1. Dependable Cost Estimating Software is needed to develop reliable construction cost estimates.
   Requirements for dependable cost estimating software include.
   1. Objective, current, verifiable, and local granular construction tasks inclusive of labor, material, equipment, and productivity components as well as a unit of measure.
   2. Cost data organized by a well-defined Work Breakdown Structure (WBS) and standardized data architecture such as expanded CSI Masterformat.
   3. The ability to create modified/custom unit price line items by adjusting labor, material, equipment, crew, and productivity data.
   4. Cost estimate copy and paste.
   5. Collaborative online cost estimate review and/or creation.
   6. Automatic cost estimate comparison.
   7. Ease-of-use.
   8. Scalability.
   9. Security.
   10. Multi-level and multi-format training and full technical support.
   11.Ability to add mark-ups, fees, etc….

Preconstruction Focus is critical

Regardless of the activity, repair, renovation, maintenance, or new construction, or project size, Integrated Planning and Procurement teams and processes within a robust standardized framework are essential to project success. While any organization with requisite talent and funding can build and maintain an accurate, up to data, repository of tens of thousands of construction line items, the resources required are nontrivial.
There is now a source of current, objective, verifiable construction cost data available to owners and design-builders.
Four BT, LLC leverages extensive knowledge of the processes, labor, materials and equipment for all types of commercial construction activities, including repair, renovation, maintenance, and new construction. Databases are per location and are updated quarterly. There is no use of location or economic factoring, or national average cost data.
Furthermore, our technology was specifically built to support the needs of estimators to easily and quickly build, review, and share information, as well as share insights via line-item notes, and the ability to easily reuse and update proposals.

Set up a quick introduction…

Construction Target Costing is a method used to shape repair, renovation, maintenance, or new build outcomes and process design to deliver customer value within specific constraints. Despite its effectiveness, it is seldom utilized by public sector real property owners. To effectively implement Construction Target Costing, several key elements must be considered:

1. Detailed technical and cost requirements for the project should align with current commercial construction standards. These requirements should be meticulously developed using precise labor, material, and equipment information sourced from the local market.

2. Collaborative preconstruction activities are essential. Internal and external Planning, Procurement, and Project Delivery Teams should engage in thorough information sharing to ensure a cohesive approach.

3. Embracing robust and collaborative “construction” delivery methodologies is crucial. This includes the creation of written execution plans or operation manuals, along with a multi-party contract that incorporates quantitative metrics for a successful project outcome.

Reach out to learn more…

• Hold a kickoff workshop
• Use a set based approach, evaluating sets against target values
• Provide cost and constructability guidelines  and ensure process standardization
• Require collaboration
• Continuously improve uopn technical and cost detailing
• Use value engineering proactively
• Hold reguar review

FM productivity constraints remain a barrier for most public sector areas.

FM productivity constraints remain a barrier for most public sector organizations, presenting barriers to efficient sustainment & new builds.

To address rising sustainment (repair, renovation, maintenance) and new build costs, robust, integrated Planning, Procurement, and Project Deliver Frameworks arecincreasing needed to maximize resource utilization.Yet public sector organization are still not providing the Leadership, Commitment, and Accountability in this area.

Legacy policies, practices and systems are the biggest barriers to requisite change management, the latter capable of delivering 30%-40%+ reductions in financial and environmental waste. Transformation, thought sorely needed, does not appear to be on the horizon.

Challenges to Sustainable FM in the Public Sector
1. Lack of real property owner leadership, commitment, and accountability
2. Planning, Procurement, and Project Delivery Teams not ready, or not willing, or not being allowed to implement efficient methods and technologies.
3. Barriers to collaboration among owners, architects, engineers, and builders.
4. Poor information management
5. Lack of clear priorities
6. Lack of awareness and education relative to efficient lifecycle facilities management.

The importance of financial, environmental, and social governance is clear, however, measurable improvement remains nonexistent.

