The evolution of construction cost estimating and project management technology Introduction Accurate, timely and transparent cost estimating is critical to the success of any renovation, repair, sustainability or new construction project. An equally important consideration is the construction delivery method. Most construction cost estimators continue to rely primarily upon hardcopy documents and electronic spreadsheets such as Microsoft ExcelTM. Relative to construction delivery methods, most Owners, Contractora and AE’s engage in a version of the outdated and adversarial design-bid-build process. (DBB). Growing numbers of cost estimators, however, have the need to work with multiple projects and multiple estimates simultaneously, securely share information on active projects and better leverage localized cost information reuse historical data. At the same time, Owners, Contractors and AEs are recognizing the need to work collaboratively as early in the construction process as possible. As a result many are moving to advanced cost estimating and management systems and various forms of integrated project delivery (IPD) methods. Furthermore, these ‘innovators’ are discovering that significantly higher productivity (50%+) and cost savings (5%-20%+) may be attainable. The collaborative aspects of these advanced cost estimating and project management software systems are also better aligned with the process of life-cycle management supported by digtial technology, otherwise known as Building Information Modelling (BIM). Spreadsheets Construction estimating involves the estimating of material, labor, equipment, overhead and contingencies. Spreadsheets, most commonly Mircrosoft Excel, are used by more estimators for this purpose than any other tool. Spreadsheets have significantly improved cost-estimation capabilities and accuracy since the 1980s. Relatively easy to master, spreadsheets
provide a means to create and report a construction cost estimate. Cost construction models can also be built within speadsheets. Productivity improvements result from the ability of Excel to easily handle a lot of the more mundane calculations required. One problem with spreadsheets, however, is their inherent vulnerability to errors due to data entry, a problem that only increases along with the complexity of an estimate. Also, as the formulae within the spreadsheets become more numerous and complex, errors became exponentially more frequent and costly. Spreadsheets also do not easily account for the use of dynamic vs. static cost information or suport the use of historical information. Both have proven to be important variables for many construction projects. Lastly, since spreadsheets are bascially single user applications, collaboration and reporting relative to roll-ups for example, are both problematic. Audit trails on a ‘cell’ level are also not possible, thus transparency and accuracy are negatively impacted. Multiple people working on the same spreadsheet, or multiple spreadsheets, while on the same project is inefficient and risk prone. Thus estimates and associate information and reports created using spreadsheets tend to be created and stored in different locations, making information difficult to accurately retrieve. As a result, changes extremely costly to execute, while old data errors are perpetuated, copied over and over again. As it became apparent that more localized and historical data would be critical to improving the accuracy of construction cost estimates and cost models, organizations instituted a formal process for collecting and storing this information. Individual Owners, Contractors and AEs began to collect this information internally in databases. Third party cost organizations, such as RSMeans Company LLC, North America’s leading source for commercial construction cost data, also began to col-
12 | CONSTRUCTION ECONOMIST | www.ciqs.org | Fall 2012
By Peter Cholakis
lect, store and provide cost data in electronic format, including materials, equipment, labor line items, productivity factors, as well as assembly and square foot cost information and localized cost indices such as the City Cost Index (CCI). Based upon the size and type of construction project, estimators soon found that they could improve their productivity and accuracy even further by sharing cost data and leveraging standardized reference cost information for specfic items/areas. Standardized cost data architectures also became important, such as the Construction Specifications Institute’s (CSI) Masterformat, Uniformat and even newer OMNICLASS. Collaborative, Integrated Project Delivery methods and Job Order Contracting As noted spreadsheets have proven value for single, ‘static,’ estimates of a certain project size, as well as a media to gather and transfer data sets. Similarly, the integration of electronic cost books with spreadsheets are equally valuable for individuals performing a small number of relatively straight forward construction, repair, or renovation estimates and projects, say three to five per year. However, with greater productivity required, the need for collaboration, transparency and better information use and reuse became apparent. Thus, two signifincant developments came to be, (1) newer, collaborative construction delivery methods such as Integrated Project Delivery (IPD) and Job Order Contracting (JOC), and (2) construction cost estimating and project delivery software technology. Job Order Contracting is a form of Integrated Project Delivery developed over 20 years ago and has a long, successful track record within certain institutional sectors in the United States, and is now moving into Canada. Collaborative cost estimating and project management solutions have been develop to support these and other constuction delivery methods. The result is a system of business processes and supporting technology to enables Owners, Contactors and AEs to modify
