Based on my experience, in almost every stage of project, capital cost estimation is always part of document deliverable. During feasibility study, Pre-FEED study, or during FEED (Front-End Engineering Design), capital cost estimation is always created. But there are several degrees of capital cost accuracy between those studies. In this post I want to share classification of capital cost estimation.

I believe that capital cost estimation is more art than science. The more experience a cost estimator gets from cost estimation, the more accurate the estimation. In many cases, an estimator must use considerable judgment in preparing the estimates.

Classification of Capital Cost Estimation

There are at five types of fixed cost capital estimates:

1. Order-of-magnitude (ratio estimate). It is rule-of-thumb methods based on cost data from similar-type plants are used. The probable accuracy is -30% to +50%
2. Study estimate (factored estimate). This type requires data such as preliminary material and energy balances and major equipment items. The probable accuracy of -25% to +30%
3. Preliminary estimate (budget authorization estimate). This type needs more details about the process and equipment, such as design of major plant items are required. The probable accuracy is -20% to +25%
4. Definitive estimate (project control estimate). The data needed for this type of estimate are more detailed than preliminary estimate and include preparation of specification and drawings. The probable accuracy is -10% to +15%
5. Detailed estimate (firm estimate). To prepare this type of estimate, complete specification, drawings, and site surveys for the plant construction are required. The probable accuracy is -5% to +10%

Read More