ASTM E2516-11(2019)
(Classification)Standard Classification for Cost Estimate Classification System
Standard Classification for Cost Estimate Classification System
SIGNIFICANCE AND USE
4.1 Use of this classification will improve communication among all the stakeholders involved with preparing, evaluating, and using cost estimates.
4.2 The various parties that use cost estimates often misinterpret the quality and value of the information available to prepare cost estimates, the various methods employed during the estimating process, the accuracy level expected from estimates, and the level of risk associated with estimates.
4.3 This classification applies the degree of project definition as the primary characteristic for determining an estimate’s classification.
4.4 Using this classification will help those involved with project estimates to avoid misinterpretation of the various classes of cost estimates and to avoid their misapplication and misrepresentation. Improving communications about estimate classifications reduces business costs and project cycle times by avoiding inappropriate business and financial decisions, actions, delays, or disputes caused by misunderstandings of cost estimates and what they are expected to represent.
4.5 This classification is intended to be generic and so provide a system for the classification of cost estimates in any industry. There are also references to specific industries, for cost estimate classification as applied in: AACE International, Process Industry 18R-97, and AACE International, Building/General Construction Industry 56R-08.
4.6 Estimate classifications provide valuable additional reporting information when used as an adjunct to Practice E1804.
SCOPE
1.1 This classification provides a generic classification system for cost estimates and provides guidelines for applying the classification to cost estimates.
1.2 This classification maps the phases and stages of cost estimating to a generic maturity and quality matrix, keyed to a degree of project definition, that can be applied across a wide variety of industries.
1.3 The Cost Estimate Classification System has been developed in a way that:
1.3.1 provides a common understanding of the concepts involved with classifying cost estimates;
1.3.2 defines and correlates the major characteristics used in classifying cost estimates, and;
1.3.3 uses the degree of project definition as the primary characteristic used to categorize estimate classes.
1.4 This international standard was developed in accordance with internationally recognized principles on standardization established in the Decision on Principles for the Development of International Standards, Guides and Recommendations issued by the World Trade Organization Technical Barriers to Trade (TBT) Committee.
General Information
Relations
Standards Content (Sample)
This international standard was developed in accordance with internationally recognized principles on standardization established in the Decision on Principles for the
Development of International Standards, Guides and Recommendations issued by the World Trade Organization Technical Barriers to Trade (TBT) Committee.
Designation: E2516 −11 (Reapproved 2019)
Standard Classification for
1,2
Cost Estimate Classification System
This standard is issued under the fixed designation E2516; the number immediately following the designation indicates the year of
original adoption or, in the case of revision, the year of last revision. A number in parentheses indicates the year of last reapproval. A
superscript epsilon (´) indicates an editorial change since the last revision or reapproval.
1. Scope 2.2 Other Standards:
ANSI Z94.2-1989 Industrial EngineeringTerminology: Cost
1.1 This classification provides a generic classification sys-
Engineering
tem for cost estimates and provides guidelines for applying the
AACE International Recommended Practice No 17R-97:
classification to cost estimates.
Cost Estimate Classification System
AACE International Recommended Practice No 18R-97:
1.2 This classification maps the phases and stages of cost
Cost Estimate Classification System: As Applied in
estimating to a generic maturity and quality matrix, keyed to a
Engineering, Procurement, and Construction for the Pro-
degree of project definition, that can be applied across a wide
cess Industries
variety of industries.
AACE International Recommended Practice No 56R-08:
1.3 The Cost Estimate Classification System has been
Cost Estimate Classification System – As Applied in
developed in a way that: 5
Building and General Construction Industries
1.3.1 provides a common understanding of the concepts
involved with classifying cost estimates; 3. Terminology
1.3.2 defines and correlates the major characteristics used in
3.1 Definitions—For definitions of terms used in this
classifying cost estimates, and;
practice, refer to Terminology E833 and Terminology E631.
1.3.3 uses the degree of project definition as the primary
4. Significance and Use
characteristic used to categorize estimate classes.
4.1 Use of this classification will improve communication
1.4 This international standard was developed in accor-
among all the stakeholders involved with preparing,
dance with internationally recognized principles on standard-
evaluating, and using cost estimates.
ization established in the Decision on Principles for the
Development of International Standards, Guides and Recom- 4.2 The various parties that use cost estimates often misin-
mendations issued by the World Trade Organization Technical terpret the quality and value of the information available to
Barriers to Trade (TBT) Committee. prepare cost estimates, the various methods employed during
the estimating process, the accuracy level expected from
estimates, and the level of risk associated with estimates.
2. Referenced Documents
4.3 This classification applies the degree of project defini-
2.1 ASTM Standards:
tion as the primary characteristic for determining an estimate’s
E631 Terminology of Building Constructions
classification.
