EA8: TYPES OF ESTIMATES — CONCEPTUAL, ROM, PRELIMINARY, DETAILED

In the construction industry, estimating a project’s cost is never a single, universal process.

Each stage of design development requires a specific type of estimate that reflects the amount of available information, the level of uncertainty, and the overall risk. The differences among estimate types are not limited to accuracy; they determine how decisions are made, how budgets are shaped, and how expectations are managed.

Understanding the distinctions between a Conceptual Estimate and a Detailed Estimate helps owners make informed financial decisions and allows contractors to protect themselves from unrealistic assumptions and scope misunderstandings.

Conceptual Estimate — When the Project Is Still an Idea

A Conceptual Estimate is created at the earliest stage of a project, when only the broad idea exists. There are usually no drawings, no specifications, and no engineering details. The scope may consist of a simple narrative, a sketch, or a description of the intended space.

Because the design is not yet developed, this estimate relies heavily on historical cost data, comparable completed projects, cost-per-square-foot benchmarks, and functional unit pricing such as cost per bed, per seat, or per linear foot. Many assumptions are made, and they are often rough by necessity.

The purpose of a conceptual estimate is to answer early strategic questions. Is the project financially viable? Which concept should the owner pursue? How should initial funds be allocated? At this stage, the goal is not precision but direction.

The accuracy range reflects the uncertainty: typically between –50% and +40%. Despite its wide margin, conceptual estimating provides crucial guidance for early decision-making.

ROM Estimate — Establishing the First Realistic Budget

The Rough Order of Magnitude (ROM) Estimate is the next step in the estimating process. It is prepared once the project begins to take shape and when partial information is available. Basic floor plans, simplified elevations, outline specifications, and early mechanical or structural narratives allow for a more structured analysis.

A ROM Estimate organizes costs into major CSI divisions and begins to introduce allowances for incomplete portions of the design. It includes high-level assessments of materials, labor, major systems, and potential risks.

Although still generalized, it provides owners and project teams with a realistic early budget and helps determine whether the design aligns with financial expectations.

ROM accuracy typically falls within ±20–30%. This makes it a valuable tool for early budgeting, feasibility checks, and initial value engineering discussions before the design becomes expensive to modify.

Preliminary Estimate — Guiding and Controlling the Design

When drawings reach approximately 30–70% design development, a Preliminary Estimate becomes possible. At this stage, the estimator has access to floor plans, reflected ceiling plans, interior elevations, schematic MEP layouts, and structural drawings that may not be final but are detailed enough for meaningful takeoffs.

This estimate includes quantified materials and labor for major scopes, production rates, subcontractor input, equipment costs, and continued allowances for incomplete details.

The primary purpose of the preliminary estimate is cost control. It checks whether the design still fits within the established budget and identifies areas where the project may drift financially. If discrepancies arise, value engineering is performed to evaluate alternative materials, systems, and construction methods.

By providing a clearer financial picture, this estimate allows the owner, architect, and contractor to make adjustments before drawings reach the final stage.

Preliminary estimates typically achieve ±10–20% accuracy and serve as one of the most influential checkpoints in the project lifecycle.

Detailed Estimate — The Foundation for Contract Pricing

A Detailed Estimate is created when the design is nearly complete, around 90–100 % construction documents. This is the most comprehensive and accurate form of estimating and requires full architectural plans, specifications, structural and MEP drawings, schedules, and all technical details.

At this stage, the estimator can perform precise quantity takeoffs across all CSI divisions. Labor productivity, crew composition, equipment costs, subcontractor bids, general conditions, overhead, insurance, and profit are all included. Clarifications and exclusions are documented carefully to define the contractor’s true scope and responsibilities.

Because the drawing set is complete, the estimator can rely on real unit pricing, competitive bids, and verified production rates. This results in an accuracy level of roughly ±2–5%.

The detailed estimate is used for finalizing contract prices (lump sum or GMP), preparing bid proposals, planning procurement, and establishing the project budget. It becomes the financial and operational backbone of the construction effort.

Accuracy Progression Throughout the Estimating Cycle

As the design evolves, uncertainty decreases and the estimate becomes more refined.

The progression can be summarized as follows:

• Conceptual Estimate: broad feasibility and early decision-making.

• ROM Estimate: formation of the first working budget.

• Preliminary Estimate: budget validation and cost-controlled design development.

• Detailed Estimate: establishment of the final construction cost.

More information leads to higher accuracy — but it also means changes become more expensive to implement. This is why understanding estimate types is essential for both owners and project teams.

Why Owners Must Understand These Estimate Types

Misunderstandings often arise when stakeholders expect the accuracy of a detailed estimate while providing only a sketch or concept. This disconnect can lead to unrealistic budgets, design delays, scope gaps, and strained communication.

Recognizing what each estimate type represents allows owners to engage in the process with clarity, set appropriate expectations, and make decisions with a true understanding of the underlying financial risks.

A shared language of estimating helps everyone work more effectively and ensures that the project remains financially aligned from concept to construction.