AACE Classes of Estimates: A Comprehensive Overview

AACE International uses a five-class estimating system, each one more precise than
the other and suited to different project phases. As projects progress in their life cycles, these
estimate classes tend towards increased precision and thorough description.

Class 5 Estimate: These are a collection of the most preliminary estimations, typically created
during a project's development phase. Since they are based on relatively little project
information—roughly 0–2% of the project's total information—and were calculated very
early, their accuracy is, nevertheless, lower than that of the other classes of estimates,
according to AACE. According to Schottlander (2006), they have a rough order of magnitude,
a more significant variation level, and an accuracy of -20 to 1, 50 percent low, and +30 to
+100 percent high. This estimate level is meant for concept screening (Bates et al., 2006).

Class 4 Estimate: The Theoretical Forecast yields a more accurate estimate as project details
become readily available. It is predicated on the information that follows in degree. The
importance of this course in facilitating financing acceptance and assessing project viability is
emphasized by AACE. It summarizes the primary cost components and has an exactitude
ranging from -30% to +50% (AACE International, 2018).

Class 3 Estimate: During the project's design, development, and engineering phases, this class
of estimations is created. Since the project is now in its design maturity phase, these are based
on 10 to 40 percent of the information. With an accuracy range of -10% to -20% low and
+10% to +30% high, this class has an even lower variation level (Schottlander, 2006).
According to Bates et al. (2006), the type 3 estimates are used for budget authorization and
control.

Class 2 Estimate: The Class 2 estimate is created with additional information as the project
progresses. Cost information from related projects is considered, and design concepts are
examined. This estimate reduces The accuracy range from ±30% to ±50%. It assists in
adjusting project cost projections and obtaining funds for more thorough planning.
Class 1 Estimate: They are usually created when the project is in its design phase and when
the needs and parameters are straightforward. Budgeting, funding, and project approval all
require class 1 estimates. To attain them, engineering and design standards must be met with
an accuracy level of no more than ±10%.

To conclude, These estimations have distinct uses throughout the project lifecycle, from idea
and feasibility studies to design and construction. as additional data becomes available. As
the project moves along, estimates get more precise and detailed. Reliable cost assessment is
essential for efficient project management and decision-making in various sectors.

Reference

AACE International. (2018). AACE International Recommended Practice No. 18R-97: Cost
Estimate Classification System – As Applied in Engineering, Procurement, and
Construction for the Process Industries
Schottlander, D. E. (2006). How accurate are your estimates? AACE International
Transactions, ES171.
Bates, J., Burton, C. D. J., Creese, R. C., Hollmann, J. K., Humphreys, K. K., McDonald
Jr, D. F., & Miller, C. A. (2005). Cost estimate classification system–as applied in
engineering, procurement, and construction for the process industries. AACE
International Recommended Practice, p. 18.