Construction Cost Estimating


Best practice, consistent, and efficient construction cost estimating should consider Owner, Builder, and AE requirements. Here’s a shortlist for your consideration and comment.

1. EXPERIENCE, EXPERIENCE, EXPERIENCE. Nothing is more important than decades of actual experience in the field as well as detailed line item experience.

2. COMMUNICATION – Use industry standard terms in plain English for each construction task. Minimize the use of acronyms and/or abbreviations. In fact only use abbreviations for units of measure.

3. Common data format (CDE) – Use CSI MasterFormt (50 division) to organize data.

4. Detail – Assure labor, material, and equipment breakdowns are available for EACH task as appropriate.

5. Integrate your work with a LOCALLY RESEARCHED unit price commercial construction cost data base. You can’t know or keep up to date on everything, and even if you did/could, this is a great way to supplement your data. DO NOT USE a national unit cost book and/or location factors/indexes.  The latter will introduce significant error.

Construction Cost Estimators, BIM, and Efficient Project Delivery

Are Construction Cost Estimators an Obstacle to Efficient Project Delivery and BIM?

Even today, most construction cost estimators continue to rely exclusively upon spreadsheets, despite well documented issues with the practice.

Are you a cost estimator, a software developer, or a cost estimator that develops software for others to use?   Good dedicated cost estimating software programs are successful for a reason. They improve one or more of the following; productivity, consistency, transparency, and/or collaboration.  They do NOT limit creativity, but simply provide a more robust environment.

That is not to say that both a spreadsheet approach – Excel, Excel with a database (Access, etc.) Google Spreedsheets, et a –  and dedicated cost estimating/project management software do not have limitations. Any objective comparison can easily reveal associated pros and cons. One solution is NOT better than the other, and associated arguments in this realm are for novices.                                       

A one were to analyze the market, it not surprising that most estimators use spreadsheets (w or w/o database support). That said, it’s a statistical result, as most estimators also work independently and/or on smaller jobs, and/or do a limited number of estimates, and/or work in relatively specialized areas.  Thus, while most good  cost estimating software applications share many of the characteristics/features found within spreadsheets, yet add higher levels of security, error detection/correction/prevention, collaboration, information updating and reuse… they are simply not needed by estimators in the above noted categories.

However, what about the folks who clearly should NOT be working in spreadsheets?  The ones that do a high number of estimates, and/or need to collaborate, and/or who need to perform rapid estimate comparision, and/or easily update and/or reuse cost estimates etc.  A significant percentage of cost estimators continue to exclusively use spreadsheets, and/or develop their own software when this is contrary to their benefit and/or their organizations and/or clients benefit. 

Why? Is it because they are afraid and/or unwilling to share information?  Are they afraid of advanced technologies?   Are they simply from a generation incapable of change?

My thought is that many construction cost estimators, just like many architects, engineers, contractors, and owners are “victims” of their environment.   That environment is shaped by impractical, inefficient, and antagonistic construction delivery methods such as design-bid-build, and even the somewhat improved design-build.

Until Integrated Project Delivery – IPD, Job Order Contracting – JOC, and similar collaborative construction delivery methods are recognized for their true value, little positive change will occur within the AEC or AECOO community.

Thus BIM, the life-cycle management of the built environment, with also be stalled until collaborative construction delivery methods become mainstream.    In this regard, we all must shift from our current   “first cost mentality”  to decision support systems based upon total cost of ownership and life-cycle costs.





Why is the Construction Industry so UnProductive?

I recently received a marketing email from a “nationally recognized” AEC software vendor that said that their product “works with any construction-estimating solution in the market” because it used MS SQL.

They went on to say that “We can compare project estimates from ….any other estimating package…”

Well, there it is… I leave it to you.

From my perspective, lack of proper education, awareness, and blatantly inaccurate marketing are just a few of several reasons why our industry is so unproductive.

