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?
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’

2. What is estimating?
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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
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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)
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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%
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6. What information is needed?
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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
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