TYPE - I

CONCEPTUAL OR ORDER OF MAGNITUDE ESTIMATE

A minimum of information is used to develop this type of "Ball Park Estimate." The
estimate is prepared from in-house-data available from past jobs on similar plants. From
these actual jobs, the proposed plant capacity is divided by an existing plant cost. This
cost is multiplied against the new plant capacity or unit ($bbl,$kW, etc.) to derive new
plant cost and then adjusted for escalation. A cost estimate determined this way is only
valid for a similar plant.
The accuracy of this type of estimate is highly dependent upon the scope and time
allotted to its preparation.
This estimate has a probable accuracy: -50% +50% or worse.
TOP

TYPE - II
FACTORED ESTIMATE

A factored estimate requires that all process equipment must be priced. A factored
estimate is produced by taking the cost of individual types of process equipment, and
multiplying it by an "installation factor" to arrive at the Total Direct Process Cost. The
process installation factors include all subcontracted cost plus all of the associated direct
field labor and bulk materials that are required to install these items. Thus, these
"installation factors" produce the Total Direct Process Unit Costs only. A correction must
also be made if the labor productivity, weather conditions, etc. are expected to be
different from those in the Midwest area. Weather conditions may affect foundation
depths, insulation and steam tracing requirements, and other items. Additions must be
made to the estimate for offsite facilities, extensive piling, unusual plant conditions, long
runs of interconnecting piping, etc.
The accuracy of this type of estimate depends upon the definition of scope, equipment
costs, and known process factors.
Probable Accuracy: -25% +30%
TOP

TYPE - III
STUDY or PRELIMINARY ESTIMATE PROCEDURES

This type estimate is prepared after the process engineers have completed the conceptual
design, made the equipment list by size and category, made preliminary process flow
diagrams, and when engineering is from 1% to 10% complete. The following documents
serve as the basis from this type of estimate:

Reasonably defined equipment list by size and category, including onsite and
offsite equipment.
Preliminary overall plot-plans.
Know general site conditions such as location, utility requirements, site survey,
utility distribution (sewers, power feeders, etc.) labor productivity availability of
skilled workmen, and availability of construction materials.
Overall process flow diagrams.

Industrial building estimates are from quotations or approximated from their size and
type of construction. Equipment is priced via cost curves or six-tenths factor. If the cost
information is not available, outside price quotations are solicited from vendors by
telephone or correspondence. The total direct cost of the project is derived from
quotations or in-house information on as many equipment and bulk material costs
including labor man-hours and costs. The total indirect cost is determined by applying a
factor to the direct cost. Labor and installation of material are obtained from ratios based
upon experience from past projects of similar type. To arrive at the total project cost, the
following items must be added: start-up, land, supervision and overhead, escalation,
adjustment for labor productivity, building, and site development (including railroad if
required). In some cases, it's not possible to use factors for offsite facilities. A more
detailed estimate will be necessary.
The accuracy of this type of estimate depends upon the definition of scope and the time
allotted to its preparation.
Probable Accuracy: -15% +20%
TOP

TYPE - IV
BASIS OF BUDGET ESTIMATE

This type of estimate is prepared after the process engineers have completed the
conceptual design, made an equipment list by size and category, made process flow
diagrams, and the detail engineering is from 25% to 50% complete. The following scope
serves as the basis for this type of estimate:

Scope substantially defined

Full listing and take-off
Fully defined equipment list by size and category - including onsite and offsite
equipment
Site work overall plot - plans and semi-final quantities
Know general site conditions such as location, utility requirements, site survey,
and utility distribution (sewers, power feeders, etc.)
Overall process flow diagrams
Basic requirements for building (buildings are approximated from their size and
type of construction)
Piping and instrumentation diagrams
Organization setup
Equipment list and takeoff for onsite and offsite facilities by size and category
Project schedule
Specifications

For this estimate a complete takeoff of equipment, substantial takeoff for piping,
electrical, instrumentation etc. The total direct cost of the project is derived from
quotations or in-house information (equipment and bulk material costs, labor man-hours,
and other costs broken down by category). Also, total direct cost is derived from labor
productivity, availability of skilled workmen, and availability of construction materials.
Installation of material and labor is obtained from ratios based upon experience from past
projects of similar type. The total indirect cost is determined by applying a factor to the
direct cost. To arrive at the total project cost, the cost of the following items must be
added:

Field indirect costs, including material costs, labor man-hours and costs, and field
organization man-hours and costs
Design development allowance
Chemicals
Startup
Land
Supervision and overhead
Escalation
Adjustment for labor productivity

The accuracy of this type of estimate is dependent upon the detail of information and how
much time is allowed for completion.
Probable Accuracy: -10% +15%
TOP

TYPE - V
DETAILED or FIRM PRICE CONSTRUCTION ESTIMATE PROCEDURE

In a detailed estimate we price each and every item in a thorough manner without
"eyeballing", "percentaging", or other forms of educated guesses. (We should note that
such approaches and techniques have merit under certain circumstances, but have no
place in a detailed estimate.) This estimate is prepared after the process design has been
completed and when the detail design is 70% - 90% complete. The documents which
serve as the basis for this estimate are the same as a budget estimate - except in a more
complete form. The following requirements must be adhered:

Material costs and subcontract costs based on firm or lump sum bids
Labor costs based on detailed man-hours and labor rates
Estimated engineering costs

This estimate should be put together from engineering, procurement, and construction
planning inputs.
Probable accuracy: -5% +10%
TOP

http://www.costestimating.com/estimates/index.html#conceptual