The use of SQL, even with “attribute filters” does NOT mean anyone can compare estimates from any program. In fact, many/most experienced software engineers and/or cost estimators might just view this as a singularly silly thing to say.  Isn’t it the detailed data format that would enable of disable this ability…not to mention an associated robust cost data architecture and associated ontology?

Sure one attempt to parse information from different cost estimating programs and data sets, but truly compare estimates side by side, much less automatically… other than simple viewing and going thru each line item for material, equipment, labor and productivity factors manually… nope, nada, not going to happen.

Your thoughts?

5 Steps to a Successful Construction Cost Estimate

1.Collaboration – To paraphrase, “no successful cost estimator is an island”.  It is critical to understand the full scope of any project.   Collaboration spans discussions with Owners, Contractors, Subs/Trade, site visits, sharing estimates and jointly reviewing/refining and negotiating estimates, and more!

2. Transparency – Despite what you may hear, there is no “secret sauce” involved in cost estimating, and no “black magic” either.  It’s all about experience and the application of robust business process and appropriate use/re-use of available cost data, including so called “reference cost data” such as RSMeans.  All stakeholders must be able to understand the cost estimate thus transparency is a requirement.

3. Technology – Collaboration, transparency, accuracy, productivity and other factors are directly impacted by technology.  Using the appropriate tools for the job is just as important for cost estimating as it is for a  construction project.  The exclusive use of spreadsheets for multiple concurrent projects and/or larger projects is typically unproductive and error prone.  Don’t fall into the “spreadsheets can do anything” trap.  That said, there is no cost estimating software application that can do everything (residential, commercial, government, …) well.  So look for ‘best of breed’ applications that are built for your needs!

4. Information – Extensive  detailed line time cost databases, such as those from RSMeans, as well as historical costs and other third party sources are extremely important relative to productivity and accuracy.  They enable information re-use, data validation, and more.   That said, proper attention must be paid to the data architecture (how information is categorized, updated, and stored).

5. Localization – Every construction job, while sharing many similarities, is different.  Each cost estimate must be localized for physical site conditions, physical location, as well as local labor and material availability.

4. Granularity – A big word, I know… but understanding the inter-relationships and variability associated with material, equipment, and labor for each activity or task is critical.   Are you using union, open shop, Davis-Bacon…  what is the source of your information, what sample size are you using,  what could affect productivity, ….
5.  Parallel Approach – Top down or bottom up?  The answer is both!   Clearly one must understand the overall value associated with a certain project.  That said, detailed line items with associated labor, materials, and equipment, and an associated bill of materials (BOM) are requirements for transparency and to mitigate errors and omissions.

via – Premier cost estimating and project management software for efficient project delivery – JOC, SABER, IDIQ, SATOC, MATOC, MACC, POCA, BOA, ….

BOARDROOM BIM – Is Building Information Modeling Relevant to C-level Executives?

Efficient life-cycle management of the built environment (BIM) is critical to many/most members of senior management, if just that they don’t know it.

The success or failure of many organizations is directly linked to the built environment for the majority of public and private organizations.   From a financial perspective, facilities and infrastructure are second only to personnel in terms of bottom line costs.   Whether in manufacturing, DOD, healthcare, education, banking/finance… or almost any sector…   facilities are directly linked to the organizational mission and impact the ability of an organization to perform that mission.   Lastly, and not least important, environmental impacts of the built environment are significant, consuming 30%+ of total non-renewable energy and contributing to 30%+ of greenhouse gas emissions.

So, why has the “BOARDROOM” virtually ignored the efficient management of the built environment? Simple, facility management executives have not presented key information to senior managers in language the latter understands – impacts to the bottom line, mitigating risk, remaining competitive, retaining key personnel, in short, the built environment’s linkage to organizational mission.

Furthermore, many/most facility managers do not fully understand/appreciate the context and/or requirements and processes associated with efficient life-cycle facility management / BIM.   And for that matter, nor do many so called IWMS software vendors (Integrated Workplace Management System).  Many individuals associate BIM with 3D modeling and construction, vs. “true BIM”, the total cost of ownership management of the built environment.

