In one of my previous articles, I discussed how every solicitation for construction services regardless of pricing model includes three critical cost categories.
One of those cost categories is the Cost Of Work (COW).
The COW is the most important cost category in construction. This is because the COW is the category where we have the most expense.
The COW is made up of several quotes from several trade contractors. Typically these quotes are solicited by the Construction Manager or the General Contractor.
One of the biggest mistakes I see people make when they solicit the COW is making up their own list of line items.
The thinking here is that they are tailoring the quotation request to match the scope of the project. What they fail to realize is that by creating unique COW line items, they also need to specifically define the line item to ensure that every bidder interprets the line item the same way.
Even in the rare occasions when each line item is defined, it’s likely that you will miss some portion of the scope and bidders will have different interpretations of what to include in that line item.
This becomes problematic for you during your analysis and leveling of the bids. Anytime any portion of the quote is left open for interpretation, I can bet you that every possible interpretation will be made.
The best way to alleviate this issue is to use a third party Work Breakdown Structure (WBS).
I touched on this briefly in my article on converting controls estimates into a binding COW.
What is a WBS
A Work Breakdown Structure is a breakdown of deliverable tasks into small manageable sections that organizes a project. You may have used a WBS if you ever worked within an organization that used time sheets. WBS systems are often used to capture time and capital expenditures within an organization.
In the context of construction WBS systems organize the work into smaller scopes of work. In the example of someone who creates their own line items for the COW, one could say they are creating a WBS for their specific project, but as we have already discussed, that comes with an added burden that is often difficult to fully address.
Third Party WBS
A third party WBS refers to one of various industry standard WBS systems available. It should be noted that construction classification systems have been developed by different countries and institutions.
In the Netherlands they use a system called the ‘Elementenmethode‘. This system, based on the Swedish SfB and classifies the project into “objects”. The Elementenmethod includes 10 classifications of building elements.
Uniclass 2015 is a unified classification system for the UK construction industry covering all sectors of the industry.
Uniclass is made up of 11 tables. Each table is comprised of a complex arrangement of groups, sub-groups, and objects. For more information on Uniclass you can go here.
Finnish Building Classification Systems
In Finland Rakennustieto Publishing provides the Finnish Building Classification System. The current system is known as the Talo 2000 (Building 2000) classification system. Talo 2000 is made up 11 Production Classifications. Each Classification is further subdivided into 8 Product Classifications.
In North America we have MasterFormat. MasterFormat uses a Classification system to classify materials and labor. Prior to 2004 MasterFormat was made of 16 Divisions. The 16 Division version of MasterFormat is still used by many organizations Today. The current MasterFormat is made up of 49 Divisions and is broken up into 3 subgroups.
In North America we also have OmniClass Construction Classification System. OmniClass builds on the MasterFormat system by further classifying materials, elements and services into additional tables. OmniClass is similar to the UK’s UniClass system.
The benefit of using these third party WBS systems is that these are widely used and fully developed WBS systems that require no further customization or definition on your part. Simply provide a list of the Divisions or Classifications you want and reference the WBS on your bid form.
In addition to providing clarity to all of the bidders on what scope to include and where to include it, using a third party WBS also allows you to reference bench-marking information from other third party sources. If you use a custom WBS, it is unlikely that you will have benchmark data that is aligned to your WBS.
So there you go. Those are some of the third party WBS systems used around the world. Did I miss any? Have you used one that I have not mentioned? Tell me your story.
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