BCIS basics: six principles of benchmarking in construction

Benchmarking is a technique used in many industries and can be summarised as a process for improving value for money over time, or a method of comparing the performance of one organisation against others in the same field to make targeted improvements.

Fundamentally, as defined by RICS, benchmarking is a way of establishing what ‘best in practice’ looks like, regardless the context, and using this understanding to make improvements where required⁽¹⁾.

For quantity surveyors, benchmarking is a comparison of one project’s cost (and carbon) against that of a similar project. This can and should be undertaken multiple times over the course a project’s lifecycle. It’s good due diligence that can really support a project’s cost-efficiency and the quality of delivery.

Better still, it should not be a heaven-and-Earth-moving approach.

Benchmarking is not about collecting and analysing every data point possible. The best examples are those where just a few metrics, that are essential to informed decision-making, are measured.

In fact, all it really takes is six simple principles to deliver reliable results every time.

1. Start with a clear plan

It almost goes without saying that every benchmarking process should begin with a well-defined purpose that’s fully understood by the team involved. This should be accompanied by clear roles and responsibilities.

In construction cost (and carbon) benchmarking, key considerations include:

• the information needed to achieve the purpose
• the best data structure for analysing projects consistently
• the resources (and their availability) that benchmarking will require
• any confidentiality requirements.

In essence, pinpointing these considerations will establish the data you want to compare, the best way of comparing this data, what’s needed to undertake this comparison and what you can share from the process.

2. Maintain consistent data collection

Inconsistency is the nemesis of good benchmarking. Too many cooks and recipes are counterproductive. The goal should instead be for all members of a team to follow one process when collecting and storing project data.

This will support a growing database with increasing details on both the focus project and a substantial body of comparable projects.

Where there is not enough in-house data to form a benchmark, BCIS provides data for more than 21,000 projects. These are vetted by the BCIS data team based on a standard form of cost analysis and can be used as a reliable addition to in-house benchmarks.

3. Conduct like-for-like comparisons

With sufficient data collected, the next phase of benchmarking is to compare projects to determine three things:

• best examples
• averages
• range of outcomes

Comparisons must be carried out on a like-for-like basis. This is because it’s hard to draw meaningful insights from comparing fundamentally different projects.

Further, before benchmarking takes place, it’s important to adjust and normalise data to account for external influences on the cost. Examples include inflation and market conditions that aren’t directly related to project design or building functions.

Applying location and time factors should therefore be a non-negotiable.  

Firstly, because two identical buildings built in different locations will always have different costs (due to factors like transport, availability of labour and materials). To account for this, BCIS location factors, (which measure overall price differences between locations, independent of design considerations) can be applied to adjust a project’s price.

Secondly, prices change over time so it’s crucial that key dates are captured before benchmarking occurs. BCIS tender price indices in particular are useful for applying time factors to project data. The BCIS All-in Tender Price Index, for example, increased by 2.3% in 2024.

Applying both location and time factors will provide a normalised project price and better support the result and purpose of benchmarking.

4. Introduce Context

What’s data without context?

Like any other study, value can only be extracted from raw numbers in the project database when they have meaning. For quantity surveyors and other construction cost consultants, it’s important this context is considered during the analysis of results and the production of benchmark reports.

In a scenario where one project costs more, the reasons for this should be clear – was this due to design choices, economies of scale or even unforeseen costs?

Stakeholders reading the report must be able to follow a journey and join the dots between data, context and recommendations made. Clearly explain the methodology undertaken, any assumptions made and how ‘abnormals’ were dealt with.

Remember to maintain project confidentiality at all times. Any sensitive details can be redacted without compromising the ability to compare the numbers.

5. Take Action

With data and context identified, it’s time to fulfil the benchmarking purpose – using learning from data analysis to influence change.

In other words, this means connecting benchmarking with value engineering discussions to highlight opportunities and suggest improvements backed by the data.

Timing is everything and acting on recommendations should be done as soon as possible. Changes made later in a project’s lifecycle open the door to rework and delays and will no longer be beneficial.

6. Repeat, repeat, repeat

Benchmarking is an ongoing process that should be repeated.

In repeating the process at different stages of a project’s lifecycle and adding more projects (and therefore data points) to the benchmarking database as they become available, averages and trends will solidify and become more reliable.

In turn, better comparisons can be made to support more targeted recommendations for changes in a project’s design.

To this end, routine benchmarking is much-needed in the construction sector. Without this and the increased data sharing it requires, raising the standard of projects, from cost and time-efficiency to carbon reductions, will never be achieved.

BCIS CapX hosts a library of over 21,000 real-world projects that encompass more than 300 different building types and can be used to benchmark costs. If you’re interested in finding out more, click here.

To help us create a step change, submit your project data with BCIS and make regular benchmarking the benchmark. 

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More BCIS Basics

Understanding project preliminaries

Six reasons to benchmark in construction

Using location factors in construction

^{(1) Cost analysis and benchmarking – RICS PRACTICE INFORMATION UK – 2nd edition, August 2024  - here}