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New Guide Helps Improve Cost Predictability of Construction Projects

Monday, March 04, 2013

Joint federal government and industry cost predictability taskforce guide now downloadable from the Canadian Construction Association website

The Canadian Construction Association (CCA) announced the availability of a new guide on cost predictability of construction projects. Prepared by a joint taskforce consisting of senior representatives from the construction industry and the federal government, the guide offers practical advice on ways to improve construction project cost predictability.

Large discrepancies between pre-tender estimates and actual bids are a common and an increasing problem for the development and construction industry, jeopardizing the viability of projects. The taskforce found that while inaccurate or insufficient estimating processes account for some of the variance, the owners’ estimating process is also rarely properly completed up to a reasonable Class A level.

The taskforce developed a cost estimate variance matrix which provides a range of estimate variance based on the level of construction documents completion in combination with an evaluation of the level of complexity of the project. According to the matrix, the previously accepted degree of accuracy +/- 5% for Class A estimates should be expanded. “Given the increasing variety and complexity of construction projects, the degree of accuracy for Class A estimates should be expanded to +/- 10%,” said John Westeinde, president of Westeinde Construction Ltd. and the taskforce chairman.

Useful to both owners and contractors submitting bids, the guide provides eight recommendations that cover the time before, during and after the bids. Also included in the guide is a list of recommended design and development documents for different classes of estimates. The taskforce concluded that although it seems obvious, to achieve a realistic Class A estimate, you need to employ professional and experienced estimators, the project design documentation needs to be complete, and enough time needs to be allocated for the estimate.

The Guide to Cost Predictability in Construction: An Analysis of Issues Affecting the Accuracy of Construction Cost Estimates is available as a free download on the Canadian Construction Association’s website.