Two Estimates. One Project. Now What?
- R. Terry Dickerson
- 11 minutes ago
- 3 min read
What to do when competing estimates are brought to the table.
When a project reaches a major design milestone, it's not unusual for two cost estimates to surface telling two different budget stories. One may come from the design team's independent estimator, while the other comes from the Construction Manager or contractor.
Which estimate is right? More importantly, what should you do next?
Key insights:
Don't panic when estimates don't match—investigate the reasons behind the differences.
Resolve scope questions before debating pricing.
Document assumptions so everyone is making decisions from the same information.
Use reconciliation to identify risks early, while changes are still manageable.
Independent estimates provide objective benchmarks to strengthen budget decisions.
What happens during the meeting
Reconciliation begins by verifying that everyone interpreted the drawings, specifications, and design intent the same way. Only after scope differences are resolved does the conversation move to pricing assumptions.
The project team reviews the estimates side-by-side. Areas of discussion often include:
Scope interpretations
Quantity differences
Unit pricing assumptions
Market conditions
Subcontractor pricing
Escalation assumptions
The reasoning behind major assumptions
How quantities were developed
Complete cost agreement is not the primary goal
Many think the main objective of reconciliation meetings is to get everyone to arrive at the same numbers.
But really, the goal should be to understand what is behind the gap in the numbers. Especially during the early design phase when parties are essentially pricing assumptions instead of definite quantities of specified materials.
Price alignment follows scope alignment, not the other way around. A successful reconciliation meeting identifies assumptions driving cost differences, then engages the design team to confirm scope alignment.
Many projects that start with a reconciled total cost experience dramatic cost differences when the scope is more clearly defined in future design submittals.
Reaching full scope alignment at the meeting’s end should be the primary goal. Unit cost differences should be an indicator that assumptions might need to be explored more carefully but should not be an opportunity to force consensus on a number or to simply agree to disagree.
When to be cautious
Remain objective, ask questions, and request recent, real-world pricing examples when presented with persuasive cost opinions.
These discussions can be challenging, so try to avoid:
Accepting lump-sum pricing without supporting information to explain the underlying scope assumptions. It's impossible to align assumptions without understanding how the number was developed.
Accepting "trade market" quotes at face value without supporting information that clarifies the scope and pricing assumptions behind them.
Treating small cost differences as "reconciled" without confirming that both estimates include the same scope.
Assuming complex building systems are aligned simply because the costs are similar. Comparable pricing doesn't necessarily mean comparable scope.
Failing to establish allowances for scope that cannot be defined until a later stage of design.
Bottom line? Avoid anything that might steer the conversation away from reconciling the scope assumptions and understanding the design intent.
What success looks like
A successful reconciliation meeting isn't measured by whether every line item matches.
Success means:
Cost differences are understood.
Assumptions are clearly documented.
Budget risks are identified.
Design and program intent is protected.
The project team leaves with confidence in the path forward.
When done correctly, estimate reconciliation can be a valuable project management tool that helps owners, designers, and builders move forward with greater confidence and fewer surprises.
The value of an independent perspective
With a commitment to early and consistent communication, Palacio’s cost professionals ask questions, validate assumptions, and provide objective feedback based on market knowledge and project experience. This approach starts before estimates are delivered with our 80% Check-In.
Palacio completes 300+ reconciliations annually—across multiple markets and regions—and continually leverage real-time market knowledge to facilitate the best cost decisions for the project.
Our estimates provide:
A benchmark for evaluating contractor pricing
Early identification of potential budget concerns
Transparency into market assumptions
Support for protecting project scope and design intent
When the team understands where differences originate, the team can move into the next phase knowing budgets are based on shared assumptions instead of unanswered questions.
Does your project need budget clarity? Reach out today to get the conversation started!
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