Inflation in Construction: Why Advanced Costing Software Is Worth the Investment
Quantity surveying and estimating can be extra challenging in an inflationary market, with costs needing to be regularly checked and validated on long-term projects.
With many cost consultants already pressed for time due to myriad factors, those looking to effectively estimate in an inflationary cost environment should consider expanding their digital toolbox.
In this blog, we will explain how moving away from manual adjustment of rates can save you valuable time without compromising on data accuracy.
The Impact of Construction Market Inflation Around the World
Consequences of cost inflation are being felt across many major industries, and construction is no exception. Fundamental materials such as timber and steel have skyrocketed in price, with supply chain inconsistencies seen as a major contributing factor.
The most recent RICS Global Construction Monitor suggests that “…inflationary pressures are set to remain intense for a while longer”, with survey respondents across the globe predicting an 8 per cent inflation of material costs over the next 12 months. In fact, the cost of materials was the most cited factor holding back construction activity according to the survey, with 88 per cent of participants considering it a major obstacle. For the Q2 2022 period, profit margins reportedly narrowed due to this steep rise in input costs, according to survey respondents.
The rising cost of energy has also played a significant role in inflation according to CRH chief executive Albert Manifold, who claimed there had been a 50 per cent increase in energy costs incurred by the FTSE 100 building materials group in the first half of 2022. He said the impacts were felt immediately following Russia’s invasion of Ukraine, putting pressure on the cost of living and driving wage inflation.
QS and estimators are used to dealing with rapid industry change, but given the strong pipeline of work ahead and predictions of further inflation, now could be the ideal time to upgrade your software and automate your workflows around rate calculation.
The Power of Live-Linking for Efficient Estimating
Manually checking and updating rates is one of many time-consuming processes for cost consultants. This is particularly true in markets experiencing rapid cost inflation. Given the complexity of project consulting, many aspects will have to be recalculated when a rate changes. For those persevering with manual estimating methods, this would be time better spent elsewhere on the project. Thankfully, all-in-one products such as RIB’s iTWO costX® solution can slash the time you spend on manual inputs.
The Rate Libraries feature within iTWO costX® allows users to build up accurate database rates for a range of different locations, with created rates based on factors including labour, material, plant and machinery. Our software supports the linking of breakdown items into their correspondent rate libraries. As an example, if you amend the labour costs in a certain instance, the built-up rate that links with it will automatically update as required. So if you have a stored rate for ‘Plumbers’ that is updated due to wage inflation, this amendment would automatically feed through to every composite rate you’ve built up for whenever a plumber is required in a build, unless a particular sheet is locked. This live-linking can be a huge time saver on major projects, while also eliminating the risk of copy-paste and other errors.
Rates can be easily imported from existing spreadsheets, or else built from scratch in iTWO costX® with handy data fields available for your reference. Consultancies with multiple iTWO costX® licences can choose to setup up a centralised database of rates that can be utilised by staff on any project. Entire teams can take advantage of the same setup, with rate libraries able to be updated or copied easily to mitigate the need to update Bills of Quantities individually. Those managing the multiple licences can even setup authorisations for database rates to ensure amendments aren’t made accidentally.
If you’re interested in finding out more about the time-saving potential of iTWO costX®, feel free to contact your nearest office today!
