Successful capital project delivery starts long before shovels hit the ground. One of the most critical steps in any construction project is cost estimating. The cost estimating process is designed to ensure owners have a greater sense of cost certainty by refining assumptions surrounding the project as details develop. Developing a budget that evolves with the design process helps project owners gain greater cost control by enabling teams to better manage project risks, ensure feasibility and secure funding.
Typically, a qualified project manager or consultant will walk you through the structured cost estimation process. However, it can be helpful to familiarize yourself with each phase so you feel confident and more engaged in your next project.
Understanding the Class D to Class A Estimating Process
The cost estimation process begins with a Class D estimate, which covers general project requirements, before working down to the Class A estimate, which provides the financial foundation for tendering. As a project evolves from its initial concept through various stages of design, project risks become clearer and active mitigation strategies reduce contingencies. A successful estimating process requires project teams to collaborate during each stage to ensure the architectural, design and construction budgets align with each project’s unique goals.
Here is what you can expect at each stage of the estimating process.
Class D Estimate: Initial Feasibility and Concept
Class D estimates provide a high-level cost approximation based on initial project concepts and broad assumptions. This estimate is typically used to determine feasibility and early funding considerations.
Key Inputs:
- Functional program and space requirements
- Site requirements and zoning considerations
- Early design concepts and envelope configuration
- Order-of-magnitude cost estimates based on historical data
Accuracy Range: +/- 20-30%
Key Tasks:
- Define project scope, vision and site constraints
- Engage with architects and engineers for initial sketches
- Develop a cost per square foot estimate
- Apply contingencies for unknown factors
- Review and adjust budget or scope based on feasibility
Class C Estimate: Schematic Design Development
Class C estimates narrow the cost range with refined design and early engineering considerations. This estimate is used for initial budget approvals and funding discussions.
Key Inputs:
- Preliminary site analysis and environmental factors
- Schematic design drawings (floor plans, elevations, sections, site plan)
- Structural, mechanical and electrical preliminary designs
- Outline specifications for materials and systems
Accuracy Range: +/- 15-20%
Key Tasks:
- Develop preliminary design documents
- Conduct geotechnical and site assessments
- Break down costs by project components (foundation, structure, M/E/P systems)
- Reduce contingency as design becomes more defined
- Review with key stakeholders and refine the budget
Class B Estimate: Design Development and Advanced Costing
Class B estimates provide a more detailed breakdown of project costs with advanced design documents. This estimate is used to finalize funding strategies and contractor discussions.
Key Inputs:
- Fully developed architectural, structural, mechanical and electrical drawings
- Site development and grading plans
- Preliminary specifications for materials, finishes and equipment
- Energy modeling and efficiency considerations
Accuracy Range: +/- 10-15%
Key Tasks:
- Complete design development drawings
- Conduct additional site and service assessments
- Prepare detailed elemental cost breakdown
- Obtain preliminary vendor and contractor quotes
- Reduce contingency based on improved certainty
- Present the refined budget for stakeholder approval
Class A Estimate: Pre-Tender, Final Construction Estimate
Class A estimates establish an accurate and detailed cost estimate for project tendering. This is the final budget before bidding and contracting.
Key Inputs:
- 100% complete construction documents (issued for construction)
- Fully detailed mechanical, electrical and structural drawings
- Finalized site development and service plans
- Trade-based cost breakdowns from market pricing
Accuracy Range: +/- 5-10%
Key Tasks:
- Complete all design and engineering documentation
- Conduct final constructability reviews
- Secure competitive vendor pricing for key trades
- Reduce contingencies to final project risk levels
- Finalize the estimate and obtain owner approval to proceed with tender
A well-structured cost estimation process is essential for ensuring cost certainty and minimizing project risks from concept through construction. By following this structured approach, project owners, developers and investors can confidently manage costs, secure funding, and move toward successful construction execution.
Engaging with experienced project managers and consultants throughout each phase will help you navigate this process with a higher level of precision and strategic foresight. If you’re planning a project and need expert guidance on cost estimating, connect with one of our project experts by emailing info@colliersprojectleaders.com.
