The practices we work to
Seven recommended practices shape every estimate.
Owners, engineering firms and lenders across Canada, Europe and the USA use the AACE framework to define what an estimate represents and the level of confidence appropriate to it.
RP 17R-97
Every estimate
Cost estimate classification system
How we apply it
Every estimate carries a class from 5 to 1, assigned from the maturity of the project definition deliverables in hand, not from the time spent or the client's preference.
What it protects you from
An early, rough number being read as a firm commitment, or a detailed estimate being discounted as a guess.
Where a client has its own estimating procedures, we work inside them and map back to AACE where the two differ.
RP 18R-97
Energy & industrial
Estimate classification for process industries
How we apply it
Used as the reference matrix for energy, carbon capture, hydrogen and industrial work: expected accuracy range, typical estimating method and end use for each class.
What it protects you from
Applying building or civil accuracy expectations to a process plant, where equipment and bulks quantities behave very differently.
Where a client has its own estimating procedures, we work inside them and map back to AACE where the two differ.
RP 56R-08
Ports, transport & civil
Classification for infrastructure
How we apply it
Applied to ports, transport and heavy civil estimates, where the definition deliverables and accuracy ranges differ from process plants.
What it protects you from
Judging a heavy-civil estimate against a process-plant matrix it was never built for.
Where a client has its own estimating procedures, we work inside them and map back to AACE where the two differ.
RP 34R-05
Every deliverable
Basis of Estimate
How we apply it
Each estimate ships with a Basis of Estimate that records scope, methodology, pricing sources, assumptions, exclusions, allowances and risk, so it can be reviewed and updated as the design moves.
What it protects you from
A number nobody can trace back to its assumptions eighteen months later, when the design has moved.
Where a client has its own estimating procedures, we work inside them and map back to AACE where the two differ.
RP 10S-90
Shared language
Cost engineering terminology
How we apply it
Contingency, allowance, escalation, indirects and management reserve are used with their AACE definitions, so the estimate reads the same way to every party.
What it protects you from
Two parties arguing about contingency when one of them means allowance and the other means reserve.
Where a client has its own estimating procedures, we work inside them and map back to AACE where the two differ.
RP 40R-08 / 42R-08
Contingency
Contingency and risk analysis
How we apply it
Contingency is developed from identified risk using expected value or range analysis appropriate to the estimate class, and is stated separately from base cost.
What it protects you from
A flat percentage that hides the real risks, or contingency buried in line items where it cannot be managed.
Where a client has its own estimating procedures, we work inside them and map back to AACE where the two differ.
RP 31R-03
Before issue
Reviewing, validating and documenting the estimate
How we apply it
Estimates are checked against quantities, unit rates, productivity, benchmarks and comparable projects before issue, with the review findings documented.
What it protects you from
An arithmetic or quantity error reaching a board paper or a bid.
Where a client has its own estimating procedures, we work inside them and map back to AACE where the two differ.
Estimate classification
Five classes, set by how far the project is defined.
Class is driven by the maturity of the project definition deliverables, not by the effort spent. Accuracy ranges are indicative for process industries under AACE 18R-97 and vary by sector, complexity and market.
Less definedFully defined
Class
5
0–2% defined
Concept screening
Capacity factored parametric models, judgment, or analogy
L −20% to −50%H +30% to +100%
Class
4
1–15% defined
Study or feasibility
Equipment factored or parametric models
L −15% to −30%H +20% to +50%
Class
3
10–40% defined
Budget authorisation or control
Semi-detailed unit costs with assembly-level line items
L −10% to −20%H +10% to +30%
Class
2
30–75% defined
Control or bid/tender
Detailed unit cost with forced detailed take-off
L −5% to −15%H +5% to +20%
Class
1
65–100% defined
Check estimate or bid/tender
Detailed unit cost with detailed take-off
L −3% to −10%H +3% to +15%
In practice
What you will see in every deliverable.
01
Estimate class stated
The class appears on the cover, with the deliverables that justify it listed in the Basis of Estimate.
02
Structured WBS
Costs roll up through a work breakdown structure agreed with you, so the estimate can be reconciled to schedule and control accounts.
03
Basis of Estimate
Method, sources, assumptions, exclusions, allowances, escalation and contingency, in a document that a reviewer can follow line by line.
04
Contingency shown separately
Base cost, contingency and any management reserve are reported as distinct lines, with the risk basis behind them.
AACE International and the recommended practice numbers cited are the property of AACE International. Emerald Group applies the practices; it does not certify compliance on behalf of AACE.