Pathway to Sustainable FM in the Public Sector
1. Organizational Leadership, Commitment, and Accountability
2. Integrated Planning, Procurement, and Project Delivery
3. Support of Change Management
4. Adoption of robust Programmatic project deliver methods
5. Use of objective, current, granular, Local Market, labor, material, equipment and productivity data
6. Mandatory initial and ongoing multi-format, multi-level training in collaborative FM lifecycle total cost of ownerships asset management methods
7. Quantitative performance metrics
8. Regular independent audits

Request more information or set up a Teams meeting!

Managing change orders for any size of repair, renovation, maintenance, or new build project, whether IPD, alliance job order contracting, DB, DBB, ‘et al’,  simply requires a robust preconstruction process in most instances.

A granular, well communciated (among owner and design/builders), well organized (using a standardized data architecture such as expanded CSI MasterFormat) DETAILED SCOPE OF WORK, eliminates of 90% of change orders.

Change orders should not result from errors and omissions,  coordination issues, means and methods, or material substitutions as these are all manageable via application of robust, detailed scope of work (SOW) development.   Objective, granular, current, local market granular construction task data is a requisite tools for robust scope of work development.

Typical change orders that may not be attributed to inefficient preconstruction activities include.

Agency change orders –  Originate from permitting or regulatory organization and not associated with existing standard codes.

Discovered site conditions – Site conditions not readily found using standard pre-construction practices.

Owner scope change – Changes initiative by the real property owner  is the most common reason for work scope modification.

Learn more about Managing Change Orders…

A robust and integrated Construction Planning, Procurement, and Project Deliver Framework is the pathway to reducing change orders, lowering project costs, and ensuring timely delivery.

The management of change orders  projects is a dynamic process beginning early in a project lifecycle and involves all project participants and stakeholders from day one.  A robust project delivery framework is needed and must be supported by both a written contract and an operations manual or execution guide.   This proactive and collaborative approach of sharing cost and technical requirements from day one can ensure 30%-40% cost saving vs. traditionalmethods.

Owner and service provider teams jointly bear risk and share in reward and foucs upon  collaborative planning and effective communication.,ensuring project continuity and success.

The benefits of circular construction and a consistently applied programmatic approach to all repair, renovation, maintenance, and new build projects include a significant reduction in financial and environmental waste.

Keywords: Construction, facilitiesmanagement, totalcostofownership, assetmangement,  lifecycle, costmanagement, Circular economy, Recycling, Waste management, Reuse, Machine learning

What is circular construction?  The application of strategies such as integrated planning, procurement, and project delivery, and a regenerative model for materials reuse, design for disassembly, prefabrication, and recycling for reducing resource consumption and waste.

What is circular procurement?  A process of prioritizing the purchase and user of  products and services designed to minimize waste, maximize resource reuse, and extend “product” lifespans throughout their entire lifecycle, thereby supporting a more sustainable supply chain; essentially, it involves looking beyond initial purchase price to consider the product’s entire life cycle and potential for recycling or reusing materials when it reaches the end of its useful life.

The construction industry is a heavy consumer of natural resources including materials and energy consumption and a major contributor to environmental issues including  elevated greenhouse gas (GHG) emissions, air pollution, environmental degradation, and global warming.  Furthermore, approximately 80% of construction materials end up as waste at the end of their useful life, and 80% 0f construction projects* are over budget, late, or completed with some level of perceived dissatisfaction from participants/stakeholders.

Unfortunately, the lack of a centralized materials reuse/recycling model specific to the built environment presents a major barrier, as does the relative lack of leadership to support requisite change throughout the AECOO** sector.  Additionally, knowledge sharing among built environment participants and stakeholders (owners, architects, builders, materials suppliers…) remains limited due to industry culture.

A prioritization of material reuse and lifecycle asset management form both overall cost and benefit perspectives must occur before the AECOO sector can achieve any level of measurable improvement.

*Construction includes new builds, rebuild, renovation, or maintenance activities.

**AECOO – Architecture, Engineering, Construction, Owner, Operator/Operations

The Guide to Construction Cost Optimization provides a road map for applying best management practices to drive financial visibility and transparency.

Introduction

Objective, verifiable, and locally researched detailed line-item unit price construction data provides the highest level of cost visibility and cost management capability.

