Get your Cost Recipes Right! You are the Chef of your Construction Project
Construction Estimating is a complex and cumbersome process that requires the loading of resources’ costs to BoQ Code lines.
This is part of defining the Cost Baseline, your Budget.
Personally, I believe that loading your resources’ costs to BoQ Code Lines is the best and most realistic way to setup your Cost Baseline. Some will argue -including the PMBOK- that resources’ costs should be loaded to the WBS (Work Breakdown Structure Activities) activities. For Construction Projects, I feel that this is absolutely wrong!
The main resource cost is on materials/quantities. Materials and relative quantities (Lump Sum and/or Measured) are most clearly and accurately defined in each BoQ Code Line and NOT in the WBS Activities, where duration is effort-driven (labor/plant driven) or time-constrain.
Bottom-up loading of resources requires association of direct and indirect parametric costs that also include historical data from previous projects. That brings us to one of the most important constitets in Cost Estimating: Cost Recipes.
Companies like RSMEANS have tried to standardize the cost representation of generalized BoQ activities providing a mix of material quantities, labor specialties, and time along with the required type of machinery. However, from market to market, conditions, costs and the mix of the resources change significantly.
Get Your Mix or Resources Right! Make your own Recipes
Work Performance Data gathered from the daily site activities and data from Materials Purchasing and Subcontractors Procurement and Contract Management, provide invaluable information to the Contactor as: Lessons Learned.
Lessons Learned turn into useful information that can be further standardized, generalized and create valuable Cost Recipe Libraries.
Monitoring, Controlling and Comparing the Actual vs Budgeted Cost of each Project enriches your Cost Management knowledge and creates for your company constantly optimized Cost Recipes.
