A common classification and its value

They apply at the same time, and the fourth lasts longest. It concerns tracking later on.

The fourth operates for the whole construction period, as covered by the article on tracking costs. Without a common structure, the tracking structure has to be agreed afresh when construction begins.

Here is a distinction set out in the standard on the classification of construction costs, and one a client ought to know. It concerns the two levels.

Entirely different decisions therefore affect these two groups. The practical conclusion for a client is counter-intuitive: when the budget is tight, both are worth looking at, since simplifying the design is not the only route. Lengthening or shortening the construction period affects costs even when the design does not change.

Three things, and the third is the most useful when the budget is exceeded. It shows where the overrun arose.

The discussion moves from the total to the content: the question is no longer whether it can be done for less, but what is inside a given position. Discussing alternatives becomes possible, since changing the solution for a particular position can be assessed on its own. And omission becomes possible, since a position can be left out of the contract in the knowledge of what it costs.

Without a structure, the only instrument is pressing down the total, which leads either to a drop in quality or to additional works later. The saving then turns out to be nominal.

Three things remain, and the second is the most important. It concerns unit prices.

The distribution of margin across the lines still differs, as covered by the article on comparing lines. Differences in quantities remain where quantities are not provided. And the interpretation of quality requirements remains where the technical description is vague.

A common structure without common quantities gives half the benefit, as covered by the article on calculating quantities. Structure says what the price covers. Quantities say how much there is.

Three reasons, and the third is the company's own interest. The company calculates in a structured way in any case, as covered by the article on the two documents. A common structure requires disclosure of neither costs nor margin. And a structured tender protects the tenderer too, since a later dispute over content becomes harder, as covered by the article on the tenderer's view.

A common structure gives four benefits at once: comparability, visibility of missing work, management of variations and cost tracking during construction, of which the last lasts longest. The standard separates structure costs, which the design changes, from site-related costs, which the programme and the procurement arrangements change, so when the budget is tight both are worth looking at. A structure does not solve the distribution of margin or differences in quantities: structure says what the price covers, quantities say how much there is.

Four rules: prescribe the structure rather than hoping tenders will arrive comparable. When the budget is exceeded, look at site costs too, not only at the design. Provide quantities along with the structure, since otherwise half the benefit is lost. Use the same structure for tracking during construction.