The benefits of cost estimating early in projects

Cost estimating is tricky when you have a detailed design in front of you, and it’s even more challenging when the design is a few lines on the page. But that should not be an excuse for early involvement from specialized cost estimators when it comes to large infrastructure projects.

The key risk every owner will have to address in every project is cost. This is the one thing that clients and funding agencies continually assess in the development of options assessments, business cases, design, construction, and operational phases. Value for money – as low cost as possible for a good outcome, is the community’s expectation and in water infrastructure projects, the community is the ultimate client. Cost blowout is a substantial risk on any project, particularly on large water infrastructure projects. So, is it any surprise that cost is critical to a project’s success?

In almost every phase of a water infrastructure project, cost is the last thing addressed – tacked on once all the technical studies and design is done. The problem with this approach is that while cost is a critical decision-making element, it’s not given the time in a project to develop project understanding, local or regional context, risk to procurement and delivery, nor construction methods and construction risk. Options assessment or early planning projects are particularly vulnerable, as costs are not usually developed by specialized and experienced practitioners. This means, options assessments can only achieve comparative costs for similar types of solutions.

Clients and owners rely on decision-making tools during early phases of a project, for example multi-criteria analysis (MCA). Of note, cost is usually a stand-alone item, in water projects often classed as cost per megalitre per annum, where an MCA is comparing non cost, or subjective issues.

If we don’t give cost it’s due diligence during early phases, we are potentially making the wrong decision. Clearly, that is not good for any stakeholder.

I propose we turn this on its head and invest in experienced cost estimators in the options phases of the project. With careful communication and management of the ‘lines on the page’, cost estimators can bring massive value to decision making.