Considering the volatility of our current construction market, estimating costs during preconstruction can be a nightmare. Rapidly fluctuating prices can lead to significant financial losses for contractors who do not take the time to thoroughly compare and analyze costs. 

There’s a famous saying by Spanish philosopher, George Santayana that says, “Those who don’t know history are destined to repeat it.” The same rings true for any construction project. Gathering and utilizing historical data from past projects to help teams prepare for future projects is not just helpful, it’s essential.

The Importance of Historical Data

Collecting historical project data equates to acquiring knowledge and gaining power. Drawing from your past data, particularly when it is product-specific and when there is enough of it, allows General Contractors, Subcontractors and Design Teams to have a far greater level of accuracy for the current project at hand.

Disclaimer: You cannot solely rely on historical data or market valuations. Because construction projects can take years to finish, recognizing macro-level forces and shifts in the global economy can significantly alter what was once considered a reliable average. This awareness is vital to a project team’s success. 

The Solution: When it comes to benchmarking, using historical data is often the best and most essential starting point. By starting with historical data analysis and staying attuned to current market conditions, project data can be fine-tuned for success.

Using historical data is not only important for project success in the construction phase, but it also helps you win more work and take on more projects. Think about it: If you are competing against other GCs who don’t have a resume of their work to show Owners and guarantee a project’s success, you are going to be the one deemed an expert and you are going to be the one that is picked for the job. ConCntric’s Calibrate feature is a comparison and presentation tool that compares past and current projects alongside industry benchmarks to help teams secure more work and facilitate a successful project.

Challenges in Preconstruction Cost Estimation

If we think about baselining an estimate using historical data, the challenge we see is the very expensive, very inefficient manual process in which it occurs. Currently, preconstruction estimators and construction professionals have to go through and identify, organize, and normalize their historical project information for a single-time use on their given project or task. From a company’s perspective, this just adds a significant labor cost to the budget.

Workers need to be spending their time ensuring the estimate detail is well organized and properly coded using established industry estimating code structures, not digging through files trying to locate historical data and industry benchmarks.

The over-dependence our industry has placed on spreadsheets has led to a severe non-standardization at the expense of a company’s ability to access and use its data to its benefit. With a lack of standard processes, the risk of project errors and omissions continues to grow and more data is getting lost by the minute.

Additionally, the inability to present the estimate to clients and Design Teams in a way that they understand and can digest dwindles. Using a preconstruction platform, each preconstruction team can access all aspects of a project to address their specific needs, instead of continuing to spend hours breaking down spreadsheets and attempting to de-code out-of-date estimating software.

Advancements in Cost Estimation

Did you know: A third of the construction industry’s professional workforce is set to retire by 2028.

What does this mean for our industry? For starters, we have not hired and trained enough people ready to take over. At this rate, we are currently gaining less than what we will be losing. Even if we did have a massive hiring boom right now, the talent and knowledge gap would still be vast. 

The talent in the current market has years and years of historical data by trade, division, system, and scope of work all indexed in their head. And when they leave, they will take that knowledge right out the door with them. Companies are ill-prepared for that knowledge to walk out the door. There will be a significant brain drain in our industry and we are not prepared. When historical data is relatively inaccessible, workers are unable to conveniently access it for their project needs as a form of reference.

The Solution: By incorporating technology into the mix now, information can start to be collected, structured and automatically synthesized so that workers have all of the information they need right at their fingertips. Once the information is all in one place, it becomes fully accessible, allowing companies to avoid the coming brain drain and get ahead of the inevitable.

Using ConCntric, teams can automatically collect, structure and utilize historical data to drive more accurate planning—whether it’s costs, schedule, risk or scope. Don’t wait until it’s too late. Get ahead of the game and keep that knowledge currently held by industry veterans safe by putting it into preconstruction software for future generations.

Steps to Improve Cost Estimation and Preconstruction Planning Accuracy

1. Leverage historical data: Use this data to start the estimating process or compare it to industry benchmarks and current market conditions.
2. Invest in preconstruction software: Start utilizing a platform that will structure and centralize your data with the proper context and attributes to ensure data accuracy.
3. Stay connected to current market conditions: Gathering historical data, centralizing it, and using it to benchmark current projects are fantastic starting points and essential to improving cost estimation accuracy. However, to ensure the best possible results, teams need to stay connected to the shifts in the economy through vendors and subcontractors, as well as the “as-bought” data collected in the bid and award process.