Not every capital project is the same. Even adding the same process line across multiple sites can vary greatly in cost and schedule based on existing facility conditions, labor availability and more. However, surprises can be minimized by implementing a holistic approach to one specific front-end process: establishing an accurate estimate that forecasts the final project cost.

An all-encompassing budget will drive the success of your project from concept to completion. It will support the possibility of achieving your project scope or identify areas to tweak. It will even help foresee where cost increases can sneak up, from unanticipated design needs to additional specialized personnel on site.

Before you create a preliminary budget and seek funding for your project, consider these factors:

  1. The labor market surrounding your project site. Capital projects can require hundreds of craft labor on-site for an extended duration. If that labor pool is sparse or overextended in your region, costs may rise exponentially to accommodate per diems, lodging, travel, competing projects and more.
  2. Design retrofits to accommodate existing site conditions. The price of equipment for a new process line may be simple to estimate, but the budget must also identify costs to engineer and modify the facility to accommodate the new equipment lineup.
  3. Establish contingencies or allowances for scope additions and the “known unknowns.” Planning ahead for possible budgetary adjustments can help make sure you have the funding necessary to complete your project right the first time.
  4. Cost escalation risks associated with materials, labor and equipment. Defining a detailed project schedule is one of the most important things you can do to manage project cost. Identifying potential cost-driven procurement activities during the front-end planning process, such as the quantity of steel required or a metallurgy preference, will provide the opportunity for time and budget adjustments during design and a purposeful approach to procuring materials, labor and equipment.

In addition, other factors may need to be addressed based on the specifics of each unique project. Often this process can be burdensome to owners and require assistance from an engineer-procure-construct (EPC) partner. By engaging an EPC partner during the front-end planning phases, a comprehensive scope and an accurate estimate representing the total installed cost (TIC) for your project can be developed. Armed with this information, you can request funding with confidence that the project’s end result will not only be successful, but also predictable.


Learn more about the consultative services that can set your capital projects on the right track.

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Heath Catt is engineer-procure-construct (EPC) project manager at Burns & McDonnell with a focus on construction in the food and consumer products manufacturing sector. He has experience providing EPC project planning and execution across a variety of industries with multiple subcontract strategies.