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+---
+id:
+aliases: []
+title: Uncertainty in Construction Estimating
+tags: []
+---
+# Uncertainty in Construction Estimating
+
+Cross-topic of [[uncertainty]] and [[construction-estimating]].
+
+This note is intended to be purely descriptive.
+See [[actuarial-science-for-construction-estimating]]
+and [[risk-management-for-construction-estimating]]
+for strategy based on such uncertainty.
+
+%%
+## TALK
+
+What do I mean that project cost is uncertain until the last invoice?
+
+What distributions exist
+which are known,
+which can never be known and must be estimated?
+
+[[bid-price-modeling]]
+
+***
+
+With perfect information all outcomes are certain.
+
+There exists some distribution representing the range of possible costs for a project.
+The remaining uncertainty represents ignorance of information an estimator can not feasibly obtain.
+
+***
+
+Suppose the estimator has spent years on the bid,
+running simulations, consulting experts, etc.
+
+Suppose the estimator has received a message from a time traveler
+which details significant news events and commodity markets
+for the duration of the project.
+
+Suppose the estimator is prescient and has observed the final cost of the project
+as reported in the winning contractor's historicals.
+
+%%
+
+## Expected Value of Perfect Information
+
+[[uncertainty#Expected Value of Perfect Information]]
+
+%%
+
+an organization pays in estimator hours.
+These hours have a direct cost in salary and benefits,
+however the greater cost is the opportunity cost
+of tying up an estimator who could otherwise be starting a new project.
+
+In many cases, the utility of doubled throughput
+far outweighs the increased risk of individual bids.
+
+%%