Cost Estimating Algorithm

case_leg_buildingalgorithmA large manufacturer of building materials had filed bankruptcy due to lawsuits filed relative to asbestos-containing products it had once produced.  As part of the bankruptcy it was necessary to determine the cost for removal of asbestos-containing fireproofing from several hundred buildings whose owners had filed claims as part of the bankruptcy proceedings.  We were asked to calculate the total cost for this work, as well as the cost for each building.

We started our analysis by selecting exemplar buildings which were representative of each building type in the claim, and for which drawings were available to permit detailed take-offs of material quantities.  Detailed cost estimates were prepared for the work using labor, material, and equipment costs from a national database, with costs adjusted for the geographical location of each building.  These estimates were verified by comparing calculated costs with documented costs from past projects.  We performed research of public documentation and aerial photo interpretation to determine the structural system, floor area, and number of stories for each building in the claim.  We then developed an algorithm to calculate costs based upon the validated labor, materials and equipment costs with geographical adjustments.  During development of the algorithm, we fine tuned geographical adjustment factors provided by a nationally recognized cost data provider.  This was accomplished by researching local labor rates, and adjusting materials costs by including more accurate transportation costs.  Based upon this work, the national cost data provider, revised their geographic cost factors.  Using the finalized algorithm, we calculated the needed costs.

Detailed, and validated cost data generated by our algorithm enabled the parties to better arrive at a settlement of property damage claims that had been filed as part of the bankruptcy.