How do you document cost estimate exclusions? (2024)

Documenting cost estimate exclusions is important for several reasons. First, it helps you to define the scope of work and the basis of the estimate, and to communicate it to the client and other parties involved in the project. Second, it helps you to protect yourself from potential claims, changes, or disputes that may arise from ambiguous or incomplete information. Third, it helps you to manage the expectations and risks of the project, and to identify any contingencies, allowances, or qualifications that may affect the estimate accuracy or reliability.

Documenting cost estimate exclusions requires a tailored approach as different projects may have varying requirements, standards, and formats. Nevertheless, there are some general guidelines to follow to ensure that your cost estimate exclusions are clear, concise, and consistent. For instance, use a separate section or document to list the exclusions and reference it in the main estimate document or report. Additionally, utilize a standard format and structure to present the cost estimate exclusions, such as a table, a bullet list, or a numbered list. Furthermore, specify clear and precise language to describe the cost estimate exclusions and avoid vague or general terms. Moreover, employ consistent terminology and definitions to document the cost estimate exclusions that align with the scope of work and the contract documents. Lastly, use examples or references to illustrate or support the cost estimate exclusions if applicable.

The content and level of detail of cost estimate exclusions may vary depending on the type, size, complexity, and stage of the project, as well as the purpose, audience, and format of the estimate. However, some common categories of items that are often excluded include those outside the scope of work or responsibility of the estimator (e.g., design fees, owner's costs), those that are uncertain or unknown (e.g., site conditions, geotechnical data), those dependent on client decisions (e.g., finishes, fixtures), those subject to change (e.g., design changes, scope changes), and those considered risks or contingencies (e.g., escalation, inflation).

Documenting cost estimate exclusions is not a one-time task, but an ongoing process that requires regular review and update throughout the project lifecycle. As the project progresses, the scope of work, the design, the contract, and the market conditions may change, impacting the validity, accuracy, and completeness of the cost estimate exclusions. Therefore, you should review and update your cost estimate exclusions when receiving new or revised information or data that may affect it, such as site surveys or geotechnical reports. Additionally, you should update your cost estimate exclusions when making changes to the scope of work or estimate, when encountering changes in project execution such as delays or claims, and when reaching milestones in the project schedule.

Documenting cost estimate exclusions is not only a technical task, but also a communication and negotiation task that involves multiple stakeholders with different interests, expectations, and perspectives. Therefore, you should communicate and negotiate your cost estimate exclusions with the client, the contractor, and other parties involved in the project. This will ensure that everyone understands and agrees with the scope of work and the basis of the estimate, as well as resolve any discrepancies or questions that may arise. Additionally, it will allow you to seek feedback or input to improve the quality of the estimate and to establish trust and collaboration among stakeholders. Ultimately, this will help to avoid misunderstandings or disputes that may affect the project performance or outcome.

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

Construction Management

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