E833 Terminology of Building Economics
E1804 Practice for Performing and Reporting CostAnalysis
4.4 Using this classification will help those involved with
During the Design Phase of a Project project estimates to avoid misinterpretation of the various
classes of cost estimates and to avoid their misapplication and
misrepresentation. Improving communications about estimate
classifications reduces business costs and project cycle times
This specification is under the jurisdiction of ASTM Committee E06 on
by avoiding inappropriate business and financial decisions,
Performance of Buildings and is the direct responsibility of Subcommittee E06.81
on Building Economics.
actions, delays, or disputes caused by misunderstandings of
Current edition approved Oct. 1, 2019. Published October 2019. Originally
cost estimates and what they are expected to represent.
approved in 2006. Last previous edition approved in 2011 as E2516–11. DOI:
10.1520/E2516–11R19.
This classification is based on theAACE International Recommended Practices
17R–97, 18R-97, and 56R-09 pertaining to Cost Estimate Classification System. Available fromAmerican National Standards Institute (ANSI), 25 W. 43rd St.,
For referenced ASTM standards, visit the ASTM website, www.astm.org, or 4th Floor, New York, NY 10036, http://www.ansi.org.
contact ASTM Customer Service at service@astm.org. For Annual Book of ASTM Available from the Association for the Advancement of Cost Engineering
Standards volume information, refer to the standard’s Document Summary page on (AACE International), 1265 Suncrest Towne Centre Dr., Morgantown, WV 26505-
the ASTM website. 1876, http://www.aacei.org.
Copyright © ASTM International, 100 Barr Harbor Drive, PO Box C700, West Conshohocken, PA 19428-2959. United States
E2516 − 11 (2019)
4.5 This classification is intended to be generic and so understand that it is only the degree of project definition that
provide a system for the classification of cost estimates in any determinestheestimateclass.Theotherfourcharacteristicsare
industry. There are also references to specific industries, for secondary characteristics that are generally correlated with the
cost estimate classification as applied in: AACE International, degree of project definition.
Process Industry 18R-97, and AACE International, Building/
5.6 This generic matrix and guideline provides a high-level
General Construction Industry 56R-08.
estimate classification system that is non-industry specific.The
4.6 Estimate classifications provide valuable additional re- accuracy ranges identified in Table 1 are indicated as index
portinginformationwhenusedasanadjuncttoPracticeE1804. valuessothattheymaybeappliedgenericallytojustaboutany
particular industry.Amore detailed explanation of these index
5. Basis of Classification
values, including two examples of their possible ranges, can be
found in Appendix X1.
5.1 There are numerous characteristics that can be used to
categorizecostestimatetypes.Themostsignificantoftheseare
6. Determination of the Cost Estimate Class
degree of project definition, end usage of the estimate, estimat-
ing methodology, and the effort and time needed to prepare the 6.1 The cost estimator makes the determination of the
estimate class based upon the degree of project definition
estimate. The primary characteristic used in this guideline to
define the classification category is the degree of project (design % complete). While the determination of the estimate
class is somewhat subjective, the design input data, complete-
definition. The other characteristics are secondary.
ness and quality of the design deliverables serve to make the
5.2 The discrete degrees of project definition used for
determination more objective.
classifyingestimatescorrespondtothetypicalphasesandgates
of evaluation, authorization, and execution often used by
7. Estimate Characteristics
project stakeholders during a project life cycle.
7.1 The following are brief discussions of the various
5.3 Five cost estimate classes have been established. While
estimate characteristics used in the estimate classification
the degree of project definition is a continuous spectrum, it has
matrix, Table 1. For the secondary characteristics, the overall
been determined from benchmarking industry practices that
trend of how each characteristic varies with the degree of
three to five discrete categories are commonly used. Five
project definition (the primary characteristic) is provided.
categories are established in this standard classification as it is
7.2 Degree of Project Definition (Primary Characteristic):
easier to simplify by combining categories than it is to
7.2.1 This characteristic is based upon the level of comple-
arbitrarily split a standard.
tion of project definition (roughly corresponding to the per-
5.4 In Table 1 these estimate class designations are labeled
centage completion of architectural/engineering detail and
Class 1, 2, 3, 4, and 5. A Class 5 estimate is based upon the
design). The degree of project definition defines maturity, or
lowest degree of project definition, and a Class 1 estimate is
the extent and types, of input information available to the
closest to full project definition and maturity. This countdown
estimating process. Such inputs include project scope
approach considers that estimating is an iterative process
definition, requirements documents, specifications, project
whereby successive estimates are prepared until a final esti-
plans, drawings, calculations, knowledge and experience
mate closes the process.
