Week 6_John Agbo_ Choosing the Class of Estimate for a building project.

A client wishes to know what to budget for (in terms of money) as he plans to construct some blocks of flats. He shows up with two alternative single line diagrams showing the site layout, indicating the building area, intended use, number proposed number of occupants and location of building but different designs. He needs an approximate estimate of the cheapest alternative within 3 hours. My boss asked that I produce an approximate estimate as well as suggest the best alternative and submit to him within 2 hours.

I thought of which class of estimate to produce out of the following:

1. Class 4 cost estimate

2. Class 5 cost estimate

Analyzing the options

1. Class 4 cost estimates – this kind of estimate is produced when the project information provided is limited. Typically, the level of project definition for this kind of estimate is not more than 15%. Estimating methods used include Lang factors, hand factors as well as other parametric techniques. Class 4 estimates are used in obtaining preliminary budgetary approvals and approvals to proceed to next stage, screening projects at more developed stages, amongst others. It requires about 20hours to prepare, depending on the magnitude of the project. It has an accuracy range of -15% to -30% on the low side and +20% to +50% on the high side. They are also referred to as top – down, screening, pre-design estimates and budget estimates.

2. Class 5 cost estimates – this kind of estimate is produced when project information is very limited. The level of project definition is less than 5%. Stochastic estimating methods used include cost/capacity, factors, hand factor, Lang factors as well as other parametric techniques. Class 5 estimates are used for evaluation of resource needs and budgeting, evaluation of alternate schemes, project amongst others. It requires about 1hours to prepare, depending on the magnitude of the project. It has an accuracy range of -20% to -50% on the low side and +30% to +100% on the high side. They are also referred to as prospect estimates and Order of Magnitude estimates.

Conclusion and Recommendation

Both classes of estimates are very closely related. The difference being the level of project definition which also determines the level of accuracy.

Since I was given single line diagrams alone, it can be seen that the drawings are less than 5% detailed.

I will therefore produce a Class 5 cost estimate often called the Order of Magnitude Estimate.

References:

1. AACE Recommended Practice No. 18R-97 cost estimate classification system – as applied to Engineering, procurement, and construction for the Process industry.

2. TCM Framework: 7.3 – Cost Estimating and budgeting