Hello friends 👋
This week I want to rant a bit about benchmarking.
Benchmarking is a process by which an attribute/performance indicator is compared to other similar projects/attributes/events etc. As a QS you will nearly always get asked to get involved in some benchmarking task and it almost always got to do with the cost!
The premise of benchmarking is to identify whether the client is getting value for their project in comparison to other similar projects.
Benchmarking can be used on a macro level i.e. building versus building or micro-level i.e. component versus component. By component I mean you can benchmark the cost that client A paid for his piling versus other projects of a similar nature.
My issue with the current benchmarking paradigm comes down to main points:
Every construction project is different; and
A lack of a simple, unified cost data collection process.
Let’s get into it.
Every construction project is different.
My argument here is that clients seem to get caught up in what other people are paying for their projects, which, on the first appearance may appear to be very similar, but do actually have some key differences. It’s very simple, Building A and Building B may be identical in every way (construction method, size, footprint, materials etc.) but they are located 2 miles away from each other. Building A may have access issues or groundworks issues. Consequently, although the actually built assets should cost similar, Building A has additional issues which impact the cost.
You would think that this is a straightforward argument and some of the senior guys I work for tend to get really annoyed when benchmarking is required to compare projects which are absolutely unique in every single way. There is nothing comparable to match it up against. For example, some of the guys in my team recently produced estimates for a luxury airport in the middle of a desert. Can you imagine trying to do benchmarking for that project?
Data collection issues
Good benchmarking relies on robust, accurate cost information to help QS’s produce comparable benchmarks. The RCIS has produced an Elemental Standard Form of Cost Analysis to provide a unified method of cost data collation.
However, you would be surprised to learn how rarely this is actually used in practice. I think it's an excellent idea but it just takes too long and it's based on the RCIS standard method of measurement – the NRM. I work in a team that uses the RMM, CESSM, HMM and even SMM7!
I think technology is making this quicker but individual firms have their own ways of producing benchmarking databases which means that the industry as a whole is not unified in the way we produce and collate benchmarking cost information.
Conclusion
I think benchmarking is important in order to understand why things cost the way they do, but it shouldn’t be used as a way of trying to force costs to decrease just because someone else got it slightly cheaper.
I think the ease of benchmarking will increase, there are tons of tools out there that seek to make absorbing and presenting cost information better.