Expert types
Cost evidence: what it would take to replace or to cure
Cost estimators support two things: the cost approach to value, and the price of any cure the agency proposes. Both are places where a plausible looking number can be badly wrong.
Scope
The questions this expert answers
What would it cost to replace this
Replacement cost of a building of equivalent utility, which is the basis of the cost approach.
How much has the building depreciated
Physical, functional and external obsolescence, where estimates between competent professionals vary widely.
Does the cure cost what they say
Agency cure estimates are often prepared quickly and at a programme level. A detailed estimate frequently lands higher.
What is left over after the cure
Where the cure is partial, the residual loss is still compensable and someone has to quantify what the cure leaves undone.
What do the site works cost
Fencing, paving, grading and drainage reinstatement, which are routinely underpriced in offers.
What about escalation
An estimate prepared now for work done in two years needs an escalation allowance, and offers rarely contain one.
Selection
Qualifications and what to check
| Criterion | What to look for |
|---|---|
| Credentials | Professional quantity surveyor, certified estimator or contractor with estimating depth |
| Building type | Experience with this kind of structure, particularly for special purpose property |
| Local pricing | Current rates in this market, not a national index |
| Documentation | Estimates broken down by element, defensible line by line |
| Testimony | Able to defend a rate schedule under cross examination |
In practice
The estimate is the claim, so it has to survive scrutiny
Where an owner argues that a proposed cure is underpriced, the argument stands or falls on the quality of the competing estimate. A contractor quotation on a single sheet is weak evidence: it has no breakdown, no stated assumptions and no basis for the rates.
An elemental estimate with quantities, rates, sources and allowances identified is a different document. It can be examined line by line, which is what makes it persuasive. It is also more expensive to produce, so the decision to commission one should follow from the size of the gap rather than precede it.
Watch for the cure that is priced but not tested. A cost estimate assumes the work is possible. Whether it is possible is an engineering question, and the two experts should be talking to each other before either writes anything.
Questions about this expert
The agency offered me the cost of a new driveway
Test two things: whether that figure is realistic for the work, and whether the new driveway restores what the old one did. Those are different questions and both are often answered too quickly.
Can my contractor give the estimate
They can, and it carries less weight than a professional estimate with a documented basis. For a small item that may be proportionate. For a substantial claim it usually is not.
Is cost the same as value
No, and this is the most common confusion in the cost approach. What a building cost to build is not what the market would pay for it. Depreciation is the bridge between them.
The expert decides the number more often than the argument does
In condemnation the facts in dispute are technical. Who presents them, and how well, is usually what the case turns on.