Cost Modeling

At Ediphi, we understand that preconstruction teams use the process of Cost Modeling (or conceptual estimating) in order to provide preliminary pricing to an Owner on a given project. Looking through internal historical data, these teams will compare historical projects of like kind in order to derive the most accurate costs to use for this new project. Even though the fidelity of detail is minimal at this stage, accurate pricing is important. Inaccurate pricing can cause the loss of jobs, set the wrong expectations, or ruin reputations.

As we work towards our goal of becoming the de facto solution for all things preconstruction from project idea, through project buyout, we are excited to introduce our new Cost Modeling tool.

What problems does this new Cost Modeling tool solve?

• Breaking Down Information Silos ✅
  • The practice of Cost Modeling has traditionally involved the use of multiple distinct software solutions. This creates information silos and increases the risk for preconstruction teams. Telling a holistic cost story is not possible with these silos in place.
• No More Managing Multiple Software Platforms ✅
  • Working in other software platforms which are disconnected from the actual estimate spreads out the information needed to make valuable insights across these disconnected platforms. This means that preconstruction teams have to manually import estimates/historical cost data in, leading to time inefficiencies and stale data while cost modeling.
• Improved Time and Accuracy ✅
  • Inaccurate cost models set the wrong expectations with Owners and can cost teams both jobs and reputations. Today, creating an inaccurate cost model is as easy as forgetting to check a certain metric, escalating costs inaccurately, incorrectly understanding past context, infrequently updating historical data with project actuals, etc. Beyond that, it also takes a lot of time, even for the most experienced estimators. By supporting the entirety of the preconstruction life cycle within our platform, Ediphi arms preconstruction teams with the necessary inputs to create a more accurate and timely output, all in one place.

In this article

• Benchmarking
• Escalation
• Markups
• Permissions
• FAQs

Benchmarking

In Ediphi, benchmarking is the process where users "archive" specific estimates to be used within the Cost Modeling tool on future projects. These estimates are typically finalized versions of a project estimate which will be used as project comparisons in future cost models when identifying projects of like kind. It is important to note that not every estimate within a project is suitable as a benchmark. Benchmarking should be approached as an action specific to each estimate, rather than to the project as a whole.

Since benchmarked estimates are meant to be finalized versions of a project's estimate, once an estimate is benchmarked, it gets automatically locked in order to prevent any subsequent modifications. The estimate can be unlocked by a project owner and/or admin if necessary, although we advise against doing so unless absolutely necessary. Upon benchmarking an estimate, the "Benchmark Export" option within the estimate's dropdown menu is updated to indicate that the estimate has been utilized as a benchmark, thereby avoiding unnecessary duplications.

Some important points to consider regarding benchmarking:

• If a benchmarked estimate is unlocked and modified, users can then re-lock the estimate. However, there is no need to benchmark the estimate again, as it is already linked to the Cost Modeling tool.
• If an estimate is benchmarked, and a user modifies that estimate, any changes made will be saved to the estimate selection in the cost modeling module. This applies solely if the estimate has not yet been incorporated into a cost model.
• Once an estimate is integrated into a cost model, it represents the cost at the time of its creation for that specific model. Consequently, if one revisits the project to update the estimate with new values or removes it as a reference point, the cost will remain reflective of the original time it was included in the cost model (the data within the cost model remains unchanged).
• There is no limit to how many estimates can be benchmarked and added to a cost model.
• A benchmark can always be removed by clicking on the ellipsis menu, and selecting Remove Benchmark.

Escalation

Within the Cost Modeling tool, there are two types of escalations which help us obtain our Total Escalation:

• Time escalation
• Location escalation

Time escalation is provided by the user on a yearly basis, however, the platform applies this escalation on a monthly basis. This approach is taken because, in most cases, the year in which the escalation commences is typically a partial year rather than a full year. Let’s explain how Escalation works with an example:

We have a benchmark estimate with an Original Cost of $1,000,000. In 2022 there was a 10% escalation, in 2023 there was an 8% escalation, and in 2024 there was an 11% escalation. The Start Date of our escalation (or Published Date) is July, 2022, and our End Date (or the creation date of the cost model) is April 2024.

