How Smart Contractors Use RSMeans Cost Data to Win More Bids?

The majority of contractors lose bids not due to bad work, but because their numbers are off.

It only takes one miscalculated line item in a bid estimate to eliminate all your profit margin. A 2024 survey by FMI Corporation found that almost 62% of construction companies indicate that project losses are specifically due to poor cost estimation. Bad data is the quiet killer of this business not project complexity, no labor shortages.

Enter RSMeans cost data: the most reputable, most thorough construction cost database in North America. Contractors who know the use of RSMeans do not speculate; they make an accurate estimate, they can put in a bid and they secure their margins on each and every project.

This guide is the complete guide to everything you need to know: what RSMeans is, how its data structure functions, how it is applied to real bids by contractors, what mistakes to avoid, and how estimators such as Design and Bids can take RSMeans-based estimating to the next level.

What Is RSMeans Cost Data? And Why Every Contractor Should Know

Forget all you have heard about construction pricing databases and RSMeans is in a different league.

RSMeans is a database of construction costs published and maintained by one of the biggest construction cost intelligence firms in the United States, Gordian. RSMeans, which was introduced in 1942, has been the gold standard of construction cost estimating in the industry. It includes materials, labor, equipment, overhead, and profit in practically all types of trade and projects.

Why is RSMeans special compared to a simple price list or supplier quote? Three things: depth, accuracy and locality.

There are more than 90,000 distinct line items in the RSMeans database. Every line item subdivides costs into materials, labor, equipment, and total unit price – providing contractors with a comprehensive, detailed perspective of what a project will actually cost. To ensure that these figures reflect the real market conditions, Gordians research team puts an average of 25,000 hours annually in verifying and updating these figures.

And this is where the guides of most competitors jump over: RSMeans modulates each cost amount over 1,000 locations in North America. It is the difference between a concrete pour in Manhattan and a pour in rural Tennessee; a pour will show a totally different unit price, since RSMeans will consider local labor rates, material availability and regional market variables.

This is not a mere price guide. RSMean is a decision-making engine that will transform raw project data into defensible, professional cost estimates.

The Anatomy of RSMeans Data: How the Database Is Structured

The majority of individuals open RSMeans, process numbers and feel overwhelmed. It can be decoded in a few minutes like this.

RSMeans provides an organization of all cost data based upon CSI MasterFormat and the standardized numbering system employed throughout the construction industry by the Construction Specifications Institute. This organization separates construction work into 50 divisions, each with a particular type of trade or work.

Some of the key divisions include:

• Division 03 — Concrete
• Division 04 — Masonry
• Division 05 — Metals
• Division 06 — Wood, Plastics, and Composites
• Division 09 — Finishes (drywall, flooring, painting)
• Division 15 — Mechanical (plumbing, HVAC)
• Division 16 — Electrical

Each line item within each division has its own code that leads to the description of the work. You will find that code in RSMeans, and it will have cost with five columns:

• Crew — the labor crew type performing the work
• Daily Output — how much work the crew completes per day
• Labor-Hours — hours per unit of measure
• Material Cost — cost of materials per unit
• Total Installed Cost — full cost including material, labor, and equipment

The beauty of this structure is that it provides transparency to the contractors. You are not being given a total figure only you are being given a complete breakdown of how each dollar is spent. It is much easier to revise the estimates at this level of detail in the event of a change in the conditions of the site. When a subcontractor quotes differently or when the prices of the materials change during the project.

Understanding the ‘Bare Costs’ vs. ‘Total Including O&P’

Another point to consider when using RSMeans for the first time: each line item contains two cost columns.

The Bare Cost column shows the cost of pure material and labor only – no overhead, no profit. The column “Total Including O&P” includes a standard overhead and profit markup which is based on the common contractor markups in said market.

Most bid scenarios require contractors to work off the Total Including O&P figure to start with, and to modify it according to their actual overhead structure and desired target margin. This difference can be understood to avoid huge mistakes in under-bidding, which costs contractors millions annually.

