The Problem Most Budgets Can’t See
Traditional approaches typically address escalation and location separately—often with a single factor applied late in the process. That works only when markets are stable and projects are simple. Today’s environment is neither.
Accurate budgeting now requires:
- Understanding how construction costs have actually moved over time
- Recognizing where location indices fall short
- Applying real-world project evidence, not theoretical assumptions
- Continuously calibrating models as markets respond
This is the foundation of the CATALYST system.
The CATALYST Four-Tier Cost Valuation Framework
CATALYST integrates national benchmarks, real-world project data, professional judgment, and live market feedback into a single modeling system. Each layer strengthens the next.
Nationally Published Cost Data
A credible starting point—not the answer
Construction Analytics (edzarenski.com) aggregates more than 20 publicly available datasets to produce the most credible long-term construction escalation history available. CATALYST uses this data to anchor national time-based cost movement.
RSMeans City Cost Indices are derived from bottom-up material and wage pricing. While this method does not reliably predict total owner cost outcomes on its own, it remains the best published benchmark for geographic normalization and is used accordingly.
CATALYST Real-World Project Data
What actually happens on real projects
CATALYST has been applied to and/or recorded over 700 building projects across 41 states, creating a structured dataset grounded in real outcomes—not abstractions.
Prior to COVID-19, observed CATALYST escalation closely tracked Construction Analytics. Since COVID, CATALYST’s rolling five-year baseline has trended approximately 10% higher, reflecting market behavior that national indices alone do not fully capture.
CATALYST accounts for location drivers beyond published indices, including:
- Urban density and site congestion
- Logistics and access constraints
- Bearing conditions and site demands
- Owner-specific requirements and delivery conditions
These factors materially affect cost and are modeled directly—not buried in contingency.
Multi-Level User Adjustment
Professional judgment, applied precisely
CATALYST allows informed adjustments without compromising model integrity. Users can refine assumptions at multiple levels:
- Whole-building escalation or location factors
- Uniformat Level 2 systems (e.g., Electrical, Mechanical)
- Sub-system levels (e.g., Exterior Wall assemblies)
- Individual line items for known project-specific conditions
This enables experienced teams to reflect current market intelligence while maintaining consistency and traceability.
Immediate Local Market Calibration
Turning bids into intelligence
As projects move into trade pricing, CATALYST captures real-time market feedback and feeds it back into future planning. Trade data—normally lost or siloed—becomes a living benchmark, continuously improving predictive accuracy across projects.
Why This Matters
Most budgeting risk is introduced early—when decisions are made with incomplete or misaligned cost signals. By integrating time, location, real-world outcomes, professional judgment, and live market feedback, CATALYST materially narrows uncertainty in early planning.
The result is not just better numbers—but better decisions, made sooner, with clearer consequences.
Supporting Evidence (Below the Fold)
Construction Cost Escalation vs. Inflation (1967–Present)
Figure 1 illustrates how construction costs have periodically diverged from general inflation, with notable surges in 2004, 2018, and during the COVID-19 era. These deviations explain why single-factor escalation approaches consistently underperform in volatile markets.
Sources
- End note 1: Construction cost escalation sources: Construction Analytics (edzarenski.com).
- Construction Wages: fred.stlouisfed.org/series/CES2000000008
- Producer Price Index - Construction Materials: statista.com/statistics/195382/...
- National Inflation Rate: usinflationcalculator.com .
