Cost Estimates Get More Accurate as Design Develops - But Only If You Track Them
Construction cost estimating is one of the most consequential management activities on a design project. An accurate budget established early - and tracked carefully through the design phases - prevents the devastating outcome of receiving bids that exceed the owner's budget after months of design work. The ARE PjM division tests candidates on the types of estimates produced at each design phase, the expected accuracy of each, and the architect's obligations when estimates approach or exceed the owner's budget.
Types of Estimates by Phase
Order of Magnitude Estimate (Pre-Design / Programming)
An order of magnitude estimate is developed before significant design work begins, often using square footage costs from comparable projects or published cost databases (RSMeans, Gordian). Accuracy is typically ±30–50% because the scope, systems, and quality level are not yet defined. This estimate is used to test whether the owner's budget is in the right range for the intended program. If the program and budget are wildly mismatched, the program or budget must be reconciled before design begins.
Conceptual / Schematic Estimate
At Schematic Design, the cost estimate improves to ±20–30% accuracy. The estimate can now use the building's area, basic systems selections (structural system type, HVAC approach), and a preliminary finish level. System-level cost models or cost per square foot by occupancy type are appropriate tools. The SD estimate is formally submitted to the owner as part of the SD phase deliverables per AIA B101.
Preliminary / Design Development Estimate
At Design Development, with systems resolved and materials substantially selected, the estimate refines to ±10–20% accuracy. Quantity takeoffs for major building systems begin to be feasible. The DD estimate is critical because it is the last checkpoint before the expensive CD phase - if the DD estimate reveals a significant budget shortfall, redesign at DD is far less costly than redesign after CDs are complete.
Definitive / Construction Document Estimate
At CD completion, the estimate achieves ±5–10% accuracy through detailed quantity takeoffs matched to the complete specification requirements. This estimate should closely predict the bids that will be received. Many owners hire an independent cost estimator to produce the CD-phase estimate as a check on the design team's assumptions.
The Architect's Budget Obligation
AIA B101 Article 6 requires the architect to notify the owner whenever the cost estimate exceeds the established budget. The architect must update the owner's construction budget at the completion of each phase. If the most recent estimate exceeds the budget by more than 10% (the specific threshold may vary by contract), the architect must revise the design at no additional charge - once. Subsequent redesign cycles due to budget overrun are additional services.
Key Exam Points
| Phase | Estimate Accuracy | Method |
|---|---|---|
| Pre-design | ±30–50% | Square foot cost comparison |
| Schematic Design | ±20–30% | System cost models |
| Design Development | ±10–20% | System quantity takeoffs |
| Construction Documents | ±5–10% | Detailed quantity takeoff |
- Architect must notify owner when estimate exceeds budget - formal obligation under AIA B101.
- One free redesign if estimate exceeds budget by more than the contract threshold; additional redesigns are additional services.
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