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

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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”

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.