This document provides an estimate review/validation checklist for assessing the quality and accuracy of cost estimates. It discusses recommended practices for cost estimating terminology, classification systems, and validating estimates. The checklist examines elements like the basis of estimate, engineering documents available, cost metrics, risk analysis, and change management to evaluate the estimate. The goal is to produce estimates that are transparent, explainable, defendable and acceptable through a thorough review process.

1. Estimate Review / Validation Checklist
Douglas W. Leo CCP CEP FAACE FRICS
Saybrook Associates, Inc.
Chair AACE International Estimating Sub-Committee

2. AACE Recommended Practices
• Cost Engineers Tool Kit -
– RP 10S-90 Cost Engineering Terminology
– RP 18R-97 Cost Estimating Classification System
– RP 21R-98 Project Code of Accounts
– RP 27R-03 Schedule Classification Systems
– RP 30R-03 Implementing Project Constructability
– RP31R-03 Reviewing, Validating and Documenting an
Estimate
– RP34R-05 Basis of Estimate
– RP 36R-08 Development of Cost Estimating Plans
– RP 38R-06 Documenting the Schedule Basis

3. Review/Validation Checklist - Introduction
The Project Cost Estimate that was just delivered is
amazing. It is exactly what was expected, costs were
immediately understandable and lower than anticipated.
Management will love this. The work on this project
estimate is worthy of great praise …… outstanding job!!!!
Were these words ever spoken outside of someone’s
dreams? …….. I think not.

4. Review / Validation Checklist Introduction
• Project Teams universally have the desire to produce
successful outcomes.
• They all want their work to be seen as on time, on
budget, and meeting the desire functionality.
• The desire is for a completed project package that is:
– Transparent
– Explainable
– Defendable
– Acceptable to management

5. Review / Validation Checklist Introduction
• Three main project drivers: Functionality, Schedule, Cost
• Over the course of the project there is shifting
importance for the three drivers but at some point costs
become the main issue with regards to moving the
project forward.
• When costs become the main focus, a thorough
understanding of the project estimate and how it was
developed is the task at hand.
• A review and validation takes place at multiple levels:
internally by the estimating provider, by the owner
client, by third party reviewers

6. Review / Validation Checklist Introduction
Completed project estimating package should always
include certain elements:
• Basis of Estimate
• Estimate Summary
• Estimate Detail
• Reconciliation Report
• Historical Cost Metric Report
• Estimate Deliverables Report
• Risk Analysis Report

7. PHASE 2
SELECT from
Alternatives
Clearly Frame
Goal
Test for
Strategic Fit
Preliminary
Overall Plan
Preliminary
Assessment
~1 % Engr.
AACE Class 5
Cost Estimate
PHASE 1
IDENTIFY & Assess
Opportunity
Fully Define
Scope
Develop
Detailed
Execution Plans
Refine Estimate
Submit Funding
for Approval
~25 % Engr.
AACE Class 3
Cost Estimate
Generate
Alternatives
Preliminary
Development
of Alternatives
Develop
Expected
Value
Identify
Preferred
Alternative
AACE Class 4
Cost Estimate
Operate Asset
Monitor &
Evaluate
Performance
Identify New
Opportunities
PHASE 3
DEVELOP Preferred
Alternative
PHASE 4
EXECUTE
(Detail EPC)
PHASE 5
OPERATE &
Evaluate
Implement
Execution Plan
Minimize
Changes
Finalize
Operating Plan
Business Plan
for Phase 5
Project Review
1 2 3 4 5
AFE
Various Cost Estimates Are Prepared
During the Project Development Process