The platform obtains the Total Time by taking the Annual Escalation for each year, and dividing it by 12. This would then give us the percentage allotted to each month in said year (below). After these Amounts are defined for each month between Start Date and End Date, the platform sums them up into the Total Time (16.67%).

Now that we have identified our Time escalation, we can proceed to analyze our Location escalation (or Location Factor). Users are also able to input the Location factor, which is simply entered as the additional amount (or discount amount) to apply to a comparison. For example:

• If we have a comparison estimate from Miami, but our project estimate is in San Francisco which tends to be 30% more, then we would input 30% as a Location escalation.
• If instead we have a comparison estimate from San Francisco, but our project estimate is in Miami which tends to be 30% cheaper, then we would input -30% as a Location escalation.

Continuing our example above, let’s assume that our Location escalation (Location factor) is 30%.

In Ediphi, our Total Escalation formula is as follows:

Based on the values we've already obtained, our Total Escalation would be:

(1 + 16.67%) x (1 + 30%) - 1 = 51.67%

Our total escalated cost for our $1,000,000 project would then be $1,516,667.

Markups

Markups within Cost Modeling are very similar to what's currently available in the platform. When you create your cost model, we will pull all markup values from the selected comparison estimates. Users can view and edit these markups as they see fit. We also enable the ability to set the relevant markups for the project you are currently cost modeling.

For more information on how to use Markups, please click here.

Permissions

Permissions within Cost Modeling are slightly different than other parts of the platform. By default, Admins within an environment and Project Owners have read and write access to the Cost Modeling tool. For Members of a project, there is a new role within Project Permissions called "Cost Model", where Admins and/or Project Owners can select if these Members can have read or write access to the Cost Modeling tool. The permissions for project members will be to not have Read or Write access to Cost Modeling. If project members want access, they will need to reach out to the Project Owners or Admins to enable Read or Write access for them.

Here’s a table that better explains the level of access each user has within the cost modeling features:

FAQs

• Why don’t I see the Cost Modeling tool in my project?

By default, project members will not have Read or Write permissions to Cost Modeling. If you want access to Cost Modeling within a project, you will need to reach out to the Project Owners or Admins to enable Read or Write access for you.

• How do I save my cost model?

No need to manually save your cost model! Cost models automatically save any changes you make within them.

• If I need to make changes to a benchmarked estimate, do I need to benchmark it again?

Once an estimate is benchmarked, you can unlock it and make said changes (as long as they are a project owner/admin). They can then re-lock the estimate once done, however they do not need to benchmark again (since the estimate is already linked to the Cost Modeling tool).

• I changed the image of one of my estimates within the cost model, but when looking at the Details view, it’s showing the old image. Why?

While in a cost model, changing the image of a benchmark estimate on the header will not affect the Details view of said estimate, as in, it will not change the initial picture that was uploaded when the estimate in question was benchmarked. Details can be considered as the “source of truth”, in that it shows the data exactly as it was at the moment of pulling the estimate into a cost model. Think of it as a Version.

• I created a cost model, but I’m only able to edit the Totals and not the Cost/GSF or the Cost/Unit. Why?

If not done at the time of creating the cost model, users should click on the Use Group button within their cost model estimate and select the Add Unit Quantities option to add all the relevant information (like GSF of the Units within their Use Groups, Unit Counts, Unit Area, etc.) in order for the comparisons to start making sense and for values to start automatically populating when compared to the benchmarks.

• If I edit the Use Groups or Groupings within my cost model, will that only affect my view, or other users potentially looking at the cost model as well?

Changes are made directly to the cost model, meaning that any user that access that specific cost model will see exactly what you have set on your end.

• How do you calculate averages?
  • The Cost/GSF is the baseline pulled from each estimate being compared.
  • An average Cost/GSF is calculated by adding the values in each respective cell of the Cost/GSF, then dividing it by the amount of estimates added to the cost model.
  • This average is then multiplied by the GSF for that Use Group to derive the total cost.
  • This total is then used to calculate the Cost/Unit.
• I see a "Blank" Use Group in my cost model. Why?
  • This simply means that you have line items with cost that have not been associated to a specific Use Group within your benchmarked estimates.
• Can I remove a benchmarked estimate?
  • Yes, you can click on the ellipsis (or "more" menu) next to your benchmarked estimate's name, and then select the Remove option.

If you have any further questions, feel free to contact our support team and we'll be happy to help!