Estimating involves determining the cost of a project based on the available information at different stages of the project life cycle. The level of accuracy of the estimate depends on the stage and level of project definition, with earlier stages having lower accuracy ranges. Estimating requires defining the scope, gathering technical specifications and other relevant project data to determine cost. The level of effort required for estimating varies from 1-100 hours depending on the estimate class.

1. Why estimating?
As long there is the currency money in the
world of supply and demand, at least as
long the question will be asked:
‘ How much does it cost?
www.costengineering.eu
’

2. What is estimating?
www.costengineering.eu

3. Current Project Life Cycle
Operational Abandon
Identification phase Definition phase Execution phase
phase phase
Project Feasibility Development Commission.
Basis for Project Detailed Materials
initiation study plan Construction start-up
design specification design procurement
note handover
± 40% ± 25% ± 25%
Study Budget
Screening ± 10%
estimate estimate estimate
Control Step 6 Step 7
estimate Commit. &
Economics Economics Economics Operations
commit.
cost control reference
Step 3
Step 1 Step 2 plan
± 5% plan Identical Identical
Change
Initial control Counter to to
Economics
commit. estimate Execution Execution
plan Step 4 phase phase
Step 5
Close out
Approval Approval Project
initial execution
execution plan
plan Abandon
project
Operations Contract
reference control Project
plan debrief
Purchase
Review order control
Review Reporting
Approval
Approval
www.costengineering.eu

4. Estimating cycle
INITIATION UP TO CLOSE-OUT PHASE
SCREENING STUDY BUDGET CONTROL
ESTIMATE ESTIMATE ESTIMATE ESTIMATE
DATABASE
CLOSE-OUT PHASE EXECUTION PHASE
'CLOSE-OUT' COST COUNTER
REPORT
(DETAILED
CONTROL ESTIMATE
INFORMATION)
www.costengineering.eu

5. How much time is spent?
AACE Cost Estimate Classification System - Process Industries
Primary Secondary Characteristic
Characteristic
ESTIMATE LEVEL OF END METHODOLOGY EXPECTED PREPARATION
CLASS PROJECT USAGE ACCURACY EFFORT
DEFINITION RANGE
5 0% to 2% concept capacity factored, L: -20% to -50% 1
screening parametric
models, judgment, H: +30% to + 100%
or analogy
4 1% to 15% study or equipment L: -15% to -30% 2 to 4
feasibility factored or
parametric models H: +20% to + 50%
3 10% to 40% budget, semi-detailed unit L: -10% to -20% 3 to 10
authorization or cost with
control assembly level line H: +10% to + 30%
items
2 30% to 70% control or bid / detailed unit cost L: -5% to -15% 4 to 20
tender with forced
detailed take-off H: +5% to + 20%
1 50% to 100% check estimate or detailed unit cost L: -3% to -10% 5 to 100
bid / tender with detailed take-
off H: +3% to + 15%
www.costengineering.eu

6. What information is needed?
www.costengineering.eu

7. Accuracy
Level 1
Screening
90/10
40 % Level 2
Study
Level 3
Budget Level 4
25 %
Control
15 % 90/10
50/50
10 %
50/50
5%
20 % 10 % Base
15 % -10 %
-15 % 10/90
Base
-25 % Level 1 Level 2 Level 3 Level 4
Screening Study Budget Control
-40 % Base € 80,000 € 85,000 € 90,000 € 95,000
10/90 50/50 € 100,000 € 100,000 € 100,000 € 100,000
90/10 € 140,000 € 125,000 € 115,000 € 110,000
10/90 € 60,000 € 63,750 € 85,000 € 90,000
www.costengineering.eu