Different Construction Cost Estimate Classes

As per AACE International Practices ( Association for the Advancement of Cost Engineering), cost estimate classes are categorized based on the maturity level of the project definition, which is based on the status of specific key planning and design deliverables.

Image Courtesy: AACE International

Project maturity is defined as the indication of the ability of the organization to master its projects. A company that owns a higher degree of project maturity is considered to have a better chance for project success than a company with a lower degree of project maturity.

Five-level system of cost estimation classification is given by AACE and used as a global practice of cost estimation. Each class requires more effort and more completed deliverables.

5 Level System for Construction Cost Estimate

Class 5 

• This is called as Rough Order of Magnitude Estimate (ROM)
• The purpose of estimate is "Concept Screening".
• It is performed at the "Conceptual Design" stage of the project.
• The project development is approximately 30 % complete
• Used for initial screening projects for capital expenditure planning
• Class 5 estimates are taken for inadequate information i.e. around 0 to 2 % of the complete project definition.
• The information generally required to develop  construction estimate is the description of the process, capacity and location. 
• The level of accuracy of a Class D cost estimate shall not be more than 20 percent of allowance.
• Capacity factored, parametric models, judgement or analogy methodologies are employed to estimate.
• The accuracy ranges -50% on the low side and +100% on the high side.

Class 4

• It is called as Feasibility Study Estimate.
• It studies the feasibility of the project and determine the viability of the project. 
• It is employed for organization heads and construction managers for strategic business planning.
• It requires around 1 to 15 % of the project information. 
• The process flow diagrams (PFDs) , major construction activities and equipment lists also influence the project costs. 
• Equipment factored or parametric models, factoring and proportioning are used on more specific item, to estimate. 
• This brings an estimated accuracy of -15 to -30% and +20 to +50% on the low and high sides, respectively.

Class 3

• It is called as the budgetary estimate used for budget authorization or control.
• It is the first control estimate that is performed at the beginning of the project planning stage.
• It is the actual capita an organization allocated for a specific project.
• Class 3 estimate is developed from the preliminary or basic engineering design (BED). 
• The maturity level of the project will be 10 to 40 % of the complete project.
• It is estimated using semi-detailed unit costs with assembly-level line items
• Given the level of detail of Class 3 estimates, its accuracy ranges from -10 to -20% on the low side and +10 to 30% on the high side.

Class 2

• It is also called a bid or tender estimate
• It will be the established contract value of the project as agreed by the organization, contract parties, and other stakeholders.
• Class 2 estimates from the baseline for monitoring the actual resources expended on the project.
• At this stage, the maturity level would have reached 30 to 70 percent, during which the project data, and engineering deliverables are finalized.
• Based on this estimate, drawings and datasheets of process units, equipment, and utilities are prepared for requesting vendor quotations.
• Detailed unit cost with forced detailed take-off is the methodology followed. 
• Class 2 estimate gives more focus to the project’s indirect costs. Overhead costs, contractors’ margins, administrative costs, and risk contingencies are some of the items included in the estimate’s line items.
• The accuracy range for Class 2 estimates is -5 to -15% on the low side and +5 to +20% on the high side.

Class 1

• Prepared for specific parts of the project to check the estimate, bid or tender. 
• Subcontractors may ask for more detailed estimates, or to control changes or variation of the orders, or it is used to evaluate the claims of the contractor.
• It is estimated using detailed unit cost with detailed take-off method.
• lass 1 estimates are accurate -3 to -10% on the low side, while +3 to +15% on the high side.

Also Read: Types of Construction Cost Estimates