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Early Phase Cost Estimates Conundrum

I can’t tell you how many times I’ve been asked to provide a project cost estimate at an accuracy level that can only be obtained after significant design progression has been completed. Look, I understand the conundrum - you’ve been asked by your leadership to spend as little as possible to provide investment grade data into large scale capital investment decisions. I get it.

In a few cases, my teams have been able to meet the desired estimate range with the budget requested, but rarely. More often we get into a significant back and forth around right-sizing a design scope to match the desired cost estimate accuracy. Typically, too, this involves some education in both directions. As the Consultant, we help the Owner understand the traditional means/methods for delivering to a certain percentage accuracy. We help define accuracy bands versus project contingency. The Owner typically educates the Consultant on what they really, really need to present to their stakeholders. This process can take time and be frustrating for all.

Ultimately, however, it is this back and forth conversation that leads towards identifying and agreeing to a scope of work and right sized set of deliverables that will meet the Owner’s needs.

Communication - go figure.

As the Consultant, be sure to really dig into what your Owner’s actual needs are:

  • Ask for time with the stakeholders that have made the actual request or those that control the capital investment decision making process.

  • Ask for a larger picture conversation about their capital and operational plans for this project and others that might overlap/impact.

  • Ask for examples of previous feasibility style deliverables and their cost estimate examples.

  • Ask for and understand their capital decision making process - what are they going to do with your deliverable?

As the Owner - don’t accept the standard line requesting commensurate design detail with your cost estimate accuracy. There is always a way to meet your needs. A good Partner will help find a path collaboratively with you. Note, however, that you may need to share some behind the scene details to ultimately arrive at an aligned scope of work.

I’d also strongly recommend getting face to face to discuss these types of challenging scoping exercises. Use a whiteboard, test ideas together, and write the scope of work collaboratively as partners. Good luck! And don't' hesitate to reach out should you be on either side of these conundrums, TCG would be happy to help facilitate.

#projectmanagement #designprojectmanagement #datacenters #projectdelivery #hitech #costestimating #feasiblity #capitalprojects #decisionmaking

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