Overhead and Uncertainty in Cost Estimates: A Guide to Their Review
Abstract
There are few industry guidelines that help owners better understand the cost estimates upon which project budgets are based. This paper begins by briefly amplifying the industry consensus that cost estimates for heavy civil and tunnel projects must be based on a “bottom-up” approach. The main focus is on explaining the categories of indirect costs typically used by contractors and their perhaps surprising contribution to overall cost. It then moves on to emphasize the need for an integrated project schedule that quantifies the duration over which these indirect costs are incurred. The paper concludes with a brief examination of and recommendation on the issue of estimating accuracy. These are some of the issues often overlooked when owners review a cost estimate.
2010
North American Tunneling (NAT) Conference Proceedings
John Stolz
Jacobs Associates
