The quality and accuracy of estimates depends on the level of advancement of the design for the project (refer to Table 1). For this reason, different sets of cost estimates will be prepared at different stages of design development. At an early stage, estimates will be at a high level. As the design becomes more specific with needs and requirements identified, more detailed cost estimates directly linked to the design specifications will be prepared. As the project definition and design evolve, cost estimates become more accurate.
Architect’s Essentials of Cost Management
It is recommended that cost estimates provide a level of cost accuracy of +/-15%, which typically requires that they be prepared on the basis of a Schematic Design. A Schematic Design encompasses plans, elevations, sections, and palettes of materials that generally represents 30% design completion. These inputs are used by Cost Consultants to prepare a Schematic Design Estimate, which is at a Class C level. This approach allows for the development of robust project cost estimates for decision-making, while minimizing any potential to impede innovation and duplicate the efforts undertaken by the Project Sponsor.For example traditionally, cost estimates in Canada have been classified into one of four categories, using Classes A, B, C and D.
The Architect’s Handbook of Professional Practice: Update 2003
Class A estimates are pre-tender estimates, based on completed construction drawings and detailed specifications contained in tender documents. They are expected to be quite accurate, within 5-10% of the actual contract price.
Class B estimates are design estimates based on an advanced project design. They are based on design drawings, project specifications and include detail on the design of electrical, mechanical and IT systems, as well as site requirements.
Class C is a planning level estimate usually based on a Schematic Design and presented in Elemental Format (a budget setting format/technique which considers the major elements of a project and provides an order of cost estimate based on an Elemental Cost Analysis of a building project). Typically, Class C estimates are required by the Project Sponsor to obtain preliminary approvals necessary to undertake design and project development. These estimates establish a preliminary budget estimate and a baseline against which project costs will be assessed at future project development milestones.
Class D estimates are conceptual estimates based on the project scope (the work that needs to be accomplished to deliver the project) and functional requirements (the output specifications/deliverables of a project), and are usually presented in unit cost analysis format (applying a monetary rate to an element, sub-element or component per unit of measurement), such as cost per m2.
Log Home Package: Budget, Design, Estimate, and Secure Your Best Price
| Primary Characteristics | Secondary Characteristics | ||||
| Estimate Classification | Project Definition | Intended Purpose | Methodology | Level of Precision | Preparation Effort |
| Class A | Design Documents
(100% Design) |
Compliance
with effective project approval (budget) |
Measured,
priced, full detail quantities |
-5% to +10% | 5% to 50% |
| Class B | Design Development
(66% Design) |
Seeking
effective project approval |
Mainly
measured, priced, detail quantities |
-10% to +15% | 2.5% to 10% |
| Class C | Schematic Design
(33% Design) |
Seeking
preliminary project approval |
Measured,
priced, parameter quantities, where possible |
-15% to +20% | 1.5% to 5% |
| Class D | Design | Screening
of various alternative solutions |
Various | -20% to + 30% | 0.5% |
Within a class of estimates, the amount of underlying design and technical work can vary significantly from one asset class to another, giving rise to a mis-perception of the level of accuracy. For example, a Class D estimates could range from the use of very rough estimates of floor space requirements priced at average real estate pricing using general market indices to quite well specified space estimates with room requirements using m2 pricing from similar projects.
Source: PPP Canada Schematic Design Estimate Guide
Successful Public/Private Partnerships: From Principles to Practices
