Definition: A standardized framework that categorizes cost estimates based on the maturity of project definition, ranging from early conceptual stages to detailed execution phases.
Key Components:
- Class 5 Estimate: Utilized during the initial concept screening with 0% to 2% project definition.
- Class 4 Estimate: Applied in feasibility studies with 1% to 15% project definition.
- Class 3 Estimate: Used for budget authorization with 10% to 40% project definition.
- Class 2 Estimate: Employed during control or bid/tender phases with 30% to 70% project definition.
- Class 1 Estimate: Implemented for definitive or detailed estimates with 50% to 100% project definition.
Use Cases/Industries:
- Energy Sector: Guiding investment decisions in oil and gas projects.
- Construction: Planning and budgeting for infrastructure developments.
- Manufacturing: Estimating costs for new production facilities.
Advantages:
- Improved Accuracy: Aligns estimate detail with project development stages.
- Enhanced Communication: Provides a common language for stakeholders.
- Risk Management: Identifies uncertainties and refines estimates as project details mature.
Challenges:
- Data Availability: Early-stage estimates may lack detailed information.
- Resource Allocation: Balancing effort and accuracy at each estimate class.
- Stakeholder Expectations: Managing perceptions of estimate precision across classes.
Related Terms: Estimate Accuracy, Project Definition Maturity, AACE International Guidelines
Example: In a renewable energy project, a Class 5 estimate provides a rough order of magnitude for initial feasibility, while a Class 1 estimate offers a detailed cost analysis before construction begins.
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Synonyms:
Estimate Classification, Estimating Maturity Levels
