Accurate construction cost estimates are critical for planning, budgeting, and decision-making at every stage of a project. Different types of estimates are used depending on how much information is available and how far the project has progressed.
Below are the 7 most common types of construction cost estimates, along with their typical accuracy ranges.
1. Preliminary (Order of Magnitude) Estimate
This estimate is prepared at the very early stage of a project when limited information is available.
Purpose:
- Initial feasibility analysis
- Early budgeting decisions
Basis:
- Historical data
- Cost per square foot or similar benchmarks
Accuracy Range:
- –30% to +50%
This estimate is useful for high-level planning but should not be used for final budgeting.
2. Conceptual Estimate
A conceptual estimate is developed once the basic project concept is defined.
Purpose:
- Comparing design options
- Budget approvals
Basis:
- Preliminary drawings
- Similar past projects
Accuracy Range:
- –20% to +30%
It provides better clarity than a preliminary estimate but still carries moderate risk.
3. Budget Estimate
This estimate is used when the project scope becomes clearer and design development has started.
Purpose:
- Setting a working project budget
- Securing financing
Basis:
- Schematic designs
- Quantity assumptions
Accuracy Range:
- –15% to +25%
Budget estimates are commonly used by owners to control project costs during design.
4. Schematic Design Estimate
Prepared during the schematic design phase, this estimate reflects a more defined layout and materials.
Purpose:
- Design cost control
- Refining project budget
Basis:
- Floor plans
- Major system selections
Accuracy Range:
- –10% to +20%
At this stage, many major cost drivers are identified.
5. Design Development Estimate
This estimate is created when design details, materials, and systems are mostly finalized.
Purpose:
- Confirming project affordability
- Preparing for construction documents
Basis:
- Detailed drawings
- Material specifications
Accuracy Range:
- –5% to +15%
It is a reliable estimate for final budget adjustments.
6. Construction Document (Definitive) Estimate
This is one of the most accurate estimates, prepared once complete construction drawings and specifications are available.
Purpose:
- Final cost planning
- Contractor bidding comparison
Basis:
- Detailed quantity takeoffs
- Final specifications
Accuracy Range:
- –3% to +10%
This estimate closely reflects the actual construction cost.
7. Bid (Tender) Estimate
The bid estimate is prepared by contractors when submitting final bids for the project.
Purpose:
- Contract pricing
- Final cost commitment
Basis:
- Construction documents
- Supplier and subcontractor quotes
Accuracy Range:
- –2% to +5%
This is the most accurate estimate, as it is based on real market pricing.
Conclusion
Each type of construction cost estimate serves a specific purpose at different stages of a project. As project details increase, the accuracy of estimates improves. Using the right estimate at the right time helps reduce financial risk, avoid cost overruns, and ensure successful project delivery.
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