Let me tell you my cost manual story. I got a call once from the local economic development authority to appraise a proposed industrial shell building for a tenant. I told them I didn’t have time to do it, and they said 300 jobs were at stake and they would make it real easy for me. They gave me all of the land sales, all of the leases, and most importantly of all, they had three contractor’s estimates to construct the subject building. I said OK. They just wanted an appraisal to stick in the file.
The contractor’s estimates to construct the same building under the exact same specifications were: $350,000, $450,000 and $575,000. That is a pretty good range. I used Marshall and Swift and came up with $425,000. Here is the moral of the cost manual story: I never use a cost manual unless I already know the approximate answer, but I use the cost manual as a supporting reference. It looks more believable to quote a nationally recognized cost manual than some appraiser’s personal opinion. So, do it both ways and you will come out ahead.
I took the Marshall cost manual course from the guy that assembles the data and got an inside view of how they work. Each cost level they report is the mid point of a bell curve for that quality classification with a range of about 20%. For example, if an average quality class S auto shop building has a cost manual cost of $30 per square foot, the actual range could be $24 to $36 per square foot. Then you have to index and localize it which could add another 15% or more onto either end of the range.
I keep records of actual cost and a record of what point in the manual range actual cost fall into so the next time if I don’t have an actual cost, I know where to start.
This instructor from Marshall told me that they get calls all of the time from clients that have been using their manuals for 20 years asking: “Oh by the way. What are all of those green indexes in the back of the book? The key is proper use classification of the building.