Volatility in construction cost estimating is being driven by a mix of market pressures, evolving technology and unrealistic expectations from project stakeholders, according to industry experts at Connico.
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In a recent industry commentary, estimating director Michael Feeney and electrical subject matter expert Charles Cleary said the increasing demand for faster project delivery — combined with rapid advances in artificial intelligence — is reshaping expectations around how quickly and accurately construction costs can be projected.
“We’re living through a unique period in the history of technology where advancements in artificial intelligence are outpacing industry regulations and creating unclear expectations for how long proper cost estimating should take,” the authors wrote.
They noted that project teams are being pushed to commit to budgets earlier than ever, even as market conditions remain highly unpredictable.
A key issue highlighted by the authors is the widespread misconception that cost estimating can be done quickly by referencing past projects. While benchmarking tools such as cost-per-square-foot metrics can provide guidance, they argue such methods fall short in today’s volatile environment.
“Skilled cost estimating takes time, and expecting precise estimates without acknowledging today’s market realities is setting projects up for avoidable risk,” the authors wrote.
Early-stage estimates, they explained, are often treated by clients as fixed numbers rather than evolving forecasts shaped by incomplete designs, shifting scope and external variables. This misunderstanding can lead to significant budget gaps as projects move forward.
The authors stressed that reliable estimating depends not on speed but on the quality of analysis, professional judgment and a deep understanding of how different cost drivers interact over time.
Several factors are contributing to increased cost variability, starting with labor availability. In competitive markets, particularly those with large-scale projects or global events, shortages of skilled workers can drive up costs significantly.
Material pricing adds another layer of uncertainty. Commodity-based materials such as copper are subject to daily price fluctuations, while specialty products may face limited supply or production constraints, making historical pricing benchmarks unreliable.
The bidding environment also plays a crucial role. Projects with restrictive requirements or limited contractor pools often attract fewer bidders, which can lead to higher costs. Estimators must account for who is likely to bid — not just the project scope — when developing projections.
The authors emphasized that these factors are interconnected, with delays or changes in one area often triggering ripple effects across multiple trades and project timelines.
To improve accuracy and reduce risk, Feeney and Cleary advocate for a more collaborative and transparent approach to cost estimating. This includes better alignment between owners, designers and estimating teams, as well as more detailed project documentation early in the process.
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They also recommend involving discipline-specific experts and implementing layered quality control to validate assumptions and refine projections.
Ultimately, the authors argue that cost estimates should be viewed as decision-making tools rather than fixed commitments.
“When owners understand how all these dynamics interact, estimates stop creating false confidence and start enabling more strategic planning,” they wrote.
In an increasingly volatile construction landscape, relying on simplified or rushed estimates can expose projects to unnecessary risk. Instead, grounding decisions in real-world conditions and market realities will be key to maintaining project viability.
Originally reported by Michael Feeney and Charles Cleary in Construction Dive.
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