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?

What is Job Order Contracting? What is IDIQ?

What is an IDIQ?

Indefinite delivery/indefinite quantity (IDIQ) contracts has been a useful tool in federal government acquisition for many years.

IDIQ contracts had historically been used only as single award contracts to procure services or supplies until the Federal Acquisition Streamlining Act (FASA) of 1994, noting the value of multiple award contracts.   Additionally the court system determined that IDIQ contracts were applicable to construction and architect-engineering services, provided the selection of contractors and placement of orders are consistent with the Federal Acquisition Regulation Part 36.

Multiple forms of both multiple and single award construction IDIQ contracts are available as well as software to enable rapid implementation and consistent deployment.  Examples of multiple awards are multiple award construction contracts (MACC) and multiple award task order contracts (MATOC). Single awards include job order contracts / job order contracting (JOC) and simplified acquisition of base engineer requirements (SABER). SABER is the US Air Force implementation of JOC.

Multiple awards result in individual job tasks for which all awardees compete and are negotiated and priced per the specific requirement. Single awards and multiple awards are typically priced using detailed line item cost estimating provided specific to the IDIQ.  Commercial, industry standard unit price books may be use, such as RSMeans Cost Books or  “custom” IDIQ price books.  Both may be referred to a Unit Price Book (UPB), or an IDIQ price book/guide.   It is important that both the Owner and the Contractor have unit line item cost estimating capability. It is generally regarded as “best practice” and may even be a regulatory requirement that the Owner does their own internal estimate (sometimes referred to as an Independent Government Estimate – IGE).  Some Owners for specific forms of IDIQ, such as JOC for example,  may elect to “outsource” or subcontract the JOC program to a third party for a fee (typically a percentage of the overall JOC program annually).  In this instance the third party acts as an “owner’s agent” and works with the Contractors directly, vs. Owner “hands-on”  participation. The latter is not recommend, nor consistent with “pure” JOC program implementation. It may however be the only option for Owners with limited technical estimating and/or project/program management capabilities.

Additionally, multiple awards are forms of design-build for complex projects, typically $750,000 to $5 million. Single awards involve minimum design for non-complex projects that typically range from $2,000 to $750,000. However multi-year JOC/SABER programs can easily exceed $300 million.  Many JOC/SABER and IDIQ contacts involve a base year and three or four year options. This means that the owner/contractor relationship is long term, with no need to re-solicit for five years, a potential benefit for all parties.

Construction IDIQ contracts provide a streamlined means to complete projects with benefits for both the government ‘/ public agency (DOD, non-DOD Federal Government, State/County/Local Government, Airports, Education, Healthcare, and the commercial business (Contractor/AE).

Construction Cost Estimating Software vs. Spreadsheets – State of the Nation 2012

While accurate, timely, and transparent cost estimating is critical to the success of any renovation, repair, sustainability, or new construction project, most construction cost estimators (over 55%) continue to rely primarily upon manual methods, hard copy documents, or electronic spreadsheets such as Microsoft Excel.

Lack of robust business processes, management practices, proper education and training, and some degree of technophobia endemic to our AECOO industry (Architecture, Engineering, Construction, Operations, Owner) may well be responsible for this “state of the nation”.   Negative impacts of ‘ad hoc’ methods and the failure to adopt robust construction delivery methods and associated supporting software include:  loss of business revenue and lower profit margins, poor productivity, spreadsheet and formula errors, lost information, and poor business decisions.

