Why rebase construction projects?

Construction moves quickly. Projects are very quick to fall out of date - tender prices that are submitted just a couple months ago can be quickly no longer relevant. Rebasing helps to solve this problem by bringing projects back to a common starting point, so that they can be accurately compared. In short, rebasing is an essential tool for anyone involved in construction projects, from quantity surveyors to project managers. It helps to ensure that projects are accurately benchmarked, and that cost forecasting is as accurate as possible.

Rebasing is not always a straight forward process however, especially when you have large amounts of data that requires constant attention to respond to the latest developments in the macro economic environment.

That’s where we come in. We’re experts in construction data, and our software is designed to make rebasing projects quick and easy. We’re constantly updating our databases with the latest data, so you can be confident that your projects are always using the most up-to-date information.

If you’d like to find out more about how we can help you with rebasing your construction projects, please get in touch.

How to rebase construction projects?

The following steps lay out in a broad sense the steps one should take to account for price fluctuations between tender receiving and further cost estimation:

Identify the basis and units of time to rebase to - common units are Quarter and Year

There are two key things to consider when rebasing a construction project: the basis, and the units of time. The basis is the starting point from which the project will be rebased, and is typically either the start or completion date of the project. The units of time are the increments by which the project will be rebased, and common units include Quarter and Year.

Once the basis and units of time have been identified, the project can be rebased by simply dividing it into the relevant number of increments. For example, if the project is to be rebased on a Quarter basis, then it would be divided into four equal parts. This would then allow for a more accurate comparison of the project against others, as well as identifying any areas where the project may be performing below average.

For each Quarter and Year assign a TPI factor

Once you have the time units you wish to rebase by you will need to decide on a factor to normalise the data that you have. This can be created by you but this will take an inordinate amount of time to create and keep up to date as inflation is constantly changing. Therefore there are several places to get this data:

• BCIS - releases forecast and historical TPI data (paid)
• RLB - releases forecast and historical data for various countries and cities
• Turner and Townsend - releases forecast and historical data for various countries and cities
• Arcadis - releases forecast and historical data for various countries and cities

Rebase the project to a common date

You then need to identify a target common date to rebase your previously selected relevant projects to. This common date should be as close as possible to the project's start date. For example, if the project started on the 1st of January 2023, then the target common date would be the Q1 2023.

If your current projects total construction cost of £1.5 million are from Q2 2015 with a rebase rate of 126 and the target date has a TPI of 221 then you can do the following calculation.

(221-126)/126 = +75% increase

£1,500,000 * 1.75 = £2,625,000

Compare the projects

It is important to remember that construction projects are unique, and as such, there will always be some element of judgement required when benchmarking them. However, by taking the above steps, you will be able to create a more accurate picture of how different projects compare in terms of cost.

TPI's are guidelines created by players in the industry, notably: BCIS, RLB, Turner and Townsend and Arcadis. They provide an indication of how construction costs have changed over time.

The choice of TPI will have an effect on the outcome of the analysis. In order to get the most accurate results, it is important to use a TPI that is specific to the country in which the project is based.

The benefits of rebasing construction projects

One important factor to consider when benchmarking construction projects is whether or not the projects have been rebased. Rebased projects are those that have been updated to reflect current market conditions. This is important because it ensures that you are comparing apples to apples, so to speak. If one project has been rebased and the other has not, then the results of the benchmarking process may not be accurate.

There are many benefits to rebasing construction projects, including the following:

1. You can more accurately compare projects. As mentioned above, rebasing ensures that you are comparing projects that are on an equal footing. This is important in order to get accurate results from the benchmarking process.
2. You can identify trends. When you compare rebased projects, you can identify trends in the construction industry. This information can be used to make informed decisions about future projects.
3. You can save money. Rebased projects can help you save money by identifying areas where costs have increased. This information can be used to negotiate better prices with suppliers or to find alternative sources of materials.
4. You can improve project planning. By understanding cost trends, you can better plan for future projects. This information can be used to create more accurate budgets and to schedule projects more effectively.
5. You can reduce risk. Rebased projects can help you reduce risk by identifying potential problems early on. This information can be used to make changes to the project plan in order to avoid these problems.

Rebasing construction projects is a valuable exercise for any quantity surveyor. The benefits of rebasing are numerous and can help you to improve the accuracy of your benchmarking process, identify trends, save money, and reduce risk.

The challenges of rebasing construction projects

The first challenge is obtaining accurate and up-to-date data. This can be difficult, as construction projects are constantly changing. Even if you have access to the most recent data, it may not be accurate. The second challenge is adjusting for inflation. Construction costs can change rapidly, and you need to be sure that you are comparing apples to apples when benchmarking projects.

The third challenge is understanding the scope of the project. A project that is twice the size of another is not necessarily twice as expensive. You need to take into account the type of project, the location, the materials used, and other factors. The fourth challenge is correctly identifying the project risk. Some projects are riskier than others, and this needs to be factored into the benchmarking process.

Despite these challenges, rebasing construction projects is essential if you want to accurately compare the cost of one project to another. With accurate data and a thorough understanding of the project scope, you can ensure that you are making the most informed decisions possible.

Conclusion

To conclude, rebasing is an integral part of keeping legacy construction data accurate, and it is also necessary for making sure that projects are benchmarked against the most up-to-date cost information. The process can be challenging, however, given the number of different data sources that need to be considered. But with careful planning and execution, it is possible to rebase projects effectively and efficiently.

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