The foremost estimating error types include the following:
Insufficient allowances: The most common problem that occurs is that a low estimate may be given by a contractor along with a list of allowance for material, and this amount may turn out to be very high as compared to the given estimate.
Wrong assumptions: There might be items that may be assumed to be included under the bid proposed by the contractor or the subcontractor but these might not actually be covered. Or perhaps, one might assume a standard septic system to be sanctioned but the requirement may differ in actuality.
Omissions: These are items inadvertently left farther than the estimation, and there are mainly either hard costs of construction or soft costs, such as tests, permits, etc. Omissions might be owing to the missing items and specifications that were left out and thus not included in the bid and estimate.
New techniques/materials: Every new technique of building or material has a learning curve. Despite creating provisions of permitting some extra time, the final time taken may surpass all rough estimates.
Price changes: Labor costs or material costs may mount between the project and the estimate.
Other reasons that actual costs may surpass projected costs consist of:
Unclear or incomplete specifications and plans: The lack of completed plans leaves much scope for divergence on what, precisely, was the bid. This could result in extra costs and change orders eventually.
Cost-plus bids: The final cost is left unidentified unless a definite maximum is known, and the former always turn out to be in excess of the estimated budget.
Job-site surprises: Unknown conditions, such as wood decay, water problems, insect damage, rock, etc. may rise up while the construction may be in progress. In certain cases, these ought to have been spotted by more conscientious and meticulous examination.
Construction/design errors: During the construction work, if some construction goes wrong, it has to be torn out and done yet again, and this may require the owner to pay twice the amount.
Owner changes: When the owner chooses to make use of better floorings, roofing, windows, etc. all through the project; or choose to move windows, walls, etc. subsequent to the installation work.
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