Budget Blind Spots: Five Planning Errors That Derail Drilling Projects—and the Benchmarks That Help You Avoid Them

There is a persistent optimism bias in project budgeting, and it affects drilling and boring work with particular force. Subsurface conditions are invisible until the drill is turning, and that invisibility tempts planners to rely on assumptions rather than investigation. The result, repeated across commercial development and municipal infrastructure projects throughout the country, is a category of cost overruns that are largely predictable—and therefore largely preventable.

What follows is a direct examination of five budgeting errors that consistently undermine drilling project financial performance, along with the benchmarks and methodologies that help experienced planners avoid them.

Mistake 1: Treating Soil and Geotechnical Assessment as Optional

Geotechnical investigation is frequently viewed as a preliminary expense that can be deferred or minimized when budgets are tight in the planning phase. This is a costly misconception. Subsurface conditions—soil type, rock depth, groundwater level, the presence of cobbles or organics, and the characteristics of confining layers—directly determine drilling method selection, equipment requirements, casing specifications, and project duration. A bore that encounters unanticipated rock formation at depth may require entirely different tooling and significantly more rig time than the original estimate assumed.

The benchmark: Industry practice for commercial and municipal drilling projects generally calls for geotechnical borings at a spacing and depth appropriate to the project footprint, with laboratory analysis of representative samples. Budget approximately 1.5 to 3 percent of total project cost for preliminary geotechnical work. Projects that skip this step frequently encounter change orders in the 15 to 25 percent range—a return on investment that makes the investigation cost appear negligible in retrospect.

The solution: Engage a licensed geotechnical engineer early, before drilling bids are solicited. Incorporate investigation findings into the bid documents so that all contractors are pricing the same known conditions rather than building contingency into their proposals to cover uncertainty.

Mistake 2: Underestimating Permit Timelines and Associated Costs

Drilling and boring projects in commercial and municipal contexts typically require multiple permit approvals: well construction permits, right-of-way encroachment permits, environmental agency notifications, and in some jurisdictions, pre-construction utility coordination approvals. Planners frequently budget for the permit fees themselves—which are modest—while failing to account for the time and soft costs associated with the review process.

In many states, well construction permits require review by a state environmental or water resources agency operating on a 30 to 90 day review cycle. If a project is submitted with incomplete documentation, the clock resets. In urban jurisdictions, right-of-way permits for bore operations may require traffic control plan approval, utility coordination meetings, and bonding—each of which adds time and administrative cost.

The benchmark: Build a minimum of 60 to 90 days of permit review time into project schedules for commercial drilling projects in most U.S. jurisdictions. For projects in states with more rigorous environmental review requirements—California, New York, and Washington are frequently cited examples—extend that window to 120 days or more. Budget for a permit coordinator or expeditor if the project involves multiple overlapping jurisdictions.

The solution: Initiate the permitting process as early as possible, ideally concurrent with design development rather than after design completion. Establish relationships with the relevant reviewing agencies and confirm submittal requirements before preparing application packages.

Mistake 3: Ignoring Equipment Mobilization and Demobilization Costs

Drilling rigs and associated support equipment—mud systems, air compressors, casing trucks, and support vehicles—represent substantial mobilization expenses that are not always visible in preliminary budget frameworks. When a project requires multiple drill mobilizations (for example, a wellfield with multiple production wells, or a series of bore crossings at different locations within a development), mobilization costs can accumulate to represent a meaningful percentage of total project cost.

This is compounded by the geographic factor. A project located in a remote area, or one that requires specialized equipment not locally available, will incur transportation costs that differ substantially from a project served by a regional contractor with nearby equipment staging.

The benchmark: Mobilization and demobilization costs for commercial drilling operations typically range from $3,000 to $15,000 per mobilization event, depending on rig size, equipment complement, and travel distance. For projects requiring multiple mobilizations, these costs should be itemized explicitly in the project budget rather than embedded in a per-foot drilling rate.

The solution: During the bid solicitation process, require contractors to provide itemized mobilization costs as a separate line item. This transparency allows for accurate budget construction and enables planners to evaluate whether consolidating work into fewer mobilizations offers meaningful savings.

Mistake 4: Miscalculating Contingency Reserves for Subsurface Risk

Contingency budgeting is standard practice in construction, but the percentage applied to drilling and boring work is frequently insufficient. A 10 percent contingency—common in building construction—does not adequately reflect the variability inherent in subsurface operations. Encountering a rock layer not identified in preliminary investigation, losing circulation in a fractured formation, or encountering a previously unlocated utility during a directional bore can each generate cost impacts that exceed a 10 percent reserve.

The benchmark: Industry guidance from the Association for the Advancement of Cost Engineering (AACE) and from geotechnical engineering practice generally supports a contingency range of 15 to 25 percent for drilling and boring work in the early project development phase, stepping down to 10 to 15 percent as subsurface investigation data matures. For projects in geologically complex areas or where investigation data is limited, the higher end of this range is appropriate.

The solution: Structure contingency reserves in tiers that correspond to project development milestones. As geotechnical investigation is completed and design is refined, the contingency percentage can be reduced—but only on the basis of actual data, not optimism.

Mistake 5: Failing to Account for Well Development and Testing Time

Once a production well or bore installation is physically complete, the project is not finished. Well development—the process of removing drilling fluids, fine sediments, and formation materials introduced during drilling—is essential to achieving the design yield and water quality objectives of the well. Development can require multiple days of pumping, airlifting, or jetting operations. Following development, pump testing is required to characterize well yield, aquifer properties, and drawdown behavior.

These activities are frequently underrepresented in project schedules and budgets, particularly when planners are focused on the more visible drilling phase. The result is a compressed timeline for development and testing that compromises the quality of the data collected and, in some cases, the long-term performance of the well itself.

The benchmark: Budget a minimum of two to five days of development time per well, with additional allowance for step-drawdown and constant-rate pump testing if aquifer characterization is required. Testing equipment rental, laboratory water quality analysis, and the engineering time to interpret test results should all be included as explicit line items.

The solution: Treat well development and testing as a distinct project phase with its own schedule and budget allocation, rather than as an afterthought to drilling completion. Engage the drilling contractor and the project hydrogeologist in establishing realistic development and testing protocols before the project begins.

Accurate drilling project budgeting is ultimately a function of disciplined information gathering and honest risk assessment. The five errors described above share a common root: the tendency to minimize uncertainty in the planning phase rather than to quantify and manage it. Developers and municipal planners who invest appropriately in subsurface investigation, allow realistic timelines for permitting, account transparently for mobilization and testing costs, and carry adequate contingency reserves consistently deliver drilling projects that finish closer to budget—and encounter far fewer of the unpleasant surprises that define poorly planned subsurface work.