F-8: “Low-Ball” Cost Estimate

 Statement of the Case: Engineer A was a member of an ad-hoc citizens’ committee, which

wanted the municipality to build a small recreation centre in their neighbourhood. The ad-hoc

committee believed that the Municipal Council would not approve the project if they knew the

true estimated cost. Engineer A volunteered to prepare a “low-ball” estimate for constructing the

recreation centre, at about 60 percent of the realistic likely cost, and the ad-hoc committee

formally presented this estimate to the Council. The committee presented Engineer A as an

independent and impartial consultant. There was no information in the documents submitted to show that Engineer A resided in the neighbourhood or was, in fact, a member of the ad-hoc

committee making the proposal.

Question: Did Engineer A act ethically in this project?

Outcome: The Municipal Council accepted the cost estimate, because a Professional Engineer

had prepared it. After a short debate, the Council approved the design phase of the project

without seeking another cost estimate. When the design was completed and tenders called, the

true cost of the project became apparent, but the public expected the project to go ahead; the

Council worried that there might be political repercussions if the recreation centre project were

cancelled. Moreover, they had already paid the design costs for the project. Council continued

the project and constructed the recreation centre.

However, upon inquiring, Council members soon learned that Engineer A was a resident of the

area and a member of the ad-hoc committee. On the advice of legal counsel, the Municipal

Council voted to ask the provincial Association to discipline Engineer A for failing to reveal a

conflict of interest in preparing and submitting the original cost estimate.

Authors’ Comments: Although Engineer A may have believed that it was a public service to

use deception to construct the recreation centre, the engineer made two serious errors. Failing to

reveal a conflict of interest is a clear violation of every Code of Ethics. Moreover, giving a

deliberately incorrect cost estimate to induce someone to do something is a serious offence,

punishable by civil or criminal proceedings, depending on the circumstances. Engineer A should

have provided a realistic and honest cost estimate, and relied on the merits of the project to

convince Council.