Estimating accuracy discussions can be quite interesting. No really! There are different nuances depending upon the level of the estimate and who is preparing the estimate.
I am fascinated by the people that develop estimates at the Feasibility or Budget stage of a project then state the estimate is a +30% to -30% for its level of accuracy. In other words, if the estimated cost on the project is $100 million, it means the estimate is anywhere from $70 to $130 million for the project. A $60 million spread like this is a little uncomfortable for me. Why bother to prepare an estimate in the first place!
Estimates that come with large stated plus or minus ranges for variation are not serving their end user’s needs. While presenting a cost range is a valid tool, a range qualifier that is larger than plus or minus ten percent defeats the purpose of preparing an estimate in the first place. In an ideal world, a zero variance from budget to bid should be the norm.
2 Comments
Don, Do you really think the Boston Central Artery Project and similar mega-projects could possibly have come closer than +30/-30% during feasibility and prior to detailed design? Range estimating serves a very important place in our industry, particularly during planning where priority of work is determined by B/C (Benefit/Cost) ratios that require ROM (Rough Order of Magnitude) estimates.
Joe Klink, PB Estimating Consultant/PM
Previously w/Bechtel for 18 Years
Joe,
Having watched from the sidelines (mainly by reading what has been reported in ENR, the WSJ and other publications) I do not know exactly what happened with the Central Artery Project budgeting. What I suspect is the project was under funded from the beginning. As a federal project of this magnitude and “political importance” there was no way the project could have ever expected to have a minus tolerance or potential for under run. I have seen other public works projects that are intentionally underfunded at the federal and state levels. Sometimes the underfunding is even unintentional because the budgeting was not done by q1ualified personnel. Some times the projects are under funded on a local level just to get them past the voters. I think this project would be an excellent example on how to put one over on the taxpayers.
Don