Why Construction Cost Estimates Keep Blowing Up — and Who Pays for It
According to Construction Dive, the construction industry is under mounting pressure to commit to project budgets earlier than ever, and the gap between what early estimates can realistically deliver and what owners expect from them is creating avoidable risk across every project type. Writing in a Construction Dive opinion piece, Michael Feeney, an estimating director, and Charles Cleary, an electrical subject matter expert, both at Nashville, Tennessee-based consulting firm Connico, argue that skilled cost estimating takes time, and expecting precise figures without acknowledging today’s market realities is setting projects up for failure before ground is broken.
Background
The authors describe a construction market shaped by labor shortages, material volatility, and a restrictive bidding environment, conditions that make early-phase cost projections inherently uncertain. Yet across aviation, infrastructure, and commercial development projects, stakeholders consistently interpret preliminary estimates as final answers rather than informed forecasts shaped by market conditions, timing, and risk.
A common misconception the authors identify is what they call the “copy-paste” approach to estimating: pull a cost-per-square-foot from a recent comparable project, adjust for location, year, and size, and submit. According to Feeney and Cleary, while benchmarks have some value as reference points, they are a poor substitute for project-specific analysis. High-quality estimating, they write, is neither quick nor formulaic. Even when scope is still evolving and drawings are incomplete, clients frequently expect a precision that simply isn’t achievable without deeper analysis.
What separates a reliable early estimate from a misleading one, according to the authors, is not speed. It is the quality of the estimating process and the estimator’s ability to anticipate how varying components can affect final cost. Estimating, they argue, is strategic forecasting, not arithmetic.
Analysis
The problem Feeney and Cleary are describing is not new, but the pressure driving it has intensified. Owners and project leaders want certainty, schedules demand speed, and across a volatile market, everyone is pushing to move faster. That dynamic has a predictable outcome: the uncertainty that should be priced into an early estimate gets quietly buried, and the project team is left holding the exposure when reality reasserts itself through change orders, schedule slippage, and budget overruns.
The rise of AI tools in estimating adds another layer of complexity. The authors note that advancements in artificial intelligence are outpacing industry regulations and creating unclear expectations for how long proper cost estimating should take. That’s a critical point for anyone operating in the field. If owners believe AI can produce a credible project budget in hours, the pressure on estimators to cut corners and compress timelines will only grow, regardless of whether the resulting number is actually defensible.
There’s also a communication failure embedded in this problem. Early estimates, properly constructed, carry ranges, assumptions, and caveats. But those qualifications often get stripped away as numbers move up the chain. By the time a budget reaches an owner’s board or a financier’s desk, what started as an informed forecast with acknowledged uncertainty can look like a hard commitment. The subcontractors bidding work months or years later are then expected to perform against a number that was never designed to be that precise.
This is where field service companies and subcontractors absorb risk they never agreed to carry. When a general contractor bids against an owner-driven budget anchored to a flawed early estimate, every tier below them gets squeezed. Scope gaps, market shifts since the original estimate, and design evolution all get passed downstream, often without transparency about where the number came from or what assumptions it was built on.
What It Means for Subcontractors
-
Push back on budget-driven scopes early. If a GC or owner presents a fixed budget without clear design documents, ask directly what estimate that number is based on and when it was produced. A cost figure from 18 months ago in a different market is not a reliable baseline for your bid today.
-
Document your assumptions explicitly. Every quote you submit should include a written list of the assumptions behind it: labor rates, material costs, lead times, access conditions. This creates a paper trail if conditions change and protects you in change order disputes.
-
Treat early-phase work as preliminary, in writing. If you are asked to provide a budget number before scope is defined, label it clearly as a preliminary estimate with a defined validity period. Do not let an informal number become a contractual anchor.
-
Price volatility into your bids. In a market defined by labor shortages and material swings, a flat lump-sum bid on a long-duration project is a liability. Where contracts allow, push for escalation clauses or material cost true-ups tied to published indices.
-
Educate your clients. Feeney and Cleary argue that builders need to educate clients on how costs can change rather than simply delivering numbers clients want to hear. That same discipline applies at every tier. The subcontractor who explains estimate uncertainty upfront is the one who avoids the change order fight at the end.
