Benchmarking is one of the most powerful tools available to clients on projects.
It’s also one of the easiest to misuse.
Often, benchmarking appears later in the process, once key strategic decisions have already been made. At that point, it stops being a decision-support tool and becomes something else entirely – a way of defending an outcome rather than testing it.
Used properly, benchmarking improves clarity around cost, risk and value. Used poorly, it can hide the very issues it’s meant to expose.
How benchmarking usually gets introduced
In many projects, benchmarking enters the conversation when costs feel uncomfortable.
Budgets are under pressure, tenders come back higher than expected, or stakeholders start asking whether the project represents “value for money”.
Benchmarks are then used to answer a narrow question:
Are we paying more than comparable projects?
That question matters – but it’s rarely the right place to stop.
What benchmarking should actually be testing
Good benchmarking doesn’t just compare headline rates or cost per square foot. It tests what sits behind the number.
At its most useful, benchmarking should help teams understand:
- How much of the cost is driven by base build scope versus project-specific abnormals
- Whether risk allowances are proportionate to the level of design certainty
- How procurement strategy has influenced pricing behaviour
- Where contractors have priced uncertainty rather than inefficiency
Without this level of breakdown, benchmarking risks becoming superficial.
Abnormals: where benchmarking often falls down
Abnormals are one of the most common areas where benchmarking is misread.
Two projects may appear similar on a high-level benchmark, but the underlying cost drivers can be very different. Items such as:
- Restricted access or out-of-hours working
- Complex landlord interfaces
- Programme acceleration or phased handovers
- Non-standard client requirements
These costs are often entirely legitimate – but when they aren’t clearly identified and benchmarked separately, they distort comparisons.
In those situations, teams can end up challenging the wrong costs, while missing the real commercial drivers altogether.
Risk pricing is not inefficiency
Another frequent issue arises when benchmarking is used to challenge risk allowances late in the process.
When design information is incomplete or decisions are still evolving, contractors will price uncertainty. That risk allowance often shows up as a premium when compared to historic benchmarks.
The mistake is assuming that premium represents poor value.
In reality, benchmarking should be used to prompt a more useful question:
Is this risk priced because of inefficiency – or because certainty hasn’t yet been created?
That distinction matters.
A practical example
We often see benchmarking work best when it is aligned with capital planning and procurement strategy, rather than applied afterwards.
On a recent programme, benchmarking helped a client understand that higher early cost certainty had been achieved by transferring risk to the supply chain. The cost premium wasn’t driven by abnormals or inefficiency, but by the point at which decisions were being made.
Once that was clear, the conversation shifted from “why is this expensive?” to “is this the right balance of certainty and flexibility for us?”
The benchmark didn’t give an answer. It created commercial clarity.
Timing changes the value of benchmarking
Benchmarking delivers the most value when it is:
- Applied early enough to influence strategy
- Structured to separate base cost, abnormals and risk
- Used to test assumptions, not defend positions
When introduced late, teams often end up debating the benchmark itself, rather than addressing the decisions that shaped the outcome.
A final thought
Benchmarking works best when it validates thinking – not when it’s used to justify it.
When clients understand what they are actually benchmarking – base scope, abnormals and risk – it becomes a tool for better decisions rather than more comfortable ones.
Need help benchmarking your project?
If you need greater clarity on your project, send us an email at info@ethoseq.co.uk.
References
RICS, New Rules of Measurement (NRM 1): Order of Cost Estimating and Cost Planning for Capital Building Works
⚖️ Disclaimer
This article is provided for general information purposes only and does not constitute professional advice. While every effort has been made to ensure accuracy, project circumstances vary and advice should always be tailored to specific requirements. Readers should not rely on this content as a substitute for professional advice.
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