RSMeans Location Cost Factors: Why Where You Build Changes Everything

This is one figure that will bring you to a halt halfway down the scroll: the cost of construction in San Francisco can be 40-60% above the national norm. In some Midwest? They can perform at 15-25 per cent below average. Same materials. Same project type. Entirely new universe of costs.

RSMeans does this by use of a system of City Cost Indexes (CCI) and Location Cost Factors. These indices respond to local market realities by adjusting the national average cost figure to local market conditions in more than 1,000 cities and counties in North America.

The CCI breaks down into three sub-indices:

• Materials Index: reflects local material costs relative to the national baseline
• Installation Index: reflects local labor rates and productivity
• Total Index: the blended adjustment for total project cost

To use a location factor, multiply the national unit cost of RSMeans by the local CCI (as a decimal). To use an example, when RSMeans provides a price of concrete formwork in the country of $8.50 per square foot and your city has a CCI of 1.18, the local cost of $8.50 x 1.18 = $10.03 per square foot.

Those contractors who neglect to perform this step or who use an incorrect location factor will always underestimate projects in expensive metros and overestimate themselves out of business in cheap areas. The location correction is not an option; it is the gap between a winning and a losing bid.

A 2023 Gordian market study discovered that contractors who systematically used adequate location considerations on RSMeans data presented bids within 5% of actual project costs. Compared with an industry average variance of between 12% and 18% to, projects that used informal pricing mechanisms.

How Contractors Actually Use RSMeans in Their Bidding Process?

Theory is great. We will discuss how RSMeans functions in reality, starting with taking a set of drawings and finishing with submitting a bid.

Step 1: Quantity Takeoff

Before the advent of RSMeans, contractors would require a quantity takeoff, which is an accurate calculation of all materials and the scope of work on the project drawings. This is in the form of linear feet of framing, square feet of drywall, cubic yards of concrete and the number of fixtures, among other details.

The quality of your RSMeans-based estimate depends on the quality of your takeoff. Garbage in, garbage out not even the finest cost database will correct a careless takeoff.

Step 2: Matching Work Items to RSMeans Line Items

After getting your quantities, get the corresponding line item in your search in the RSMeans database using the CSI MasterFormat division or keyword search. Choose the specification that most nearly corresponds with the actual work material type, installation method, crew type, and conditions.

The old-time estimators understand that the choice of the appropriate line item is not as insignificant as some might believe. A line item on normal concrete placement will be vastly different from the concrete placement in a confined space or high deck. Always take time to read the specification notes for each line item of RSMeans.

Step 3: Applying the Location Cost Factor

Now that you have your line items identified, use the right City Cost Index where your project is located. Even on large projects, this step alone can change your overall estimate by tens of thousands of dollars and in less than five minutes when you are familiar with where to find the CCI tables.

Step 4: Adding Project-Specific Adjustments

RSMeans offers standard cost bases. In real projects such conditions are hardly ever met. Manual adjustments are added by experienced contractors to:

• Hard to access sites or limited working space.
• Premium crews or overtime schedules.
• Abnormal soil/subsurface environment.
• Unusual materials not in standard specifications.
• Premium-priced brand-name products that the owner specifies.

Step 5: Building the Full Bid Summary

Once all line items have been assembled with location-adjusted costs and project-specific adjustments, contractors assemble a bid summary that will aggregate direct costs, include general conditions and calculate profit margin. RSMeans also offers advice as to what general conditions costs are typically, usually ranging from 6% to 15% and depending on project size and complexity.

RSMeans Formats: Books, Online Database and Software Integrations

How you connect to RSMeans data transforms your workflow in ways that most people would probably not notice. The following is a straight breakdown.

RSMeans Print Books

RSMeans is a publisher of annual books on costs in particular trade areas, such as concrete and masonry, mechanical, electrical, commercial renovation and others. These books are updated annually and can be used as desktop references where one can quickly look up something. The biggest drawback: print data is fixed when the publication is issued and not able to capture mid-year market changes in materials or labor.

