal in Construction. Available at: https://www.mckinsey.com (Accessed: 3 July 2026).
National Institute of Standards and Technology (2015) Life-Cycle Costing Manual for the Federal Energy Management Program (NIST Handbook 135). Gaithersburg, MD: U.S. Department of Commerce.
Project Management Institute (2021) A Guide to the Project Management Body of Knowledge (PMBOK® Guide). 7th ed. Newtown Square, PA: PMI.
Royal Institution of Chartered Surveyors (RICS) (2021) New Rules of Measurement (NRM1): Order of Cost Estimating and Cost Planning for Capital Building Works. London: RICS.
Trademark Disclosures
OpenCOST™ is a trademark of Four BT, LLC.
MasterFormat® is a registered trademark of the Construction Specifications Institute (CSI) and Construction Specifications Canada (CSC).
