Evidence-Based Estimating – Construction

Evidence-Based Estimating

Evidence-based estimating requires current, local market labor, material, and equipment costs for associated repair, renovation, maintenance activities associated with relevant means and methods.

While the traditional estimating remains largely dependent upon subcontractor proposal, historical data, and national average cost data with location and economic factors, none of these provide the verifiable cost data needed to enable cost visibility and reliable cost management.

Evidence-based estimating

Learn more about 4BT Local Market Cost Data and Evidence-base Estimating …

  1. Comprehensive
  2. Industry Format
  3. Verifiable
  4. Current
  5.  Granular
  6. Actionable

Construction cost estimating is critical for accurate budgeting, planning, and project execution. Many still rely on RSMeans national average cost data adjusted with location factors (e.g., City Cost Index, DoD Area Cost Factors), subcontractors, and/or historical data. While convenient, these methods often fail to reflect true local market conditions and can introduce significant risk to project costs.

Key Issues with Location Factors

  • Not Intended for Detailed Estimates: Location factors were designed for conceptual or early-phase estimates, not for appropriation-quality budgets.
  • High Error Potential: Studies report errors ranging from -100% to +200% when using location factor adjustments in early project phases.
  • Inability to Capture Local Conditions: Location factors cannot account for labor, material, or equipment variability , often resulting in cost swings.
  • Static Methodology: Not reflective of local market dynamics.
  • Budget Risk: Reliance on location factors can lead to inaccurate budgets, increased change orders, and funding shortfalls.
  • Contractor Disputes: Over- or under-estimated costs increase the likelihood of claims and project delays.
  • Limited Transparency: Stakeholders lack verifiable cost visibility, making cost management less effective.

Transitioning to current, verifiable, locally researched cost data provides the DoD with reliable budgets, stronger cost control, and better alignment with modern, collaborative construction delivery practices.

Evidence-based estimating

References

  • Gordian/RSMeans. (2025). RSMeans Location Factor Disclaimers and Methodology Notes.
  • Peitlock, B.A. (1998). Developing Location Factors Using a Factoring Method. ICEC International Cost Management Journal.
  • Migliaccio, G. (2013). Empirical Assessment of Spatial Prediction Methods for Location Cost Adjustment Factors. Journal of Construction Engineering and Management.
  • University of Colorado Denver, Dept. of Civil Engineering. (2017). Validation of Project-level Construction Cost Index Estimation Methodology.

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