While some degree of unit cost aggregation may be unavoidable, using assemblies or other “less detailed” groupings may adversely impact
cost analysis, tracking, and comparison.
Data classification is broadly defined as the process of organizing data by relevant categories so that it may be used and protected more efficiently. On a basic level, the classification process makes data easier to locate and retrieve
Regardless of the level of aggregation associated with a particular unit cost, it is critical to explicitly identify all the items that are included in each unit cost to enable the comparison of unit costs across projects and workorders!
Cost management involves different risks for all the parties involved, which highlights the need to manage risks properly.
• NEVER accept a lump sum estimate for a workorder/project without a full detailed line-item estimate and review of line-times and quantities. Public sector organizations have a responsibility to be good stewards of tax dollars.
• Fully audit cost estimate and actual cost information. Verify all aspects of the direct work (e.g., inspecting 100 percent of labor, materials, and equipment used) as well as the coefficient/adjustment factor used, and the type, number, and cost of non-prepriced line-items.
• Accept unit cost data with field verification of actual quantities, provided the unit price book (UPB) is locally researched and current. The UPB and its update frequency should be noted in the Job Order Contract.
Note: Use of traditional historical data and construction cost indexes is not comparable to current locally researched cost data. There are many construction cost data and indexes available:
• Handy-Whitman Index of Public Utility Construction Costs. These indexes show cost levels for different types of construction in the electric, gas, and water industries. The gas and electric indexes started in 1924, and the water indexes started in 1957. The indexes include general items of construction such as reinforced concrete and specific items of material or equipment such as pipe or turbogenerators.
• Engineering News-Record (ENR). ENR publishes several construction cost indexes including the Construction Cost Index (CCI) and the Building Cost Index (BCI). BCI uses rates for skilled labor from specific trades and applies them to projects where materials are the highest proportion of the project cost. CCI uses rates for common laborers and applies those rates to projects where labor is the greatest proportion of the project cost.
• RSMeans Cost Data, This document is for construction cost reference information. It includes unit price data for a wide range of
construction item levels or categories such as assembly cost tables and building square foot costs as well as a reference section that includes crew tables, historical cost indexes, and city cost indexes.
• Bureau of Labor Statistics’ Consumer Price Index (CPI). This index is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. It is the most widely used measure of inflation.
• Gross Domestic Product (GDP) Implicit Price Deflator. This index is a measure of the change in prices of all goods and services in the economy.