Construction estimating involves the estimating of material, labor, equipment, overhead/profit and contingencies. Spreadsheets, most commonly Microsoft Excel, are used by more estimators for this purpose (over 40%) than any method, although as many as ten (10) percent or more of construction cost estimators may still rely exclusively upon hand written estimates.  While spreadsheets are relatively easy to master and provide a means to create and report a construction cost estimate and or cost models, their benefit comes largely from their ability to partially relieve estimators of mundane calculations.  Accuracy, however, is not necessarily improved and productivity is not maximized.   For example, data entry remains tedious and prone to error, formula error are common, and collaboration and information sharing are limited. (Christofferson, Jay. “Estimating with Microsoft Excel”, Brigham Young University. Nickols, Robert Duane. “Construction Estimating Using Excel” Lexington Technical Institute, University of Kentucky. Caulkins, Jonathan P., et al. “Do Spreadsheet Errors Lead to Bad Decisions” Carnegie Mellon University)

Sophisticated, Cost estimating and Efficient Project Delivery Software systems are now available, and have been proven over the past decade.  Growing numbers of cost estimators now have the need to work with multiple projects, multiple estimates, and multiple contracts (IDIQ, JOC, SABER…) simultaneously and securely.   These newer Cost estimating and Efficient Project Delivery Software systems, such as 4Clicks Project Estimator, provide these benefits, and more.    A ‘short list’ of additional capabilities includes the ability to work with multiple cost books/guides/UPBs, track project status, automatically compare estimates, easily copy/paste, clone, and reuse estimates, integrated sophisticated visual estimating and quantity take-off (QTO) tools, including pattern search, automatically link specifications to estimates ….
Owners, Contractors, and AEs are moving to advanced cost estimating and management systems, and many oversight groups such are beginning to require their use.

The level of collaboration, transparency, and information re-use enabled by Cost Estimating and Efficient Project Delivery Software drives 15-25%+ reductions in procurement cycles, six to ten times faster estimating, reduce overall project times, as a significant reduction in change orders and the virtual elimination of contract related legal disputes.

White Paper – Cost Estimating Evolution 

A Comparison of Construction Cost Estimating Tools – Spreadsheets, Cost Calculators (RSMeans CostWorks), and Cost Estimating/Project Management Software (e4Clicks Project Estimator)

INTRODUCTION

Accurate, timely, and transparent cost estimating is critical to the success of any renovation, repair, sustainability, or new construction project. While most construction cost estimators continue to rely primarily upon hardcopy documents and electronic spreadsheets such as Microsoft Excel, many are beginning to leverage electronic cost books and associated “calculator” software tools. Both of these approaches have merit and are well suited for certain types of users.

Growing numbers of cost estimators, however, have the need to work with multiple projects and multiple estimates simultaneously, securely share information on active projects, localized cost information, as well as easily locate and reuse historical data.
These Owners, Contractors, and AEs are moving to advanced cost estimating and management systems. They are discovering that significantly higher productivity can be gained (50%+). Furthermore, the collaborative aspects of these advanced cost estimating and project management software systems are aligned with integrated project delivery methods and construction sector movement toward Building Information Modelling (BIM).

This paper addresses each of these primary approaches to construction cost estimating and discusses their application. For clarity, products are referenced within each category as follows: (1) Spreadsheets – Microsoft Excel, (2) Electronic Cost Books/Calculator – RSMeans CostWorks, and (3) Cost Estimating and Project Management Software – e4Clicks Project Estimator.

bp 2011 9 22 comparison-cost-estimating-tools

CONCLUSION

Over the past forty plus years, there have been many initiatives to improve cost estimating to facilitate the delivery of construction projects on time and on budget. Owners, contractors, and AEs now have multiple methods to select from based upon their needs.

Spreadsheets were a major improvement in the 1980s, followed by formal processes for collecting and harnessing historical information to more accurately project and control costs.

Over the past decade, a powerful new capability has been added, collaborative cost estimating and project management software. The evolution of transparent and collaborative cost estimating and project management software mitigates the time wasting, unproductive aspects of creating estimates one at a time from scratch. Additional benefits include the reduction of data input and formulae errors, as well as costly ‘errors of omission’, common with ‘ad hoc’ spreadsheet-centric approaches.

What’s next…?

The application of cloud computing to cost estimating and project delivery and management software and the subsequent integration with Building Information Modelling.  The ability to produce accurate cost estimates and control costs throughout a buildings life-cycle will be greatly enhanced. Another breed of cost estimating and project management software, Adaptive Project Delivery (APD) will also evolve.  But all this is for another story.