Since other levels or types of cost estimating can’t meet this level, care should be given as to what form of cost data is being use.

Other, less stringent forms of cost estimating include the following: national average line-item cost data (with or without adjustment or localization factors), system or assembly level cost data,  building level and/or other forms of parametric cost data, as well as historical cost data and economic factoring.

Labor

Based upon contract requirements, local labor costs may be sourced from published Davis Bacon Wage Rates, or published state data sources, or directly researched local prevailing wage rates with appropriate inclusion markups for worker compensation, unemployment, liability insurance and allowance for small tools and consumables.  In the public sector,  federal government contracts may require Davis Bacon Wage Rates or prevailing wage rates, or both, with the usage of the higher of the two.   Markups include worker compensation and unemployment insurance costs per state in which work is performed. Liability insurance based upon local contractor rates is also added as a percentage. Finally, a percentage of labor is added for small tools and consumables based upon the labor category. The base rate usually does not include overhead and profit, however, can be added later to ensure data integrity.

In addition, highly specialized subcontract items may require travel and per-diem expenses for mechanics.

The labor-hours expressed in quality construction cost databases reflect average installation time, using an efficiency level that is consistent with the particular trade.

Material Costs

Material costs are local for commodities such as concrete, asphalt and aggregate. Other material costs are based upon either local costs, national or regional costs. Many items that are researched do not vary nationally due to the national pricing by many vendors and manufacturers. Some costs are regional and are priced for large areas of the country such as western, central and eastern states. If regional or national prices are used, these should be checked against local pricing to assure that the local costs do not significantly vary. Material costs are either local, regional or national depending upon the location. Sales tax is generally not added unless requested to ensure data integrity.   Material prices must consider whether local areas are remote  or congested inner-city regions which can cause significant variance.

Equipment Costs 

Equipment costs are either local rates or a national rate for each piece of equipment used in crews performing the task based upon daily usage. Overhead and profit markups are not included in the pricing, but can be added electronically to the database as needed.
General Conditions

General overhead and profit can be added by percentage if desired.  In addition, some general provision items can be added to the estimate such as construction trailers, cleanup and temporary power.
Quality / Quantity

The prices for materials and the workmanship are based upon normal construction standards. Many material prices can also be adjusted for quantity as an adjustment factor in the database.   The are generally provided in the form of line item modifiers.  Modifiers are add or deduct cost from the parent line item.

via Four BT, LLC, the AEC industry’s innovative integrated project delivery, detailed locally researched construction cost data, and SAAS technology solutions provider. Integrating powerful, proven project planning, procurement, and execution methods to help guide organizations to achieve accelerated improvement of their facilities repair, renovation, and construction outcomes. We focus upon supporting a collaborative culture and client-specific programs centered upon delivering customer value, driven by, proven LEAN processes, actionable data, enabling cloud technology, ongoing training, and continuous improvement.

Better CONSTRUCTION COST ESTIMATION workflows can be used by owners and design-builders to better navigate the journey to improved cost visibility and cost management.

Leveraging single resource for  Objective, Verifiable, and Current LOCAL MARKET granular construction tasks (over 90,000) replete with labor, material, and equipment costs and productivity informatoin is a proven pathway to the development of a ROBUST SCOPE OF WORK and OnBUDGET project delivery.

Reliance on subcontractor or contractor quotes and national average cost data and location factoring, or historical cost data introduces significant cost errors of 30% to 40%+.

Learn more today.

Engage in data driven cost estimating with objective, verifiable, and current local market labor, material, and equipment price books from 4BT (Four BT, LLC).

Approximately 90,000 line items including demolition lines and line item modifiers available within an easy-to-use web application.

Target Value Delivery (TVD) is “a management practice that drives the (design and construction) to deliver customer values within project constraints” (Ballard, 2009).

