Much of a construction project’s financing success relies on an estimators’ knowledge and skill to develop accurate and precise expense assessments. This is vital because direct and indirect costs can significantly impact a project’s profit margins if they are off by even the slightest amount. As a general contractor, we are frequently asked by project owners and architects “how accurate are your construction estimates?”
Here at BelVan Construction, we believe that as more detail is developed during the design process, the more accurate a construction estimate can be. When it comes to construction expenses, 2/3rds of the overall budget represents the cost of the actual construction materials, labor, and sub-trades, like demolition, concrete, interior wall & ceiling systems, HVAC, plumbing, electrical, fire protection, finishes, and more.
Generally, 1/3rd of the total budget outlines the project’s non-construction cost items, including permits & fees, architectural design & engineering, rental equipment & site facilities, project & construction management, site supervision & safety, site protection & signage, quality control testing & inspections, contractor overhead & profits, and contingency.
Considering all of the factors mentioned above and many more, BelVan Construction offers various classes of construction project estimates, which we will discuss here. The following are five essential estimate classes that are performed at BelVan:
- Estimate Class E Or Order Of Magnitude Estimate
- Estimate Class D Or Pre-Feasibility Study Estimate
- Estimate Class C Or Feasibility Study Estimate
- Estimate Class B Or Budget / Capital Appropriation Estimate
- Estimate Class A Or Definitive Estimate
Project overrun refers to a budget deficit or increase in costs resulting from unexpected expenses that weren’t anticipated during the planning phase. On the other hand, project underrun signifies a scenario where the actual project costs end up being less than the projects expenses.
Estimate Class E (Order of Magnitude Estimate)
The estimating methods we use during Estimate Class E include ‘past project comparables.’
The bases of these estimates are construction type, preliminary site location, preliminary outline of the design, and preliminary scope.
With a level of project definition of 0% to 2%, this estimation technique can achieve the expected accuracy of 50% Overrun to -30% Underrun.
Estimate Class D (Pre-Feasibility Study Estimate)
The estimating methods we use during Estimate Class D include ‘past project comparables & unit rates.’
The bases of these estimates are defined structure type, defined site location, defined project scope, preliminary layout, and preliminary equipment list.
With a level of project definition of 1% to 15%, this estimation technique can achieve the expected accuracy of 35% Overrun to -25% Underrun.
Estimate Class C (Feasibility Study Estimate)
The estimating methods we use during Estimate Class C include ‘unit rates & budget equipment or trade estimates.’
The bases of these estimates are approved structure type, approved site location, more defined project scope, advanced layout, and advanced equipment list.
With a level of project definition of 10% to 40%, this estimation technique can achieve the expected accuracy of 25% Overrun to -15% Underrun.
Estimate Class B (Budget / Capital Appropriation Estimate)
The estimating methods we use during Estimate Class B include ‘firm dollar equipment or trade quotations, detailed material takeoffs, and ind. Cost individually estimated.’
The bases of these estimates are approved structure type, approved site location or data, approved project scope, IFC construction drawings, complete equipment list or data, and vendor quotations.
With a level of project definition of 30% to 70%, this estimation technique can achieve the expected accuracy of 15% Overrun to -10% Underrun.
Estimate Class A (Definitive Estimate)
The estimating methods we use during Estimate Class A include ‘equipment purchased, firm price quotes, and firm construction tender prices.’
The bases of these estimates are approved structure type, approved site location or data, approved project scope, IFC construction drawings, complete equipment list or data, vendor quotations, and construction tender packages.
With a level of project definition of 50% to 100%, this estimation technique can achieve the expected accuracy of 10% Overrun to -10% Underrun.
Final Thoughts
From the information shared above, we can conclude that as more detail is developed during a particular construction projects design process, the more accurate the construction estimate will get. This is why we, at BelVan Construction, believe that it’s essential to always provide your general contractor with the required amount and quality of information if you want your commercial or industrial construction project to be a success.
About BelVan Construction
BelVan Construction is a dedicated general contractor based in Edmonton, Alberta. We provide businesses with the most accurate estimates and project financing recommendation services across Alberta, BC, and Saskatchewan. Visit our website to learn more about our expert services or contact us for personalized service.
