Estimating the cost of capital projects: an empirical study of accuracy levels for municipal government projects

Abstract

This paper highlights the findings of a study undertaken to assess the accuracy of cost estimates for construction projects at various levels of design maturity. Specifically, this paper addresses the accuracy of cost estimates for major types of municipal works including drainage, roadways, and building projects over a span of 3 years. Over 200 projects were statistically evaluated in the study at four levels of the design, namely, concept, preliminary, detailed, and award. Those estimates were then compared with actual incurred cost at project completion. In general, it was found that estimates are not as accurate as generally believed. It was also confirmed that cost estimates for rehabilitation work were less accurate than those for new work. In the absence of major changes to the design and estimation processes, more tempered accuracy limits were derived and proposed.Key words: estimating, budgeting, construction costs, variability in capital costs.