RSMeans Online Database

RSMeans online offers subscribers the capability to use the entire 90,000+ line item database with monthly updates on pricing. The online platform enables the users to:

• Search by keyword or CSI division code
• Apply location factors dynamically for any of 1,000+ cities
• Export cost data to spreadsheets for further analysis
• Access specialized databases (residential, commercial, renovation, green building)

To the majority of professional contractors and estimating teams, the online database is much more valuable than the print books, particularly on a project that may be in multiple locations or have complex scopes.

RSMeans Integrated into Estimating Software

The most powerful way to use RSMeans is through direct software integration. Contractors can estimate platforms that implement RSMeans data, giving the ability to access live cost data in the bid worksheets without changing a tab. This not only removes the possibility of manual lookups but also increases the speed of estimate generation and ensures that all cost information is kept in sync.

A 2024 survey of construction technology by JBKnowledge found that contractors with embedded cost databases in their integrated estimating software had an average of 34% less time to prepare estimates, on average, than those who used manual methods with independent databases.

The 6 Most Costly RSMeans Mistakes Contractors Make

Among even those contractors who regularly use RSMeans some mistakes cost them real money. Before they touch your bottom line, be aware of these errors.

Mistake 1: Using Outdated RSMeans Data

The costs of construction materials can change radically in one year. An example is lumber prices, which increased more than 400% during 2020-22. Cross-referencing current supplier quotes on volatile materials against an old RSMeans print book is a sure way of eroding the margins.

Mistake 2: Skipping the Location Adjustment

Do not use national average RSMeans numbers without a location cost factor correction. As explained, there may be cost differences of more than 50% between markets with the same scope of work. This single omission can make bids completely uncompetitive or unprofitable.

Mistake 3: Misreading Crew Productivity Assumptions

RSMeans labor costs assume standard crew productivity under normal conditions. If your project involves restricted access, extreme weather conditions, or inexperienced labor, you must manually adjust the labor-hour figures upward. Failing to do this underestimates labor cost and kills your margin.

Mistake 4: Ignoring Equipment Costs

Most contractors pay attention to the material and labor and pass over the equipment column in RSMeans. In heavy civil or mechanical projects, equipment costs may comprise 20-35% of the overall project cost. Being systematic in neglecting this column will sink the boat in those types of projects.

Mistake 5: Applying O&P Blindly

The “Total Including O&P” column adopts the RSMeans standard assumptions of overheads and profit, which may not be consistent with your real cost structure. A small contractor that has large fixed overhead may require a greater markup. It may not require a big GC with negotiated prices with suppliers. Always compare RSMeans O&P to your real overhead rate.

Mistake 6: Not Reading the Line Item Notes

Each RSMeans line item is specified with specification notes outlining precisely what is covered and what is not covered by the cost. Leaving out these notes will cause the wrong line item to be chosen altogether, an error that may cost a bid in thousands of dollars.

RSMeans vs. Supplier Quotes: When to Use Which

Every serious estimator will ask himself a question: shall I trust RSMeans or shall I call my supplier and ask him to quote? The response is both yet at the appropriate times.

RSMeans works best for:

• Preliminary budgets and feasibility studies
• There are conceptual estimates prior to full drawings.
• Reasonable subcontractor quotes.
• Projections in new markets or divisions of trade.
• Coming up with quick estimates within constrained time frames.

Direct supplier quotes work better for:

• Bids that require hard pricing.
• Volatile commodities (steel, lumber, copper) that fluctuate in price.
• Special or proprietary materials not in RSMeans.
• Projects in which the supplier relationships provide you with a competitive pricing edge.

The cleverest contractors take RSMeans as their primary framework and sanity check then overlay real supplier quotes on high-value or volatile line items. This hybrid method will be a combination of RSMeans speed and accuracy of current market pricing.

Specialized RSMeans Databases: Beyond Basic Construction Costs

RSMeans is well known among most contractors as far as new construction is concerned. However, there is much more to its database. Gordian releases various RSMeans databases that are industry and project-specific:

• RSMeans Residential Cost Data: Single and multi-family residential construction, contractor prices.
• RSMeans Commercial Renovation Costs: Tenant improvement and renovation including demolition and waste considerations.
• RSMeans Green Building Costs: Sustainable construction materials, systems and cost premiums related to LEED.
• RSMeans Site Work & Landscape Costs: Earthwork, utilities, paving and landscape.
• RSMeans Facilities Construction Costs: Building owners’ repair, maintenance and alteration costs.