Climate change is real, no debate left… period.  If for no other reason than to mitigate human impacts upon climate change, efficient facility life-cycle management should be a REQUIREMENT at the boardroom level.   Of course, mere long term survival of the human race as we know it may not be a concern of some c-level folks focused exclusively on quarterly profits.  So, for those individuals, FMers need to help the c-level gain visibility into the bottom line costs currently expended upon operating physical infrastructure and the associated direct and indirect impacts the condition of the built environment has upon product/services quality, dollars wasted upon unscheduled/emergency maintenance/repair vs. preventive/schedule maintenance/repair and renovation, risk mitigation, etc. etc.

“The AECOO industry (Architecture, Engineering, Construction, Owner, Operations) as a whole needs to invest more time and management to fully implement what is an entirely new approach to a traditional industry.”

BIM is a strategic, boardroom-level resource if applied properly.  What is your organization to plan for the future of collaborative, efficient facility life-cycle management?

Collaboration the key obstacle to BIM / efficient management of the built environment.  There is no to barrier to BIM except those people construct around themselves.” – Premier software for construction cost estimating and efficient project delivery – JOC – Job Order Contracting – SABER – SATOC – IDIQ – MACC – POCA – BOA – MATOC ….

BIM Framework – Process for Facility Life-cycle Management

Visual Construction Cost Estimating – Advanced Grade Beam

Use of eTakeoff Advanced extension doing Grade Beam takeoff with multiple variables and four outputs

via – Premier software for cost estimating and efficient project delivery – job order contracting – JOC, SABER, IPD, SATOC, IDIQ, MATOC, MACC, POC, BOA …

BIM Construction Cost Estimating – Top Ten List

First and foremost BIM is the life-cycle management of the built environment supported by digital technology.  While the industry is currently fixated upon 3D visualization tools, aka Revit, Archicad, Bentely… they only represent components of a BIM solution.

Construction cost estimating, and facility life-cycle cost estimating are critical components of any facility design, project delivery, repair, renovation, sustainability, or planning function.

Here’s a list of BIM Construction Cost Estimating Requirements:

1.  Collaboration – involvement of all stakeholders – Owners, AE’s, Contractors, Oversight Groups, Community …

2. Transparency – Appropriate access to cost information, and associated comparison to published independent third-party costs such as RSMeans Cost Data.

3. Consistent Format and Terminology – Use of a standard set of terms and data architectures such as Uniformat, Masterformat, Omniclass.

4. Metrics and Benchmarks – Time, Accuracy, Cost

5. Proper allowances for local conditions – geographic, weather, productivity of labor, …

6. Appropriate level of technology to assure productivity, collaboration, security, audit trail.

7. Robust Process – The application of a robust process and business “best-practices” with a focus upon continuous improvement.

8. Appropriate knowledge of all “levels” of construction cost estimating and their potential accuracy – Square Foot / Conceptual / Building Level Construction Cost Estimating, Assembly / System Level Construction Cost Estimating, Unit Line Item Construction Cost Estimating.

9. Knowledge of the impact of the Construction Cost Delivery Method upon construction costs and life-cycle costs – Design-Bid-Build, CM@Risk, Design-Build, Job Order Contracting, Integrated Project Delivery

10. Fundamental understanding of Total Cost of Ownership and Facility Life-cycle Management – Physical and functional conditions, Operations, Sustainability, Renovation, Repair, Efficient Project Delivery Methods ( IPD-Integrated Project Delivey, JOC – Job Order Contracting )

Estimating, Project Delivery Methods and Improved Construction Productivity

Accurate construction estimates are a fundamental component of any successful construction project.

The more accurate the scope of a construction project, the more accurate the estimate.

To achieve accuracy in both the scope and the estimate requires collaboration and communication among Owners, AE’s, and Contractors.  Thus, while many/most AEC professionals could likely provide an accurate estimate if provided an accurate, detailed scope of the project, the latter is rare.

