In construction, the post-Covid era has brought unparalleled cost volatility, uncertainty, resulting in higher than necessary budgets and costs. Figure 1 shows the past cost surges in 2004 and 2018. But these surges pale in comparison to more recent surging cost trend. This reality makes it increasingly difficult for estimators and preconstruction professionals to accurately and reliably forecast construction costs, especially on the more unique and complex projects.
Figure 1 -Construction-related Escalation 1
It’s true that solving this dilemma requires more sophisticated data processing and analysis tools and processes. But even the best tools and processes are incapable when the organizational structures and delivery methods are bent contrary to process improvement.
We've known for years that fragmentation is a huge problem. Despite attempts to solve this, every component, process, standard, and technical solution still operates in a silo. Figure 2 illustrates this - just in the preconstruction stages. Every person, department, organization, and building team operates in an information and one-off process silo.
There is no relationship between any of these aspects of the building process and the building’s purpose. For lack of a knowledge system, every supporting data or information transaction between component groups or processes requires a manual action. All current technologies all operate within siloes, further entrenching our siloed state - to the detriment of the whole system. As a result, technology costs increase with no measurable value improvement.
Building CATALYST provides the first data technology solution that integrates across primary parties – owner, designer, and builder domains. CATALYST does so by integrating the respective information sources. Figure 3 demonstrates how all data can be networked into a system of causes (purpose and attributes) and effects (program, parameters, time and cost) at the critical data level. This sets the stage and builds the data platform needed for detailed data and associated technology solutions to be integrated into a comprehensive data system via CATALYST.
With Building CATALYST, preconstruction and cost estimating professionals become instrumental in leading that transition from our fragmented and manual state to an advanced integrated and automated one. The key is for upper management to embrace and commit to a systems approach to project planning and preconstruction.
End note 1: Construction cost escalation sources: Construction Analytics (https://edzarenski.com/).
Construction Wages: fred.stlouisfed.org/series/CES2000000008
Producer Price Index - Construction Materials: https://www.statista.com/statistics/195382/us-producer-price-index-of-construction-materials-since-1990/
National Inflation Rate (https://www.usinflationcalculator.com/).