The database that should be used by the contractors is the one that is in line with their specialization in the market segments, rather than a general building construction edition. The special databases have more accurate line items and better represent the cost structures of the respective sectors.

How Design and Bids Use RSMeans Data to Give Contractors a Competitive Edge?

Understanding RSMeans is one thing. It is one thing to have a team that can practice it with accuracy and swiftness on your behalf.

Design and Bids will synchronize RSMeans cost information with its professional construction estimating process. Thus, all estimates your team will be given will have the power of validated, location-adjusted and market current prices. That is what that would do to your business:

Faster Bid Turnarounds

Manual RSMeans lookups require hours or even days on complicated projects. We simplifies the whole estimation process using pre-assembled RSMeans and location-adjusted pricing, reducing the time you spend preparing estimates, enabling you to submit more bids each month.

Location-Accurate Pricing for Any Market

You can offer work in New York, Houston, Phoenix or any of the rural counties in between. Design and Bids experts uses the right RSMeans City Cost Index of your particular project location. Each estimate is the true cost atmosphere of your market not some national average that will burn you.

Defensible, Transparent Estimates

The answer is important when an owner or GC questions you about what numbers you are coming up with. Estimates constructed using RSMeans data carry instant credibility within the industry. The fully itemized estimates generated by Design and Bids use standard cost data as reference, so your bids are defensible, professional and trusted by the clients and the general contractors with whom you do business.

Reduced Bid Risk

All bids are risky. Design and Bids measures such risk by constructing estimates based on proven data as opposed to intuition or price books. The outcome: lower bids with established margins, fewer surprises in the field and the safeguarding of your business in all contracts.

RSMeans and Labor Cost Estimating: Understanding Crew-Based Pricing

Most estimates break down at labor. Prices of materials are comparatively fixed, and are relatively simple to confirm- labor is invisible, variable, and market-dependent in a manner that most databases cannot withstand. None of the competitors does this as well as RSMeans.

RSMeans gives each line item a particular type of crew such as C-7 Crew which can include a foreman, two carpenters, and a laborer who are working on a particular assignment. There is a daily output rate of each crew (the amount of work they finish in a given day) and a labor-hour rate (the number of hours they work in one unit of measure).

This crew-based method implies you can model various crew arrangements and view their impact on your cost. An older crew with higher daily production may be more expensive per hour, but the production per unit may be less important information that you need to know when you are comparing subcontractor proposals.

RSMeans labor rates are based on the rates of unions within respective regions. RSMeans also offers open-shop adjustment factors which allow an open-shop contractor in the non-union context who uses another wage structure to re-estimate the cost of labor at a different wage rate. The U.S. Bureau of Labor Statistics estimates that union workers in the construction business on an average basis earn 18 to 24% more than their non-union counterparts, which is a huge difference that should be reflected in your estimates.

Using RSMeans for Preliminary Budgeting vs. Final Bid Estimating

Not every estimate is the same. RSMeans is flexible to all project lifecycle phases but the manner in which it is used varies greatly between early budget estimates and end-of-project bids.

Preliminary Budgeting (Conceptual Phase)

During the concept or schematic design stage, owners and developers require approximate order-of-magnitude costs on which they can assess the viability of the project. RSMeans promotes it with the help of square-foot cost models and assemblies that enable estimators to price an entire building type on a square-foot basis depending on the building class, occupancy type, and location.

An illustration is that RSMeans could provide that a Class B office building in Denver would cost around $185 to $225 per square foot to construct the building – this would provide a developer with an instant feel of the overall investment in the project without even a drawing of the building being created. These square-foot models have a normal accuracy of about ±15% to ±25% which is quite befitting feasibility analysis.

