Todd W. Pickett

2005 AACE International Transactions, EST.10

AACE International, Morgantown, WV, 2005

Hours and hours of an estimator's time may go into the preparation of a project cost estimate, but it is never complete unless it is accompanied by a Basis of Estimate (BOE).

So exactly what is a Basis of Estimate? And, what purpose does it serve? In a nutshell, it is a succinct method of documenting critical aspects of a project cost estimate for the purposes of mitigating project cost risk. A well-written BOE will clearly and concisely state the purpose of the estimate (i.e., cost study, project options analysis, funding), the project scope, pricing basis, allowances, assumptions, exclusions, cost risks, and opportunities, and deviations from estimating standard practices. It is also a documented record of pertinent conversations that have occurred and agreements that have been made between the estimator and other members of the project team.

This paper will describe the layout of a properly prepared Basis of Estimate. A general outline will also be provided that can be used as a BOE template.

Originally published by AACE International.

Reprinted with the permission of AACE International,

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