a reply to: ApacheHelicopetr
If you ask someone to do what's never been done before and stiff them for every penny that it takes over their estimate, no one is going to be
interested in building anything for you. The company is not going to pour capital into a project that's never been done before and assume all the risk
The best thing for the government to do would be to employ their own experts who can look at a proposal and say, "that's not a realistic projection".
This is done to some degree, but not well.
Say I contract a guy to dig a well for my cabin in the woods and we both look at the terrain and study it and agree we should probably hit the water
table at around 450'. We don't know for sure. No one has dug here before. We've got data from a few wells within a ten or twenty mile radius, and we
figure as best we can that's how deep we need to go. He does his math, estimate he can do it $20 a foot ($9000). It's an estimate, not a fixed-price
offer. He has no idea what he's going to run into. What if he runs into bedrock at 400'. And/or the water is deeper. He needs a different drillhead he
doesn't own, or has to design one, or needs guys with that experience, and it takes more man-hours. He's going to ask for more money and explain why.
He needs another 5 grand. You can tell him, stop, don't spend another dime. We're done. But now you've spent $20 per 1' x 400'= $8000 and have no
At that point, you can hire another guy to start another well at a spot 100 yards away where he thinks he can do it for $11k total knowing what you
know now. He might be wrong, too. Don't know until you start digging. Or you can bite the bullet and pay the 5k for the first guy to finish. A
different company and well means more time and now you've spent at least $19k (8k failure +11k new) on getting a well. Finishing means $13k
(Probably. You hope).
Sometimes companies underbid but still don't get the contract. A company who dug a well for a next-door neighbor says, "listen, it's going to be $12k
and here's why... There's solid rock at ~400' next door. Water's at 500'. Probably true at your place, too. If not, it'll be cheaper, but that's my
estimate." A contractor without experience in the area says, "there's probably water at 400'. I can do it for $8k". You should probably pick the
more experienced guy with a track record.
None of them are going to offer to build you a well on a fixed price contract unless they know exactly what they are getting into. No one. So you hope
you pick the most experienced, best managed, least risky company and budget accordingly.
But again, when you're doing something for the first time, you simply don't know what you're running up against. And there is always, always something