9 NOV 2018
It is human nature to assemble cost data and compare it. Sometimes we do it subconsciously, sometimes consciously.
We have not consciously collected data on the price of a litre of semi-skimmed milk, but we know that £2.00 is too much. When buying more expensive items TV’s, cars, etc. we will set a budget, decide on a model and benchmark prices from different suppliers.
Retailers benchmark their prices, John Lewis Partnership’s business model ‘never knowingly undersold’ is based on benchmarking, while supermarkets increasingly use data collection and benchmarking (price comparisons) for marketing.
This can be done because the products are clearly definable, and the prices are readily available.
In the construction industry we struggle on both these counts – compatibility and availability of data.
The advantages of having transparent data on building cost is hopefully obvious. Cost is only one measure of a building’s performance. Clients are seeking ‘best value’, but what is implied in that statement is ‘for money’. The value of better performance can only be judged if the client knows what it costs.
Cost is not the only thing, but you cannot judge value for money without it.
Comparability of cost data needs two things – standard analysis of cost data and a means of describing the specification and performance of the building. The latter is not easy, and it is important to differentiate between what might be called the ‘Poundstretcher’ model and the ‘John Lewis’ model. The former will provide the cheapest item that fits a description, e.g. 40’’ TV, while the latter will provide a specified product at the best price. The construction industry is not always good at specifying clearly and delivering what is specified.
Comparability of costs requires a clearly defined standard of reporting. For over 50 years the BCIS Elemental Standard Form of Cost Analysis (SFCA) has been used in the UK for consistent analysis of building projects. The consistency has been achieved by defining the parts of a building by what they do, their function, rather than how they are built. These are defined as Elements.
This has two advantages over a trade breakdown as traditionally used in a Bill of Quantities.
The availability of this data has allowed established clients to develop cost led procurement techniques, because clients know what their buildings should cost.
The cost of a building will be affected by three main issues:
Costs of buildings can be benchmarked by choosing projects with matching scope and specification to see where a new project sits in relation to similar projects or by comparing projects for a type of building to establish the influence of differences in scope and specification on the cost. To do this the project costs need to be ‘normalised’, i.e. brought to a common date and location. When project costs are held in the BCIS database this can be done automatically using the BCIS Tender Price indices, Location Study and other Tender Price Studies.
BCIS was set up as an industry repository of elemental project cost data and now provides a publicly available database of over 20,000 projects.
Because the SFCA has been widely adopted as a data structure most projects will have cost data in this form, whatever the procurement route:
The costs therefore exist in clients’ and consultants’ databases but do not always get collected together or reported to BCIS. It is felt that some effort is required in reporting to BCIS but all that is required is for the necessary contract documents (see BCIS Data Collection below) to be uploaded onto the BCIS website and BCIS will carry out the analysis for approval.
In some sectors, particularly in the private sector, there are seen to be issues of commercial confidentiality. BCIS can and does hold data securely in its database so that it is only available to the client and any consultant they name. This allows the client to benchmark against their own projects on the database and against projects supplied by others.
One current area of discussion is the cost of projects containing a significant amount of offsite construction. There are an increasing number of these but the costs that are available generally cover the offsite construction only, which will vary from project to project. Benchmarking requires whole project costs including all the onsite works
BCIS analyses projects on behalf of its subscribers and other organisations.
It is always keen to add more data, and provide clients, consultants and contractors with secure online access to the information that relates to their own projects. The analyses can be prepared from contract documents used in most procurement routes (see Table).
|Procurement route||Required for costs||Needed for specification||Optional|
|Design and build||Contract sum analysis||Employer’s requirements or contractor’s proposals||Drawings|
|Specification and drawings||Contract sum analysis||Specification||Drawings|
|Traditional||Bill of quantities||–||Drawings|
|Target cost||Target cost breakdown||Specification||Drawings|
Comparing costs is a natural thing to do, we all do it; we need to do it better in construction. The form for comparing data and the means of doing it exist in BCIS. The data is available, but it is often hidden away in individual project files in a form that makes comparison difficult. Submitting project costs to BCIS overcomes these problems.
The industry needs greater transparency of project data to help to understand value for money and facilitate innovation.
For clients BCIS provides an independent validation of their project costs to facilitate benchmarking and provide data for future planning and programme management.
Collecting, collating and interpreting information on behalf of surveyors for more than 50 years.
Our data is used by consultants and contractors to produce specific estimates for option appraisals, early cost advice, cost planning and benchmarking