Whole-Project Estimate Classes

Some companies use different classes of project estimate. How do they differ and how do you know?

 

Classes of Estimate in Construction

      Estimating methodology is well established in the public works and building construction industry

    Four classes of construction project estimate are quite common

·         Paralleling the levels of accuracy discussed in previous Issacons

·         They are usually designated "A" through "D"

·         Where Class A is the most reliable

·         Each is described in the following pages

 

Estimate Class A

    General description

·         An owner's estimate based on complete contract documents and used as a control check on authorized expenditures prior to tendering

·         Or by the contractor as a basis for tendering

    Includes

·         A detailed quantity take-off and projection of time and costs to deliver the entire facility

·         Production team usually involved in the preparation

·         And willing to commit to it

·         Expected precision variance -5% to +10% or less

Class B Estimate

    General Description

·         An estimate based on completed preliminary design drawings

·         Upon acceptance, these estimates become the cost plans for project cost control during design

·      Includes

·         At least two levels of a documented work breakdown structure, definition of major systems and subsystems, preliminary drawings and outline specifications

·         Developed by project manager and/or subject matter experts

·         Expected precision variance -10% to +20% or less

 

Class C Estimate

·      General Description

·         Ballpark estimate used only in preliminary discussion of feasibility

·         Sufficient for selecting correct investment decisions

·         But not used for making commitments

·      Includes

·         Completion of all work necessary to undertake preliminary design

·         Knowledge of site conditions adequate to enable identification of site related risks, and

·         Development of corresponding contingency costs

·         Expected precision variance -15% to +25% or more

 

Class D Estimate

·      General Description

·         An estimated "Order of Magnitude", strictly only an indication of the final cost and completion date

·         Purely for cost comparison between alternative solutions, or competing projects

·         It is essential that each is estimated on the same basis

·         By the same people!

    Includes

·         A comprehensive statement of requirements in mission terms

·         And an outline solution

·         Expected precision variance -25% to +75%

 

How can you tell?

    In previous Issacons

·         We've stressed the importance of quoting estimates in ranges

    The problem is

·         It is difficult to add, analyze and manipulate numbers that are in ranges

·         Except in risk assessments

·         Using Monte Carlo risk assessment software

    So, from the numbers alone

·         You often cannot tell, unless you are told!

 

But there is a way

A neat solution

·         Your organization can adopt a special estimating convention

·         Of using the last two decimal places as flags

·         Thus, estimate figures for each class would be quoted as

·         Class A: $187,500.99

·         Class B: $188,000.88

·         Class C: $190,000.77

·         Class D: $200,000.66

·         This handy convention does not disrupt analysis and findings