Engineer’s construction cost estimate, More than meets the eye
While discussing a new project with clients, we often hear “And, will you do a cost estimate too?”. It’s common for clients to request an engineer’s construction cost estimate for the projects we’re designing.
There are numerous tools available to engineers to reach these estimates. This includes published unit prices from state departments of transportation, cost estimating software, experience with similar projects, and conversations with materials suppliers and contractors. We use this information to develop a projected construction price, which the client and other stakeholders may use for budgeting purposes.
The Association for the Advancement of Cost Engineering International has some useful guidelines on accuracy and risk associated with cost engineering. The greater the project definition, the less risk of price variance. Specialty projects such as dams and hydroelectric projects are especially difficult to define and as a result present a greater risk of cost variance. This is because they may have complicated features and difficult to foresee conditions including multi-stage stream diversion, large-scale de-watering, cofferdams or possibly work performed underwater by divers. These unique items usually vary considerably in price based upon how the contractor phases the project, available materials and their experience on similar projects.
Construction cost estimate reliability
It is always interesting to see how the engineer’s construction estimate compares to the bids received, knowing that much more detail is available to contractors when they review a completed plan set. Typically, more complexity in the project and/or more “specialty” elements included the design are reflected in a greater price range in bids from contractors.
In some cases, we see large differences between contractors’ bids and a construction estimate created during the design process. When we do, it is important to dive into the details to determine the reason. Often the majority of the engineer’s cost estimate is correct, however unforeseen elements such as existing contractor workload, expected prices of raw materials, and prior experience on similar projects drive up the total cost. These and other variables may be difficult to anticipate in the design engineer’s cost estimate, especially if the design is completed months or years before it is sent out to bid.
To adjust for these uncertainties, we add a contingency to the cost estimate. The more unknowns and complex the project, the larger the contingency. It is important for the client and design engineer to discuss how the engineer’s cost estimate was developed, his/her assumptions and contingency used. The more informed the client and stakeholders are prior to the bid opening, the better the budgeting planning.
ABOUT THE AUTHOR
Marty Kemps, P.E., is a senior engineer and client manager with nearly 20 years of geotechnical and project management experience. He has served as project manager for upgrades to existing dams, new dams and has performed numerous safety inspections along with construction administration oversight. When not working on dams and hydroelectric projects, Marty enjoys motorcycling and skiing.
More blog articles by Marty include:
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