Pricing Databases

The only people who know what a construction task costs are the person who pays for it day to day, and the person who charges for it day to day. The adjuster and the contractor. Basically, the market sets the price. The adjuster pays what the contractor charges. Excluding collusion and the like, if the contractor charges too much, the adjuster can go to another contractor. If the adjuster underpays, no contractor will do the job. This is capitalism, supply and demand.

I have written a DOS structural estimating system and part of the development process was the pricing of an over 50,000-price database. It was a very enlightening and frustrating process. We knew what contractors charged in our area, by polling contractors and adjusters.

But run the numbers from the supply house, and things do not stack up.

I have a database program that allows the input of prices off the shelf for building products, like a box of drywall screws, a sheet of drywall, bucket of mud, roll of drywall tape. Then a job is defined, such as drywall a 15-foot long wall eight feet high. The required amount of the previously priced supplies used in the job is calculated, and a total material price for the job is computed. The average square foot price was calculated by dividing total price by the number of square feet.

A similar process is followed for labor, defining a crew and pay rates if required.

The end Result was a calculated price of 72 cents a square foot for drywall.

What were the adjusters paying? $1.10 a square foot for drywall.

What did the research guides and software programs say? Between 96 cents and $1.32 per square foot.

What does all this mean?

The only people who know what a construction task costs are the person who pays for it day to day, and the person who charges for it day to day.

The construction price guides are valuable tools and they set the defacto standard. But to blindly rely on them is as short sighted as to ignore them. There is much valuable research that these companies do, and I would not want the task. As I said, I have a program that will track building supply price changes over time, but the process is very man hour intensive, hence expensive. And still this program will only track changes to the actual prices, not the market prices. And as seen above, these do differ.

IMO, the best solution would be easily modifiable, sharable, clone-able, swappable databases. Make it easy to clone an existing database to a new one. Make it easy to change the prices in the database. Make it easy to swap between databases and pull from foreign databases. Once revisions are made by on site personnel, upload the changes to a central server, where they can be downloaded to the adjusters. Thereby eliminating the need for every adjuster to make the changes.

The big pricing guide folks wouldn't like it, but here is where an open data standard would be very useful. A central web page where adjusters posted what is being paid for certain tasks could function as a data gathering tool to track price changes. This could be compared the research guides and adjusted as needed.

This would track market prices, but would, quite rightly, be seen as a pain in the neck. It is also hard to see how this would be profitable for someone, and in our society, if it is not profitable, it will not get done.

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Copyright 2001  Jeffrey B. Goodman. All rights reserved.
Revised: November 27, 2001 .