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Posts|November 01, 2022

Providing Construction Cost Estimates Can Cost You Big Time!

By Kelly Potter
Principal CIC, PWCA

Design firms often agree to prepare construction cost estimates for their clients throughout the lifecycle of a project. While these estimates can be essential in helping project owners make decisions with planning, they are challenging to provide and can open-up design firms to significantly increased exposure.

Here is the issue: Many clients and owners neither understand nor anticipate all the complexities of a construction project.  Factors such as, market conditions, construction materials, and labor costs are beyond a design firm’s control and make estimating precise costs nearly impossible.  If your estimate is significantly off, your client might claim that your miscalculations caused them to make key decisions that resulted in added costs or other potential damages.  These potential claims can cost a firm big time.

Here is a solution:  First, determine if your client’s requirements are even reasonably attainable within their budget.   Then you might avoid providing cost estimates altogether and recommend your client hire a professional cost estimator.  If you do move forward in providing the service, make sure your contract includes language that states your limitations in providing estimates, and that the estimates are of probable cost and subject to change.  Reach out to your attorney or Cavignac broker for sample contract language.

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