gained from past projects, reconnaissance data, and other
5.5 The five estimate classes are presented in Table 1 in information that must be used, and developed, to define the
relationship to the identified characteristics. It is important to project. Each industry will have a typical set of deliverables
TABLE 1 Generic Cost Estimate Classification Matrix
Primary Characteristic Secondary Characteristic
DEGREE OF EXPECTED
ESTIMATED PREPARATION
PROJECTION END USAGE METHODOLOGY ACCURACY
CLASS EFFORT
DEFINITION RANGE
Typical ± range
Typical degree of effort
Expressed as % of Typical purpose relative to index of 1
Typical estimating method relative to least cost
complete definition of estimate (that is, Class 1
B
index of 1
A
estimate)
Class 5 0 % to 2 % Screening or feasibility Stochastic (factors or models, or both) 4to20 1
or judgment
Class 4 1 % to 15 % Concept study or feasibility Primarily stochastic 3 to 12 2 to 4
Class 3 10 % to 40 % Budget authorization Mixed but primarily stochastic 2 to 6 3 to 10
or control
Class 2 30 % to 70 % Control or bid/tender Primarily deterministic 1 to 3 5 to 20
Class 1 70 % to 100 % Check estimate or bid/tender Deterministic 1 10 to 100
A
If the expected accuracy range index value of “1” represents +10/–5 %, then an index value of “10” represents +100/–50 %.
B
If the preparation effort index value of “1” represents 0.005 % of project costs, then an index value of “100” represents 0.5 %.
E2516 − 11 (2019)
that are used to support the type of estimates used in that 7.6.1 The level of effort needed to prepare a given estimate
industry. The set of deliverables becomes more definitive and is an indication of the cost, time, and resources required. The
complete as the degree of project definition (such as architec-
cost measure of that effort is typically expressed as a percent-
ture and engineering) progresses. age of the total project costs for a given project size. As the
degree of project definition increases, the amount of effort to
7.3 End Usage (Secondary Characteristic):
prepare an estimate increases, as does its cost relative to the
7.3.1 The various classes (or phases) of cost estimates
total project cost.The effort to develop the project deliverables
prepared for a project typically have different end uses or
is not included in these effort metrics; they only cover the cost
purposes.As the degree of project definition increases, the end
to prepare the cost estimate itself.
usage of an estimate typically progresses from strategic evalu-
ation and feasibility studies to funding authorization and
8. Relationships and Variations of Estimate
budgeting, to project control.
Characteristics: Discussion
7.4 Estimating Methodology (Secondary Characteristic):
8.1 Thereareamyriadofcomplexrelationshipsthatmaybe
7.4.1 Estimating methodologies fall into two broad catego-
exhibited among the estimate characteristics within the esti-
ries: stochastic and deterministic. In stochastic methods, the
mate classifications. The overall trend of how the secondary
independent variable(s) used in the cost estimating algorithms
characteristics vary with the degree of project definition was
aregenerallysomethingotherthanadirectmeasureoftheunits
provided above. This section explores those trends in more
of the item being estimated. The cost estimating relationships
detail. Typically, there are commonalties in the secondary
used in stochastic methods are often based on factors, metrics,
models, etc. With deterministic methods, the independent characteristics between one estimate and the next, but in any
given situation there may be wide variations in usage,
variable(s) are more or less a definitive measure of the item
being estimated (can include, detailed takeoff, quotes, bids, methodology, accuracy, and effort.
etc.).Adeterministic methodology reduces the level of conjec-
8.1.1 Thelevelofprojectdefinitionisthedriveroftheother
ture inherent in an estimate.As the degree of project definition
characteristics. Typically, all of the secondary characteristics
increases, the estimating methodology tends to progress from
have the level of project definition as a primary determinant.
stochastic to deterministic methods.
While the other characteristics are important to categorization,
they lack complete consensus. For example, one estimator’s
7.5 Expected Accuracy Range (Secondary Characteristic):
bid might be another’s budget. Characteristics such as meth-
7.5.1 Estimate accuracy range is an indication of the degree
odology and accuracy can vary markedly from one industry to
to which the final cost outcome for a given project could vary
another and even from estimator to estimator within a given
from the estimated cost.Accuracy is traditionally expressed as
industry.
a 6 percentage range around the point estimate, after applica-
tion of contingency, with a stated level of confidence that the
8.2 Degree of Project Definition:
actual cost outcome would fall within this range (6 measures
8.2.1 Each project (or industry grouping) will have a typical
are a useful simplification, given that actual cost outcomes
set of deliverables that are used to support a given class of
have different frequency distributions for different types of
estimate. The availability of these deliverables is directly
projects). As the degree of project definition increases, the
related to the level of project definition achieved. The varia-
expected accuracy of the estimate tends to improve, as indi-
tions in the deliverables required for an estimate are too broad
catedbyanarrower 6range.Additionally,industryexperience
to cover in detail here; however, it is important to understand
shows that a percentage range should also vary with the cost
what drives the variations. Each industry group tends to focus
magnitude of the project. In addition to the degree of project
on a defining project element that drives the estimate maturity
definition, estimate accuracy is also subject to:
level. For instance, chemical industry projects are process
7.5.1.1 Level of non-familiar technology in the project.
equipment-centric; such as, the level of project definition and
7.5.1.2 Complexity of the project.
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