The endemic lack of collaboration among Owners, AEs, and Contractors, as well as relatively low percentage of timely accurate construction project scopes are both due to the inconsistent application of robust project delivery methods.

Any significant improvement in construction cost estimating and associated procurement, project management, and actual job-site work must be based in the development and deployment of efficient project delivery methods, such as Integrated Project Delivery (IPD), IPD-lite, Job Order Contacting(JOC).

Accurate scoping requires a knowledge of the construction processes. Unit costs and standardized data architectures and lexicon play key roles in accurately communication project requirements, however, AE, site, and execution components all impact unit pricing.

Converting scope to quantities requires a solid understanding of construction techniques, working with numbers, drawing scales, waste factors, plan reading, conversion factors, labor/material/crew/equipment variables …. and quantity take-off (QTO) and unit, assembly, system, and square foot costs are all important aspects.  For example, professional estimators..whether Owners, Contractors, or Independent,  get their unit costs a wide range of sources… historical information, contractors, trades, business product manufactures, as well as published national average, and localized cost data.
While a  lump sum price is so much more than “just” the total of unit material, labor and equipment costs, unit costs and standardized cost data architecture do, however, help in mitigating “missed items” and in communicating and resusing cost data. – premier software for efficient project delivery – JOC, SABER, IPD, SATOC, MATOC, MACC, IDIQ, POCA, BOA.

Construction Cost Estimating – Art or Science?


Standardized, repeatable methods, reference cost databases with common data structures, and robust software technology enable information sharing and reuse. All are key components of the construction cost estimating process for facility portfolio owners, contractors, subcontractors, and AE’s.

Construction Cost Estimating - Process Overview

That said, experience is equally important to enable localization and customization of costs due to when and where construction is taking place, and/or particular functional needs.

The role of software integrated with the construction delivery process, is equally important.  For example, JOC / SABER cost estimating and project management software leverages and shares the estimating team’s experience with everyone working on a planned or current project, as well as preserves valuable information for future reuse.

Software also helps to assure consistency, transparency, and quality.  Cost estimating software that includes project/program management, document management, and visual estimating is even more efficient as it assists estimators, procurement, designers, engineers, contractors, subcontractors, and owners from concept thru design, procurement, construction, and warranty!

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What makes a good construction estimate?

Clear identification of task

Estimator must be provided with the project description, ground rules, assumptions, technical and performance characteristics. The estimate’s constraints and conditions must be clearly identified to ensure the preparation of a well-documented estimate.

Broad participation in preparing estimates

All players / constituencies should be involved in deciding needs and requirements and in defining parameters and other characteristics.

Availability of valid data

Multiple sources of suitable, relevant, and available data should be used.  Data should be independently verified for accuracy, completeness, and reliability. Relevant, historical data should be used from similar systems to project costs of new systems. The historical data should be directly related to the requirements.

Standardized structure for the estimate

A standard work breakdown structure, as detailed as possible, should be used, refining it as the cost estimate matures and the system becomes more defined.  The standardized structure helps ensure that no portions of the estimate are omitted and makes it easier to make comparisons to similar project.

Provision for program uncertainties

Uncertainties should be identified and allowance developed to cover the cost effect.  Known costs should be included and unknown costs should be allowed for.

Recognition of inflation

The estimator should ensure that economic changes, such as inflation, are properly and realistically reflected in the life-cycle cost estimate.

Recognition of excluded costs

All costs associated with a system should be included; if any cost has been excluded, it should be disclosed and given a rationale.

Independent review of estimates

Conducting an independent review of an estimate is crucial to establishing confidence in the estimate. The independent reviewer should verify, modify, and correct an estimate to ensure realism, completeness, and consistency.

Revision of estimates for significant program

Estimates should be updated to reflect changes in a system’s design requirements. Large changes that affect costs can significantly influence program decisions.

Adapted from GAO Cost Assessment Guide, 2007