Cost Benchmarking in Construction is a valuable tool. It helps contractors and estimators to create accurate cost estimates.
Cost prediction for any type of construction is difficult work. Which is why it’s important to use every tool at your disposal. At SMA Estimating LLC, benchmarking is a regular part of the estimation process. It aids in developing an efficient budget. They implement the most effective strategies against the established standards or similar projects. Thus, increasing efficiency and reducing any cost gaps in a construction project. Estimators also follow up and monitor the project.
Types of Benchmarks
There are two main types of benchmarks used by any Construction Estimating Company.
Historical Data Benchmark
Historical data involves analyzing similar projects from the same utilizing that information in the current construction project. These projects are similar in scope, size, and complexity.
Industry Specific Benchmarks
Industry-specific benchmarks are used when historical data is insufficient or when objects from different locations need to be compared. This type of data usually comes from other industries and organizations.
Steps of Cost Benchmarking in Construction
1) Select the benchmark that is most suitable for your construction project. You can use various cost-estimating software to analyze the data.
2) Gather information on material, labour, and equipment costs. Collect as much information as you can as this will help you to develop a comprehensive budget.
3) Analyse the data to identify cost-impacting factors. You can also use it for risk assessment by learning about gaps and indifferences.
4) Use these findings and implement them into your current construction project. Make sure to make alterations according to your project’s requirements.
Purpose of Cost Benchmarking in Construction
1) Accurate Budget
The main purpose of cost benchmarking in construction is to create an accurate cost budget. Benchmarking can help to set a standard for cost, and one can make changes to it to achieve preciseness.
If you have inadequate data about the construction project and it is hard to create an estimate, you can rely on cost benchmarks! It will give you an understanding of how much similar past projects cost.
2) Identify Cost Saving Opportunities
The most important purpose of creating a budget is to control the finances. It is very easy to go overboard in a construction project and spend an unnecessary amount of money.
From Construction Estimating in NYC to various other states, estimators are using benchmarks. It helps to improve the construction business by saving time as well as money. Benchmarking can help an expert to identify cost-saving strategies and apply them in current projects.
3) Best Practices For Project
There are many different approaches that one can take to calculate the cost of the project. Should you go for the unit method or the square foot method? How to decide that?
Through cost benchmarking in construction! By reviewing past projects, it is easy to identify which methods to choose. Other than that one can steer clear of any practices that can decrease accuracy. In simple words, one can use it to avoid making the mistakes others made.
4) Eco-Friendly Practices
In addition to highlighting best practices, benchmarking is now also being used to gain insights into eco-friendly practices. This is a recent application of this tool.
With the increase in global warming and other environmental damage, it is important to incorporate eco-friendly practices to do your part!
5) Staying Competitive in Industry
The construction industry is highly competitive whether it’s for residential, commercial, or industrial projects. To stay in a competitive industry one must adopt certain traits. It is important to make sure that not only do you have a competitive edge but also your profit margins are desirable. Benchmarking gives you the competitive edge you need to stay forward in the game.
Conclusion
In summary, Cost Benchmarking in Construction is one of the most paramount tools for an estimating firm to stay efficient and competitive. By doing this companies can pre-identify areas of tasks where they can improve themselves. This can be done by the comparison of cost and performance with set Industrial standards. Thus, ensuring to adoption and apply the most cost-effective techniques in a construction project. This article describes why this approach is advantageous leading to improving the budgeting process as well as enhanced performance.