There are four basic types of estimates relied on by construction cost estimators. While estimate types may be referred to by different names and may not be always recognized as definitive, most estimators will agree that each has its place in the estimating process. The type of estimate performed is related to the amount of design information available. As a project proceeds through the various stages of design (from schematic design, to design development, to contract documents), the type of estimate changes—and accuracy increases. The four basic estimate types are:
1. Order of Magnitude Estimate: Loosely described as an educated guess, order of magnitude estimates are also referred to as “napkin estimates,” because they are often the result of conversations between contractors (or developers) and clients over dinner, in which an estimate is created on the nearest piece of paper. Order of magnitude estimates can be completed in a matter of minutes. Accuracy is -30% to + 50%.
2. Square Foot and Cubic Foot Estimates: These are often useful when only the proposed size and use of a planned building is known. Very little information is required. Performing a breakout for this type of estimate enables the designer and estimator to adjust components for the proposed use of the structure (hospital, factory, school, apartments, for example), type of foundation (slab on grade, spread footing, piles), and superstructure (steel, concrete, or a combination) and to focus the cost more closely to the final price. Accuracy is -20% to + 30%.
3. Assemblies (or Systems) Estimate: This is best used as a budgetary tool in the planning stages of a project. Accuracy is expected at -10% to 20%.
4. Unit Price Estimate: Working drawings and full specifications are required to complete a unit price estimate—the most accurate of the four types, but also the most time-consuming. Used primarily for bidding purposes, accuracy is -5% to 10%.