How to apply TVD:

1. Early involvement and ongoing participation of owners, engineers, and design/builders.
2. A robust collaborative project delivery methods and associated written “execution guide” or “operations manual” as part of contractual documents that aligns mutually biennial goals and outcomes for all participants.
3. An objective, verifiable, and current, granular, locally researched database of labor, material, and equipment costs and tasks, shared by all participants and organized in a standardized, easily understood and manageable manner.  Learn more.
4. A centralized data repository and associated quantitative metrics
5. Initial and ongoing training for ALL participants and stakeholders.

The importance of actionable construction cost data cannot be overstated.  From preconstruction through procurement and project delivery, actionable construction cost data is required in order manage multiple aspects of any size repair, renovation, maintenance, or new build project.

Characteristics of actionable cost data:

1. Organized using a standard data architecture – example CSI Masterformat
2. Objective and verifiable
3. Granular components – Individual construction tasks, each with a Description (in plain English and using industry standard terms), Unit of Measure, Labor type and cost, Material type and Cost, Equipment Type and Cost, Productivity rate (based upon associated crew)
4. Locally researched – (national average cost data and location factoring provides insufficient cost visibility)
5. Current – (Cost data should be updated quarterly at a minimum, or more frequently based upon market events)

Granularity and Specificity:  Locally researched cost data offers detailed, project-specific information, capturing variations in costs within specific locals, regions, or even specific sites. It considers the exact materials, labor, and equipment required for the project’s location.  The use of construction cost indexes or area location factors, or other generalized adjustment factor does not capture these fine details, potentially leading to inaccuracies of up to 30% to 40%+ or greater.

Curret actionable cost is is critical in an economic environment where costs can fluctuate rapidly.  It is directly sourced from the market where the project is being executed. It can account for local variations in labor, material, equipment and site conditions.

Lean construction aims to embody the benefits of the Master Builder concept, as does Advanced Job Order Contracting, Integrated Project Delivery, and Alliance Partnering.

The Master Builder concept is an ancient approach to construction, where a single individual or entity is responsible for both the design and the construction of a project. This role encompasses all aspects of planning, architecture, engineering, and building, integrating both creative and technical responsibilities. Historically, the master builder was seen as a highly skilled craftsman and a leader who had deep expertise in all areas of construction, overseeing projects from inception to completion.

Key Characteristics:

1. Unified Responsibility: The master builder held ultimate responsibility for the project, ensuring it met design intent, functioned properly, and was built to high-quality standards.
2. Integration of Design and Construction: Unlike modern construction, where design (architecture) and construction are often separate entities, the master builder concept integrates both, allowing for seamless communication between design intent and execution.
3. Holistic Vision: Master builders had a comprehensive understanding of the entire construction process, from material selection to structural integrity, which allowed them to create cohesive, well-executed projects.
4. Historical Examples: Many iconic structures from ancient times including medieval cathedrals, Roman aqueducts, were built under the master builder model.

Modern Context

In modern construction, the master builder concept has evolved into initial concepts such as design-build, where a single entity manages both design and construction. While specialization and complexity have grown over time, the core idea of integrating design and construction to ensure quality, efficiency, and cohesion remains valued.

Today the Master Builder concept has evolved into frameworks like Integrated Project Delivery (IPD), where a single entity or team is responsible for both the design and construction of a project, and Advanced Job Order Contracting (example OpenJOC(TM) Open Job Order Contacting.  Although today’s construction processes are more specialized and fragmented than in ancient times, the underlying goal of integrating planning, design, procurement and project delivery/construction remains, aimed at improving efficiency, reducing conflicts, and enhancing project outcomes.

Key Modern Concepts Based on the Master Builder Idea:

