Definition:
A definitive estimate used for final budget approval, construction execution, and project closeout, typically developed when 50% to 100% of scope is defined.
Key Components:
- Project Definition: 50% to 100% scope maturity.
- Accuracy Range: Typically -5% to +10%.
- Methodology: Based on final detailed engineering, signed contracts, and supplier agreements.
- Contingency Level: Lowest, with risks well-quantified and managed.
Use Cases/Industries:
- Final Capital Approval: Ensuring accurate costs before construction begins.
- Project Cost Auditing: Verifying final costs for financial reporting.
- Owner’s Estimate Validation: Confirming EPC contractor estimates.
Advantages:
- Highly Accurate: Minimizes budget overruns and disputes.
- Critical for Final Decision-Making: Establishes firm project execution commitments.
Challenges:
- Long Preparation Time: Requires full engineering completion.
- Rigidity: Late-stage changes can cause major cost impacts.
Related Terms:
Definitive Budgeting, Execution Cost Estimate, Final Cost Projection
Example:
An offshore wind farm developer finalizes a Class 1 estimate based on signed supplier contracts and finalized design drawings, ensuring project costs align with investor expectations.
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Synonyms:
Definitive Estimate, Execution Estimate
