I guess the topic title pretty much says it all.
Here in Massachusetts, the “Big Dig” has gone outrageously over-budget. Well then why do they bother taking bids? Why can’t a company, agency, whatever be forced to stick to their original bid? If not, why not just bid $1 for the next project and say - sorry - it went over-budget. That’ll be $10 billion dollars please.
I would have put this in General Questions, but it doesn’t have a definite answer does it?
It does, IIRC. It would be worth posting there.
How about a new Parliament building ?
Supposed to open over two years ago at a cost of around £40 millions, the current score for the Scottish Parliament building is October 2004(from the official Scottish Parliament site) and a cost (obviously not on the same site due to embarrasment I would think) of around £400 millions.
October is not yet here, so there could be further delays and cost increases.
They already stopped some of the more expensive frill on the structure due to cost, wonder what they would have added to the bill.
The client, when releasing a request for bids, supplies certain contract documentation that allows the contractor to know what he is bidding on. For instance, in the case of the Big Dig, the soil properties would be outlined in the bid documents.
If conditions on site vary from the bid documents, then the contractor can ask for a change order. Same thing if events out of his control occur, for instance, a hurricane that blows down all the cranes.
The contractor will get paid for things that a valid change order is made for.
If, on the other hand, the contractor says that he will charge $500 a cubic yard for removing bedrock, he will be bound to that price. If the contract documents said that there were 10 c.y. of bedrock to be removed, and he bid $5000 to remove it, he gets $5000 no matter how long it takes or how ever many machine break doing it, etc. But if there turned out to be 15 cubic yards, he gets the extra money for it.
What people don’t understand about the Big Dig is that nothing has ever been done like it before. It was impossible to accurately predict the costs of constructing it. Also, ,some experimental methods were being tried out. Some worked, some didn’t. That led to further cost overruns.
Mithril
Thank you for that informative, well-written answer.
Being a life-long Massachusetts native, whenever there are cost overruns, delays, etc. I immediately think of corruption. Heck, we are a corrupt state.
Until recently, the President of the University of Massachusetts was Billy Bulger - someone who was the President of the Mass State Senate for a long time. Isn’t it amazing he was able to become a state university president? No doubt the competition was grueling. Well you get the idea.
Thanks again Mithrill.
A good answer. Another source of cost overruns comes from errors on the construction documents. The larger the project, the more architects and engineers are involved. I’d imagine the Big Dig had hundreds of 36"x48" pages of drawings and a specification book 10 inches thick. It is inevitable that something shown on drawing L-16 contradicts what is shown on drawing C-53, and they both contradict spec section 2.03.1A. And it is even possible that all 3 of these depictions of the same thing look good on paper but are all unconstructable.
And especially for underground projects, you would be astounded at the number of unexpected items come up that no-one could have predicted… gravesites, old undocumented but often still active sewer and water lines, buried cars, etc.
These things all add up. Oh, and many bidders DO bid low with the assumption that things will go wrong and they will get extras. But if you bid too low, and get too few extras, your construction company can be bankrupted by a single job. Sealed public bidding is a horrific guessing game that does NOT lead to the best company getting the job. Most project managers I know would love to ditch the standrad bid process in favor of closer relationships with contractors so they can use the good ones even if it costs a little more. Sadly, human nature being what it is, this would leave the process open to corruption and bribes.