8. Process Industry Classification Matrix
Primary Characteristic Secondary Characteristics
LEVEL OF PROJECT
DEFINITION
END USAGE METHODOLOGY ACCURACY RANGE
PREPARATION
EFFORT
ESTIMATE
CLASS
Expressed as % of
complete definition
Typical purpose of
estimate
Typical Estimating
Method
Typical variation in low
and high ranges (a)
Typical degree of effort
relative to least cost
indice of 1 (b)
5 0% to 2% Concept Screening
Capacity Factored,
Parametric Models,
Judgement, or Analogy
-20% to -50%
+30% to +100%
1
4 1% to 15% Study or Feasability
Equipment Factored, or
Parametric Models
-15% to -30%
+20% to +50%
2 to 4
3 10% to 40%
Budget, Authorization,
or Control
Semi-Detailed Unit
Costs w/ Assembly
Level Line Items
-10% to -20%
+10% to +30%
3 to 10
2 30% to 70% Control or Bid/Tender
Detailed Unit Cost w/
Forced Detailed Takeoff
-5% to -15%
+5% to +20%
4 to 20
1 50% to 100%
Check Estimate or
Bid/Tender
Detailed Unit Cost w/
Detailed Takeoff
-3% to -10%
+3% to +15%
5 to 100
Notes: a) The state of process technology and availability of applicable reference cost data affect the range
markedly. The +/- value represents typical percentage variation of actual costs from the cost estimate after
application of contingency (typically at a 50% level of confidence) for given scope.
b) If the range indice value of "1" represents .005%, then an indice value of 100 represents 0.5%
Estimate preparation effort is highly dependent upon the size of the project and the quality of estimating
data and tools.

9. Estimate Input Checklist and Maturity Matrix
Estimate Classification
CLASS 5 CLASS 4 CLASS 3 CLASS 2 CLASS 1
General Project Data
Project Scope Description General Preliminary Defined Defined Defined
Plant Production/Facility Capacity Assumed Preliminary Defined Defined Defined
Plant Location General Approximate Specific Specific Specific
Soils & Hydrology None Preliminary Defined Defined Defined
Integrated Project Plan None Preliminary Defined Defined Defined
Project Master Schedule None Preliminary Defined Defined Defined
Escalation Strategy None Preliminary Defined Defined Defined
Work Breakdown Structure None Preliminary Defined Defined Defined
Project Code of Accounts None Preliminary Defined Defined Defined
Contracting Strategy Assumed Assumed Preliminary Defined Defined
Engineering Deliverables
Block Flow Diagrams S/P P/C C C C
Plot Plans S P/C C C
Process Flow Diagrams (PFD's) S/P P/C C C
Utility Flow Diagrams (UFD's) S/P P/C C C
Piping & Instrument Diagrams (P&ID's) S P/C C C
Heat & Material Balances S P/C C C
Process Equipment List S/P P/C C C
Utility Equipment List S/P P/C C C
Electrical One-Line Drawings S/P P/C C C
Specifications & Datasheets S P/C C C
General Equipment Arrangement Drawings S P/C C C
Spare Parts Listings S/P P C
Mechanical Discipline Drawings S P P/C
Electrical Discipline Drawings S P P/C
Instrumentation/Control System Discipline Drawings S P P/C
Civi/Structural/Site Discipline Drawings S P P/C

10. Estimate Review / Validation Checklist
• Total Engineering Completeness - (%) at the time of
MTO creation – primary determination of accuracy and
estimate classification
• Project Estimating Plan – developed, reviewed, agreed
upon by all parties, signed off before start of estimate
• Basis of Estimate – prepared by estimating provider,
reflecting the completed estimate

11. Estimate Review / Validation Checklist
• Estimate Summary – with a defined WBS / COA
structure
• Estimate Detail – transparent and easily followed that is
in-line with the estimate summary
• Estimate Cost Metrics – how closely are estimated costs
in-line with defendable historical cost metrics (from
established actual costs not estimated costs)

12. Estimate Review / Validation Checklist
• Estimate Reconciliation – differences and similarities
between Previous estimates for this project or similar
projects
• Estimate Deliverables Checklist – what were the
deliverables utilized to produce the estimate. Who
produced them & when were they available to
estimating (Primary indicator of completeness of scope)
• Project Risk Analysis and Risk Logs – how was
contingency developed and its statistical significance?
How was risk identified and mitigated?

13. Estimate Review / Validation Checklist
• Material Take Offs – how were MTOs created, by whom
and when in the process? How were updates handled?
Trace MTOs from creation to the estimate
• Equipment pricing – how much is equipment pricing is
from quotes, from historical data or allowances?
• Equipment Bid Tabs – What is the project philosophy
regarding the selection of equipment pricing? Are the
costs in the estimate traceable to quotes?
• Change Management Plan and Change Logs – how is
scope being managed?

14. Conclusions
• Utilizing the Checklist a reviewer will understand the
development of the project cost and their completeness
and degree of accuracy
• Any items not available will indicate areas of concern
and places to focus greater attention
• But most importantly the checklist, if utilized by
estimating providers and project teams as a guide
during the complete project process, will produce
project costs that will be better understood and
manageable to all project stakeholders.