Q&A: What is Predictive Construction Data and Why Should You Care?

What would change in your planning if you were able to accurately predict construction costs 36 months in advance? Our recent webinar  What is Predictive Construction Data and Why Should You Care? attempted to answer that very question and explore how the utilization of cost data can save decision makers both time and money.

Experts:

Tim Duggan Director of Cost Analytics of RSMeans data from Gordian
Russ Mitchell Enterprise Sales Consultant of RSMeans data from Gordian

Q&A:

Here are a few takeaways from the webinar’s Q&A session.

Q: In your opinion, what is the most important thing to know about predictive construction data?

Tim: The most important thing to understand is how the data is developed so you understand the results. That’s why we provide error rates as well as trending analysis so that you can see what’s influencing the costs going forward.
Russ: You know I agree with Tim. But also what I think is really interesting about RSMeans data, well, let’s compare it to historical data. If you’re like the people I’m talking to every single day in this marketplace, historical data simply isn’t good enough to drive future performance. With RSMeans data and our predictive analytics capabilities, you are able to incorporate multiple voices and data points into your planning process, and budgeting process. This enables you to shape what future costs look like and perform to budget in ways you weren’t able to do before relying solely on your historical data.

Q: How far in advance would you suggest that planning begin?

Russ: Well typical construction cycles for something like a hospital from certificate of need all the way through commissioning can be five and seven years. Given a standard construction timeline and sort of rationalizing that answer, I don’t think it’s ever too early.
Tim: I’ll add that from a predictive presentation or a predictive deliverable, there is a limitation to how far predictions are accurate. When you look at the marketplace, things are extremely volatile, and over three years a lot can change. So we feel up to three years in advance is an optimal point to begin planning based on predictive costs.  We’re also giving you trends and causes for market fluctuations over that time period; therefore, you can extrapolate out a little bit to infer what it’s going to be five and ten years out if the trend continues. But once you get into that three year time window, we can really nail down your costs for accuracy. Now and for the future.
Russ: And that’s a great point Tim. This data is constantly being built and re-built all throughout the United States and Canada and every single time you go in and refresh your project, you’ve got the most accurate data that’s available at that moment and the best thirty-six month view that you’re going to find anywhere.

Q: The presentation mentioned a minimal variance in the projected costs down the road.  Does that variance account for the regional costs modifiers or is it just the basic costs for a product nationwide?

Tim: It starts with the value nationwide and then we use our Construction Cost Index to adjust that cost to the conditions because we:

• track the data over the entire country
• create the national average cost
• see what the differences were in any given location

So yes, we do adjust it for local market conditions. Secondly, we also give you information about what’s going on in that market from a supply and demand perspective. As an example, if there’s no work in that area or the workload has changed significantly, we all know that the cost for bidding and getting that job is going to increase because opportunity is what breeds the variance in that cost in any given location.

To watch the full webinar click here.