Construction Estimate Risk Factors
• Project Delivery Method and Management
• Potential scope growth
• Acquisition strategy
• Construction elements
• Design quantities
• Special fabrication and equipment
• Market/bidding conditions
• Escalation
• Cost estimate assumptions
• Schedule estimate assumptions
• External Risks
• Assumed Funding Strategy
• Design Confidence
• Project Management Plan
• Potential for unknown-unknown risks
• Change management
• Potential mitigation efforts for identified risks
Risk Quantification
• Cost Impacts
• Cost Variations (low variance, likely, and high variance)
• Schedule Impacts
• Schedule Variations (low, likeliest, and high)
• Correlation of Risks to One Another
• Cost Impacts due to Schedule Variations
A construction cost estimate is prepared in as much detail (inclusive of detailed notes) as required to negotiate the lowest reasonable price. Construction drawings and specifications are included in the supporting documents. Owner estimates are critical in the process, and used to in the evaluation of the contractor’s proposal for scope differences.