Mastering Cost Estimation: Common Pitfalls and How to Avoid Them
Accurate cost estimation is critical to project success. We break down the most frequent mistakes made during the bidding phase and how to mitigate them.
Cost overruns are an industry plague, and they almost always stem from the earliest phases of a project: estimation. Accurate cost estimation and quality surveying are not just about numbers; they are about understanding risk.
The Top 3 Estimation Mistakes
1. Optimism Bias
Estimators often assume the best-case scenario for productivity and material delivery. Solution: Always apply historical data and factor in a realistic contingency based on a formal risk assessment.
2. Scope Omissions
Missing minor details in the drawing can lead to massive unbudgeted costs later. Solution: Utilize specialized estimation software and peer reviews to ensure no stone is left unturned.
3. Ignoring Market Volatility
Material prices fluctuate. Quoting based on today's steel price for a project starting in six months is a recipe for disaster. Solution: Build escalation clauses into contracts and utilize forward pricing models.
TotalPMP provides specialized cost estimation services to ensure your bids are both competitive and profitable.