Estimate Classification and BOE

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The AACE Class 1–5 system is the industry standard for calibrating estimate accuracy to design maturity. Every estimate must be classified — this tells the owner and your team exactly how much accuracy to expect.

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AACE Class 1–5 — Manufacturing Plant Application

Class	Design Completeness	Accuracy Range	Typical Use	Primary Method
Class 5	0–2%	-50% / +100%	Concept screening, portfolio decisions	Analogous / ROM
Class 4	1–15%	-30% / +50%	Study / feasibility	Equipment factored, parametric
Class 3	10–40%	-20% / +30%	Budget authorization / GMP candidate	Semi-detailed with sub quotes
Class 2	30–75%	-15% / +20%	Control estimate / GMP finalization	Detailed with major sub quotes
Class 1	65–100%	-10% / +15%	Check estimate / bid/tender	Full bottom-up with all sub bids

Source: AACE RP 18R-97 (Process Industries), RP 17R-97 (General)

Practical rule: Never let an owner treat a Class 3 estimate like a Class 1. Always label estimates with their class and expected accuracy range. The BOE makes this explicit.

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FEL to AACE Class Mapping

FEL Stage	Description	AACE Class
FEL-1	Business opportunity / conceptual	Class 5
FEL-2	Feasibility / preliminary engineering	Class 4
FEL-3	Front-End Engineering Design (FEED)	Class 3
Detailed Design	Construction drawings	Class 2 → Class 1

Owner FEL naming vs. industry FEL naming — they are not the same. Many CPG and food manufacturing owners (ConAgra, Kraft Heinz, Mondelēz, etc.) use their own internal FEL stage labels that do not map directly to the industry FEL-1/2/3 convention above. Common patterns:

Owner Label	Typical Owner Definition	Rough AACE Equivalent
FEL-I (owner)	Pre-FEED / project authorization estimate	Class 3–4
FEL-II (owner)	Preliminary design / sanction estimate	Class 2–3
CIR (Capital Investment Request)	Post-FEED, GMP-ready	Class 2
SPF (Strategic Plan Forecast)	Long-range portfolio placeholder	Class 5

When reviewing an owner-template estimate, confirm which definition applies before scoring Class Alignment. An owner’s “FEL-I” accuracy range of -10%/+30% is closer to AACE Class 3 than to industry FEL-1 (Class 5).

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What Changes Between Classes

As design matures from Class 5 → Class 1, three things change:

1. Inputs — from analogous project data to actual vendor quotes and complete drawings
2. Method — from parametric/factored to full bottom-up quantity takeoff
3. Contingency — decreases as uncertainty resolves (Class 5: 30–50%; Class 1: 5–10%)

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The Basis of Estimate (BOE)

The BOE is the single most important document an estimator produces. It is the narrative that explains, justifies, and bounds every number in the estimate.

The BOE is both a communication tool and a legal document — it often becomes an exhibit to the GMP contract, so scope exclusions and assumptions in the BOE define what the contractor is and is not responsible for.

Required Sections of a Manufacturing Plant BOE

Section 1: Project Identification — Name, location, owner, DB firm, revision number, date, prepared by/reviewed by

Section 2: Estimate Classification — AACE Class and accuracy range; percent design completion; drawing list with revision numbers

Section 3: Scope of Work — Inclusions — Explicitly state everything that IS included. Example: “New 40,000 SF production bay addition; two new production lines; utility connections to existing headers; new electrical distribution to production area”

Section 4: Scope of Work — Exclusions — Explicitly state everything NOT included. Common exclusions:

• Owner-furnished equipment (OFE) and owner-furnished materials
• Process equipment vendor startup and commissioning labor
• Production line validation (pharma/food)
• IT infrastructure, MES/SCADA software
• Escalation beyond the pricing date

Section 5: Estimating Methodology — For each major cost category, state the method used:

• “Structural steel — bottom-up QTO from structural drawings; unit rates from RSMeans 2025 Q1 + market check”
• “Process equipment installation — factored from equipment list at Lang factor of 0.45 of FOB cost”

Section 6: Pricing Basis — Pricing date; location factor applied; labor rates (union vs. open shop; prevailing wage); material pricing source

Section 7: Escalation — Methodology; start/end dates; material vs. labor escalation rates applied separately

Section 8: Contingency — Total amount and %; composition by type (design development, scope gap, execution); flat % vs. probabilistic method

Section 9: Allowances — Specific fixed-dollar allowances for known-but-undefined items (hazmat abatement, permit fees, owner’s T&I)

Section 10: Exclusions and Qualifications — Critical assumptions restated as qualifications:

• “Estimate assumes soil bearing capacity of 2,000 PSF or better; geotech report not yet received”
• “Assumes no hazardous materials in existing building”

Pre-Spend and Authorized Expenditure in Owner Templates

Owner capital project templates (ConAgra FEL, Kraft BIC, and similar) often include a Pre-spend column alongside the estimate. This is not a duplicate or an error — it tracks capital expenditures already authorized and spent before the current estimate was issued.

What it is: The owner’s capital authorization process approves spending in tranches. Engineering studies, preliminary design, or long-lead equipment deposits may be approved and spent before the full project estimate reaches the Investment Committee. Pre-spend captures that already-committed cost so the IC can see the true remaining authorization needed.

What it means for the estimate:

• Pre-spend is typically excluded from the estimate total (already approved separately)
• The estimate represents the incremental authorization request, not the total project investment
• A junior estimator who adds pre-spend to the estimate total will double-count approved costs
• When reviewing an owner-template estimate, check: is the pre-spend column populated? Is the estimate total shown net of pre-spend or inclusive?

Example (ConAgra CF104 Crane): External engineering pre-spend of $1,075,000 and project management pre-spend of $40,000 were carried in the FEL template’s pre-spend column — excluded from the TIC total but visible to the IC as already-committed cost.

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Owner Template Class Ambiguity

Owner-prepared capital estimate templates (ConAgra FEL, Kraft BIC, Mondelēz, and similar CPG formats) rarely enforce a formal AACE class selection. Common patterns:

• Class field left blank — the template has a dropdown or checkbox for class but it was never selected (Kraft J-Con B-3 pattern)
• Class contradiction — the summary header claims one stage (e.g., FEL-I) while individual line items are tagged a different class (e.g., “Class 2”) (ConAgra Crane CF104 pattern)
• Class inferred from range only — the template includes a contingency accuracy range (e.g., -10%/+30%) without mapping it to an AACE class

When reviewing an owner template, infer the effective class from: (1) the contingency % carried relative to class targets, (2) the line-item class tags if present, and (3) the range analysis output. Do not rely on the cover page class field — it is frequently blank or wrong.

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BOE Quality Check

Before submitting any BOE, verify:

• Every major cost category has a stated methodology
• A drawing list (with revision dates) is attached
• All assumptions and exclusions are written, not implied
• Contingency basis is documented (not just a percentage)
• AACE class and accuracy range are clearly labeled
• Pricing date is explicit

See BOE Template for a ready-to-fill template.