Conceptual Estimates
At the outset of the project, when the scope and definition are in the early stages of development, littleinformation is available, yet there is often a need for some assessment of the potential cost. The owner
needs to have a rough or approximate value for the project’s cost for purposes of determining the
economic desirability of proceeding with design and construction. Special quick techniques are usually
employed, utilizing minimal available information at this point to prepare a conceptual estimate. Little
effort is expended to prepare this type of estimate, which often utilizes only a single project parameter,
such as square feet of floor area, span length of a bridge, or barrels per day of output. Using available,
historical cost information and applying like parameters, a quick and simple estimate can be prepared.
These types of estimates are valuable in determining the order of magnitude of the cost for very rough
comparisons and analysis but are not appropriate for critical decision making and commitment.
Many situations exist that do not warrant or allow expenditure of the time and effort required to
produce a detailed estimate. Feasibility studies involve elimination of many alternatives prior to any
detailed design work. Obviously, if detailed design were pursued prior to estimating, the cost of the
feasibility study would be enormous. Time constraints may also limit the level of detail that can be
employed. If an answer is required in a few minutes or a few hours, then the method must be a conceptual
one, even if detailed design information is available.
Conceptual estimates have value, but they have many limitations as well. Care must be exercised to
choose the appropriate method for conceptual estimating based on the available information. The
estimator must be aware of the limitations of his estimate and communicate these limitations so that the
estimate is not misused. Conceptual estimating relies heavily on past cost data, which is adjusted to reflect
current trends and actual project economic conditions.
The accuracy of an estimate is a function of time spent in its preparation, the quantity of design data
utilized in the evaluation, and the accuracy of the information used. In general, more effort and more
money produce a better estimate, one in which the estimator has more confidence regarding the accuracy
of his or her prediction. To achieve significant improvement in accuracy requires a larger-than-proportional
increase in effort. Each of the three conceptual levels of estimating has several methods that are
utilized, depending on the project type and the availability of time and information.
Order of Magnitude
The order-of-magnitude estimate is by far the most uncertain estimate level used. As the name implies,the objective is to establish the order of magnitude of the cost, or more precisely, the cost within a range
of +30 to –50%.
Various techniques can be employed to develop an order-of-magnitude estimate for a project or portion
of a project. Presented below are some examples and explanations of various methods used.
Rough Weight Check
When the object of the estimate is a single criterion, such as a piece of equipment, the order-of-magnitudecost can be estimated quickly based on the weight of the object. For the cost determination, equipment
can be grouped into three broad categories:
