The Illusion of Accuracy in Project Management: The Estimate Was Accurate. The Project Still Lost Money.

Quantities deserve particular attention. In machinery and plant engineering, the bill of quantities follows from the technical design. It is prepared by engineers, not invented by estimators. If a design assumption changes, the associated quantities and costs must change with it. A sophisticated costing system cannot compensate for a missing component, an unrealistic installation duration or a service obligation that was never included in the scope. The estimator can calculate the wrong basis with impeccable precision.

Estimating Is a Communication Task

That is why I regard estimating as a communication task. The most useful meeting is often not the one in which participants debate the final price. It is the one in which engineering, sales, estimating, procurement and project delivery work through the quantity structure together. What has been included? What is excluded? Which interfaces are unresolved? Which assumptions would have the greatest financial effect if they proved wrong? These are ordinary questions, but asking them early and systematically changes the quality of the decision.

In my professional practice, a structured quantity review—what I call the Mengengerüst-Durchsprache, or MGD—was designed to make those questions visible before the offer became a commitment. The principle is simple: bring the relevant disciplines together, examine the technical basis, record deviations and resolve ownership. The meeting is not intended to replace engineering judgment. It makes that judgment available to the wider project team at the point when it can still influence cost and risk.

Integrating Risk into the Estimate

A related lesson concerns risk. Organisations sometimes treat risk management as an additional form to be completed after estimating. That sequence misses the point. Risk belongs inside the commercial reasoning. A cost item may be correctly calculated under one assumption and wholly inadequate under another. The estimate therefore needs not only values but also an explicit account of uncertainty, dependencies and potential consequences. Risk assessment, quantity review and cost estimating should inform one another rather than operate as separate administrative processes.

I use the term Intelligent Estimating Management (IKM) for this integrated approach to cost estimating, risk management and project control. It does not imply that a new software platform will solve the problem. Software can improve transparency, consistency and speed. The organisational task is to ensure that the right people challenge the right assumptions before a bid is submitted and continue to do so as the project develops.

The Estimate Must Survive Project Execution

Once the order has been won, the original estimate should not disappear into an archive. Its assumptions provide a reference for execution. Project managers need to understand what the price presupposed, where the uncertainty was concentrated and which decisions were still open. Equally, estimating needs feedback from delivery: where did the quantities diverge, which risks materialised, and which assumptions repeatedly proved unrealistic? Without that feedback, the next bid starts with the same blind spots.

A manufacturing estimate is often presented as a single number, sometimes accompanied by a contingency percentage. But the number is the last link in a chain of technical decisions. Capacity, process design, equipment selection, installation sequence, site conditions and commissioning requirements all influence the quantities that eventually become costs. If one link is missing, the arithmetic can still be impeccable. The spreadsheet simply calculates an incomplete description of the work. That is why a discussion about estimating quality must begin with the technical basis, not with the sophistication of the calculation software.

Consider the handover between sales and engineering. Sales needs a competitive offer and a clear customer commitment. Engineering needs enough information to define what will actually be delivered. Estimating needs quantities, hours and rates that can be defended. Each function may perform its own task professionally and still produce a weak overall result if the assumptions are not compared. A delivery boundary that is obvious to one department may be invisible to another. An installation activity can be described in the technical documents yet absent from the cost breakdown. These are not necessarily individual failures; they are failures of coordination.

The quantity review is therefore not a ceremonial approval meeting. It should ask uncomfortable but practical questions. Which quantities come directly from the design, and which are estimates? Which installation conditions have been confirmed? Where do we depend on a customer assumption? What is included in a supplier quotation, and what remains our responsibility? What would happen to the budget if the technical solution changes? The value lies in bringing the right people together early enough for the answers to affect the offer. A two-hour cross-functional discussion can be more valuable than days spent refining unit rates against the wrong quantities.

Distinguishing Risk from Missing Scope

There is also a difference between uncertainty and a known omission. An uncertain quantity may justify a range, a scenario or an explicitly priced risk. A forgotten work package is something else entirely. Adding a general contingency percentage does not turn an incomplete scope into a complete one. Good risk management starts by distinguishing what we know, what we assume and what we have not yet clarified. That distinction gives management a basis for deciding whether to accept a risk, reduce it through additional engineering or address it contractually.

Commercial and technical responsibility should meet before the offer is released. A risk register that sits beside the estimate but has no effect on it is of limited use. Likewise, a technically sophisticated estimate that cannot be explained to the commercial decision-makers does not create confidence. The estimating team should be able to show which major cost drivers have been checked, which assumptions remain open and which consequences follow if those assumptions prove wrong. This is not an argument for eliminating entrepreneurial risk. It is an argument for taking risk consciously rather than discovering it during execution.

Recognising Deviations Before the Margin Disappears

After contract award, the same logic must continue. The original estimate is a starting hypothesis about the work to be performed. As engineering becomes more detailed, quantities and work content may change. Project control should compare those developments with the original assumptions and calculate the expected cost of the remaining work. Otherwise a project can look healthy in the monthly report while its future workload is already exceeding the available budget. The relevant question is not simply how much money has been spent. It is what the organisation now believes the entire job will require.

This creates an important role for claim management as well. When customer requirements, site conditions or interfaces change, teams need to recognise the effect while evidence and decisions are still available. Claims cannot compensate for poor estimating discipline, but they can protect the business when contractual scope genuinely changes. Estimating, risk management, project control and claims should therefore exchange information rather than operate as separate specialist islands. Their common task is to make the economic consequences of technical decisions visible.

For leaders, the practical test is not whether every project hits its original budget. Complex projects will always contain surprises. The test is whether significant deviations are recognised early, explained in terms of their causes and translated into decisions. Can engineering identify the quantity change? Can project management describe the remaining work? Can finance quantify the likely impact? Can the commercial team determine what is contractually recoverable? If those conversations happen only after the margin has disappeared, the organisation has received its information too late.

The Real Measure of Estimating Quality

The financial question is therefore broader than whether the estimate was accurate on the day it was approved. The question is whether the organisation created a sufficiently shared understanding of the project to make a responsible commitment. In complex manufacturing projects, the quality of that understanding often matters more than another decimal place in the spreadsheet.

Conclusion

Ultimately, reliable project economics depend on more than accurate calculations. They require a shared understanding of the technical scope, transparent assumptions, active risk management and continuous feedback between the people estimating the work and those delivering it. For business leaders, the priority should be to ensure that these disciplines operate as one connected management process. The objective is not to eliminate uncertainty, but to identify it early enough to make informed decisions. A project does not lose money simply because the arithmetic is wrong; sometimes, it loses money because the organisation never fully understood what it was committing to. This is the purpose of Intelligent Estimating Management (IKM): to connect estimating, risk management and project control so that technical changes are translated into commercial decisions while there is still time to act.