1. Design-Build (Partial Lean solution):
   • Single Entity Responsibility: In the design-build model, one company or a team is contracted to handle both the design and construction aspects of a project. This contrasts with the traditional design-bid-build approach, where design and construction are handled by separate entities.
   • Advantages: This integration helps to streamline communication, reduce delays, manage costs more effectively, and minimize disputes between designers and builders.
   • Collaboration and Efficiency: The design-build process fosters collaboration from the start, as the design team works directly with the construction team to ensure the design is feasible, constructible, and cost-efficient.
2. Integrated Project Delivery (IPD):
   • Shared Risk and Reward: IPD is a highly collaborative approach that brings together the owner, designers, contractors, and often key subcontractors under one contract. All parties share the risks and rewards, fostering greater collaboration and innovation.
   • Technology Integration: The use of advanced technology, such as Building Information Modeling (BIM), enables better coordination between design and construction teams, echoing the holistic control the master builder once had over a project.
   • Focus on Outcomes: IPD aims to optimize project results, increase value to the owner, reduce waste, and maximize efficiency, aligning with the master builder’s role in ensuring the best possible outcomes.
   • Lean Construction Principles: Modern construction methods, especially those involving Lean principles, emphasize waste reduction, collaboration, and continuous improvement, which are aligned with the holistic vision of the master builder.
3. Advanced Job Order Contracting (JOC):
   • Integrated Planning, Procurement, and Project Delivery: While JOC has been traditional used primarily as a method to speed procurement, when deployed more holistically, as a Broader Integrative Tool it can serve as a comprehensive tool that integrates planning, procurement, and project delivery, leveraging granular cost data to enhance overall cost management and project outcomes.  JOC can synchronize internal planning (like project scheduling and resource allocation) with external factors such as contractor selection and supply chain management. This creates a cohesive framework for managing projects, ensuring that all steps align with the broader organizational goals.
   • Single Source of Responsibility:  In a JOC, like in the Master Builder concept, there is a single point of responsibility for executing the construction projects. The contractor is on-call for various jobs under a pre-negotiated contract, making them the go-to for all construction-related tasks within the scope.  The JOC contractor is responsible for managing and delivering construction outcomes, similar to how a Master Builder would oversee and manage the entire building process.
   • Efficiency and Streamlined Processes:  JOC is designed to allow for quick mobilization and execution of smaller, repetitive construction tasks without the delays of traditional bidding. This reflects the Master Builder’s ability to directly execute or oversee work without the inefficiencies caused by fragmented responsibilities. The pre-established pricing models and workflows in JOC resemble how a Master Builder might rely on standardized processes to maintain efficiency and quality over a series of projects.  The costs data used however must me current, objective, granular, and directly based upon locally researched labor, material and equipment costs and not based upon national averages and/or cost factoring.
   • Ongoing Relationship and Collaboration: In JOC, the contractor maintains an ongoing relationship with the client (often public instituion) over time, addressing multiple projects under a single contract. This ongoing collaboration is akin to the long-term relationship a Master Builder might have had with a patron or community, handling multiple construction tasks as needed.  The contractor becomes familiar with the owner’s needs and preferences, which can improve project outcomes—similar to how a Master Builder’s understanding of the client and their vision would contribute to success.
   • Objective, Granular Cost Data: One of the significant advantages of JOC is its ability to leverage current, verifiable cost data. The use of unit price books (UPBs) or other cost databases provides a transparent, accurate picture of costs for various tasks. This aligns with the need for cost visibility and transparency you mentioned earlier, which is crucial for effective cost management, especially in a Lean construction context.
   • Enhanced Cost Management: By using real-time, detailed cost information, JOC enables better cost prediction, tracking, and control. This can help avoid the common pitfalls of cost overruns or inaccuracies seen in more traditional models. The availability of such data also helps improve decision-making during the design and construction phases, similar to how the Master Builder’s deep knowledge ensured efficient project delivery.
   • Project Delivery Improvement: By fostering a streamlined and collaborative environment, JOC can help integrate project delivery processes with cost data and procurement in a way that improves efficiency, reduces waste, and leads to better project outcomes. This approach creates a feedback loop where data from completed projects inform future planning, creating continuous improvement in the process.
     • Efficiency and Control: Like the Master Builder, JOC allows for efficient execution, particularly for recurring or similar types of projects. The focus on efficiency and managing resources well, without the delays of traditional procurement methods, is a shared characteristic.
     • Continuity and Expertise: The long-term relationship between the JOC contractor and the client is somewhat analogous to the ongoing role of a Master Builder, who would have been relied upon for various construction needs over time.
     • Modern Applications of JOC Reflecting Master Builder Concepts:
       In summary, JOC shares some aspects of the Master Builder concept, particularly in terms of efficiency, single-source responsibility, and continuity.  It focuses on efficient, pre-planned construction tasks, often based on existing designs or minor modifications, and collaboration between owners and design-builders.  When implemented fully, JOC can integrate planning, procurement, and project deliver professionals.  JOC’s ability to integrate these elements makes it a powerful tool not only for procurement but also for project delivery and cost management, much like the holistic oversight of a Master Builder in modern terms.

