Local governmental public works departments frequently engage in planning, cost estimation, ceiling price determination, bidding, contracting, construction, supervision, and inspection activities for various building projects. However, despite all this work, local governments in Japan often cancel bids for project design and construction due to incorrect cost estimations. Consequently, facilities are often not constructed as planned, resulting in adverse impacts on public services and decreased government employees’ motivation. While local governments have conducted internal investigations to prevent incorrect estimations, a firm diagnosis model and preventive measures have not been developed. This study analyses the various causes of incorrect cost estimations and subsequently examines the resulting social problems. We propose improved human resources development management and organisational management techniques using the V-mSELC model—an error analysis model designed to address incorrect cost estimations. The study aims to aid public works professionals and interested scholars.