Before the first dirt is moved, or the first nail driven, a construction project may be in serious trouble and paramount amongst the reasons is a flawed cost estimate.
Every year publicly funded state and federal agency's, and private parties, construction projects face the prospect of cancellation or going through an expensive rebiding process, because the bids came in well above a budget estimate that was set too low.
Contractors may suffer serious financial losses, or slip into bankruptcy, because of a bid based on a flawed estimate.
Often bonding companies must take over failed projects and suffer great losses all because of a contractor's poorly prepared cost estimate. This scenario results in higher premiums for bonds, contractors not qualifying for bonds and lowering of competition for bidding on projects.
Construction cost estimating, if not done in a professional manner, may result in financial damages and construction delays, which in some cases precipitate excessive cost cutting. Recouping lost profits from a bad estimate by cutting corners can lead to shoddy workmanship or, worse, unsafe construction practices.
