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November 7, 2012
Cost predictability guide for projects revamped
Practical advice to improve construction project cost predictability is the main goal of a new guide developed by a joint federal government and industry taskforce which included the Canadian Construction Association.
The Guide to Cost Predictability in Construction: An Analysis of Issues Affecting the Accuracy of Construction Cost Estimates looked at how to best tackle the growing problem of large discrepancies between pre-tender estimates and actual bids.
The previously agreed degree of accuracy of +/- 5 per cent for Class A estimates should be expanded, explained the taskforce’s chairman.
“The more we looked at it, that +/- 5 per cent is too narrow,” said John Westeinde, taskforce chairman, Westeinde Construction Ltd. president and CCA member.
“Even contractors bidding on the exact project with the exact circumstances, their bids varied up to 10 per cent. How can you expect a cost consultant, no matter how tuned he is on a virtual basis, to reach a better variance than that? It is not realistic.”
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.
The original guiding principle of a +/- 5 per cent variance simply does not apply to the current construction landscape, noted Westeinde.
“Projects have become much more complex, individual and unique. For instance, there are projects in northern Canada in which weather conditions and logistics dictate costs,” he said.
“We want owners to recognize, even under the best of circumstances, it is not realistic that you should end up at +/- 5 per cent variance. This is not to say we should not strive for that but don’t get excited if it is at +/- 5, 6 or 7 per cent.”
The guide’s taskforce included Defence Construction Canada, Public Works and Government Services Canada, contractor, architect, engineer and costs consultant representatives.
“The report is based on their experience and a proper reflection on what is really required to do this,” said Westeinde.
“The report is directed to industry but primarily to owners and design consultants. Owners must recognize if they want to get accurate estimates beforehand, they have to have people that are qualified, but primarily, you have to allow enough time for the design consultants to complete their drawings within reasonable deadlines.”
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