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17R-97: Cost Estimate Classification System

17R-97: Cost Estimate Classification System
AACE International, August 7, 2020

Price: $0 (Member) / $100 (Non-Member)

As a recommended practice (RP) of AACE International, the Cost Estimate Classification System provides guidelines for applying the general principles of estimate classification to project cost estimates (i.e., cost estimates that are used to evaluate, approve, and/or fund projects). The Cost Estimate Classification System maps the phases and stages of project cost estimating together with a generic project scope definition maturity and quality matrix, which can be applied across a wide variety of industries.

This recommended practice has been developed in a way that:

  • provides common understanding of the concepts involved with classifying project cost estimates, regardless of the type of enterprise or industry the estimates relate to;
  • fully defines and correlates the major characteristics used in classifying cost estimates so that enterprises may unambiguously determine how their practices compare to the guidelines;
  • uses the maturity level of project definition deliverables as the primary characteristic to categorize estimate classes; and
  • reflects generally-accepted practices in the cost engineering profession.
An intent of this document is to improve communications among all the stakeholders involved with preparing, evaluating, and using project cost estimates. The various parties that use project 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.

This classification RP is intended to 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.

This document is intended to provide a guideline, not a standard. It is understood that each enterprise may have its own project and estimating processes, terminology, and may classify estimates in other ways. This guideline provides a generic and generally acceptable classification system that can be used as a basis to compare against. This recommended practice should allow each user to better assess, define, and communicate their own processes and standards in the light of generally-accepted cost engineering practice.

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