Schematic and Design Development Estimates

As design progresses and drawings become more detailed, estimators shift to assembly-level estimating — pricing complete building systems (foundations, structural frame, exterior envelope) rather than individual materials. RSMeans assemblies bundle related line items into system costs, making it possible to estimate at this level quickly and with reasonable accuracy (±10% to ±15%).

With the advancement of design and the development of more detailed drawings, estimators find it easier to move to the assembly level of estimating, which involves estimating a whole building system like foundations, structural frame, exterior envelope, as opposed to estimating individual materials. RSMeans assemblies collimate the line items to form system costs and thus, it is possible to estimate at this level, with great speed and reasonable accuracy within a range of about 10% to 15%.

Construction Document and Final Bid Estimates

Contractors at the final bid stage process completed construction documents and developed detailed unit-price estimates based on unit RSMeans line item estimates. It is the finest granular and most precise use of RSMeans data, with a goal of accuracy of  ±5% to ±10% when done right with existing location variables and project-specific compensations.

Final Thoughts: RSMeans Is a Tool and Your Expertise Makes It Powerful

The reality that no software company can live to confess is this: There is no such thing as a powerful RSMeans, only powerful estimators who use it.

The database offers the starting point, correct, fully detailed, location-corrected cost information that is based on years of research and 25,000 hours of yearly validation. However, it is the contractor who understands what line items to choose, what modifications to make, and how to interpret team productivity assumptions. Also, how to superimpose actual market circumstances, which produce bids that are won and profitable jobs.

According to a McKinsey Global Institute study of major construction projects, poor management of project costs is costing the construction industry an estimated $31 billion every year. Enhanced data estimation, combined with the skill to implement it in a proper way, strikes that figure right in the face.

Access to RSMeans via the online database, using it in your estimating package or outsourcing to a professional estimating partner with Design and Bids, the idea is the same. Less inaccurate estimates, competitive bids, and more secure margins on every project you take.

Begin to think of RSMeans as a price list, but not as a strategic cost intelligence tool, as it really is. The doers are the contractors who remain in business and are expanding 5 years later.

FAQs

What is RSMeans cost data? Who publishes it?

RSMeans is a construction database of cost including all construction costs published by Gordian. It has more than 90,000 line items that refer to materials, labor and equipment and the total installed cost of virtually all forms of construction work in North America. Each year, the Gordian research team takes about 25,000 hours to correct and confirm the information to ensure that it remains relevant to the actual market situation.

What are the RSMeans location factors?

RSMeans is a system that is based on City Cost Indexes (CCI) to be able to adjust national average costs in more than 1,000 specific locations in North America. The CCI indicates variations in local labor rates, material prices, and market conditions. To implement a location factor, multiply the RSMeans national cost figure by the local CCI in the form of a decimal. To illustrate, a CCI of 1.15 indicates that the local costs are 15% points higher than the national average.

Does RSMeans data have sufficient accuracy to be used to make final bid submissions?

Yes. RSMeans data is accurate to within 5% to 10% of the final bid when used appropriately, with location adjustments and project-specific modifications. Nevertheless, in the case of a highly volatile material such as lumber, steel, or copper, the estimators with experience compare the RSMeans values with the current supplier quotes to make sure that the prices can reflect the situation on the market at the moment of bidding.

What is the difference between ‘Bare Cost’ and ‘Total Including O&P’ in RSMeans?

Bare Cost is the cost of direct material and direct labor without overhead or profit markups, basically the cost of doing the work without any business costs. Total Including O&P, includes typical contractor structures and adds common overhead and profit markups in that market. Most contractors take Total Including O&P and base it on their desired profit margins and the prices they have achieved in their actual overheads.

What is the role of Design and Bids in making use of RSMeans data to support contractors?

Design and Bids incorporated RSMeans cost data in its professional estimating process to create location-adjusted, itemized construction estimates for contractors in all market sectors. With the appropriate City Cost Index applied to each project location, current RSMeans line item is referenced and project-specific corrections are applied. We provide estimates that are precise, believable, and designed to shield the contractor margins to enable clients to bid with confidence and to win higher-profit contracts.