Comparison with Historical Master Builder:

• Specialization: Modern projects often involve highly specialized roles (architects, engineers, contractors, etc.), unlike the generalist master builder of the past. However, these specializations are now more integrated under frameworks like design-build or IPD or advanced Job Order Contracting
• Collaborative Tools: The use of robust processes, actionable data, and advanced technology enables a level of precision and collaboration that the historical master builder could only achieve through deep personal expertise and oversight.

In essence, the modern construction industry’s shift toward more integrated, collaborative delivery models mirrors the holistic approach of the ancient master builder, but leverages modern technology and organizational frameworks to manage the complexity of today’s projects.

Isn’t it time for owners, designers, engineers, and builders to STOP thinking about accurate construction cost estimates?

The fact of the matter is that there is no such thing as an “accurate construction cost estimate”. 

Measuring accuracy requires a reliable reference point or datum.  In construction cost estimating there is no such value.  Many mistakenly use the actual build cost, others use historical costs, while other depend upon experience to measure some level of accuracy.  None of these can serve as a datum.  Bad datums provide poor measurements.

A construction cost estimate, however, can and should be Objective, Current, Granular, and reflect LOCAL Market Labor, Material, and Equipment costs.   A detailed, line items estimate using this information provides the highest level of cost visibility, transparency, and management possible.

A detailed line item cost estimate using objective, current local market granular line item construction task data delivers should therefore be used prior to the procurement of ANY repair, renovation, maintenance (including preventive, routine, etc.), and new construction service.  This is especially true for public sector organization where fiduciary responsibility is a legal and professional requirement.

GSA PBS JOC Program Management Audit – Issues Continue:  The General Services Administration (GSA) Public Buildings Service (PBS) has faced scrutiny and criticism in the past for various financial and management issues, including those related to Job Order Contracting (JOC) programs.

Financial Management Issues

1. Budget Overruns: There have been instances where projects managed by GSA PBS exceeded their budget estimates, leading to increased costs and financial inefficiencies.
2. Mismanagement of Funds: Audits and reports have sometimes highlighted improper use or allocation of funds, affecting the overall financial health of the agency.
3. Lack of Accountability: Poor financial tracking and reporting mechanisms have occasionally resulted in a lack of accountability for spending, making it difficult to identify and rectify financial mismanagement.

Job Order Contracting (JOC) Program Management Issues

1. Inefficient Contracting Processes: Delays and inefficiencies in the contracting process have been a recurring issue, affecting the timely execution of projects.
2. Lack of Oversight: Inadequate oversight and monitoring of JOC projects can lead to quality control issues and deviations from project specifications.
3. Contractor Performance: Problems with contractor performance, including failure to meet deadlines and deliver quality work, have been reported. This can be attributed to both the selection process and insufficient management of contractors.
4. Cost Control: Challenges in controlling costs within the JOC program have led to budget overruns and financial inefficiencies, similar to broader financial management issues within the GSA PBS.  GSA continues to use national average cost data and location factoring for JOC Programs, despite the availability of objective, verifiable, current, granular construction labor, material, and equipment construction task data that is locally researched.

Addressing these issues often requires systemic changes, improved oversight, and stronger accountability mechanisms to ensure better financial and program management.

GSA PBS continues to faces challenges with the management of JOC Programs and cost control. A recent assessment highlighted deficiencies in pricing for the PBS Southeast Sunbelt Region’s Job Order Construction contracts. The audit revealed inflated or unsustainably low pricing due to flaws in price analyses. Inappropriate use of flawed pricing also impacted project cost estimates. Find out more in the memorandum: [Link to the memorandum](https://lnkd.in/eVmEKpgz)