Pricing Work When the Drawings Are Barely There
The phone rings. The owner’s voice is upbeat, almost casual: “We’re looking for a budget number on this new project. Shouldn’t be too complicated.” You ask for the drawings. They send over a site plan, a couple of elevations, and something labelled “design intent” that looks suspiciously like it was sketched on the back of a coffee receipt. Then comes the kicker: “Can you have it by Friday?”
You have been here before. The timeline is tight, the details are thin, and yet the expectation is that you will hand over a number everyone can treat as gospel. If you are lucky, they will call it a “ballpark.” If you are not, they will use it as if it were a final bid, and remember it forever.
This is the daily reality of early-stage estimating, when you are pricing a moving target. No matter how many disclaimers you attach, someone will still ask six months later why the number changed. The challenge is giving a figure that is both useful and safe, without feeling like you are just throwing darts at a board.
Before we go further, it is worth making sure we are speaking the same language about what “early-stage” really means. Depending on where you work and who you are working with, you might hear Class 4 or Class 5 if the client is using the AACE International system, or Class D or Class C if they follow the Canadian framework. The names differ, but the intent is the same: to give a directional budget with very limited design information. Let us line them up so you can see exactly how they compare.
How AACE Class 4/5 Estimates Compare to Canadian Class D/C
If you work across borders or with different client groups, you have probably noticed that not everyone speaks the same “estimate class” language. In the industrial and infrastructure sectors, it is common to use the AACE International classification system. In the Canadian public sector and architectural work, you are more likely to see the Class A to Class D framework used by the Canadian Institute of Quantity Surveyors (CIQS), Public Services and Procurement Canada (PSPC), and the Canadian Construction Association (CCA).
Here is how they align when we talk about early-stage pricing:
AACE International
- Class 5 Rough Order of Magnitude (ROM): Prepared when the design is 0–2% complete. Used for initial screening and strategic planning. Typical accuracy ranges from –20% to –50% on the low side, and +30% to +100% on the high side (AACE 18R-97).
- Class 4 – Feasibility Study: Prepared at 1–15% design completion, when major systems are defined but details are still lacking. Accuracy ranges from –15% to –30% on the low side, and +20% to +50% on the high side (AACE 18R-97).
Canadian (PSPC / CIQS / CCA)
- Class D Indicative Estimate: Based on a functional program or very early concept sketches. Used to establish the order of magnitude of costs. PSPC allows a design allowance of up to 20% (RAIC CHOP – PSPC Classes, CCA Cost Predictability Guide).
- Class C Schematic Design Estimate: Based on schematic design and a clear list of requirements. Often prepared when the design is about 33% complete. PSPC allows a design allowance of up to 15% (RAIC CHOP – PSPC Classes).
In simple terms:
- AACE Class 5 ≈ Canadian Class D
- AACE Class 4 ≈ Canadian Class C
Both systems are designed to give decision-makers a directional budget early in the process, not a fixed price. The difference lies in terminology and how accuracy is expressed.
Understanding these classifications is critical because it frames the conversation about accuracy, scope, and risk from the start. Once you know which class you are working in, you can set realistic expectations, which is important, because the demand for these early numbers is not going away any time soon.
Why Early Numbers Are Always in Demand
Owners, lenders, and project sponsors expect cost figures long before a project reaches full design. This is not about impatience; it is driven by practical needs. At Class 5 or Class 4, an early estimate can unlock critical next steps such as securing investor interest, applying for funding, or gaining board approval. Without it, progress stalls.
Often, the design team is still working in broad strokes. Architects may be testing massing concepts, and engineers might be sketching system layouts without committing to final specifications. Meanwhile, commercial pressures are already in motion, and budgets must be shaped around an evolving scope.
In volatile markets, a timely rough order of magnitude can be more useful than a fully detailed number produced months later that no longer reflects reality. Owners prefer early adjustments over committing resources to a design that exceeds budget tolerance. The challenge for estimators is that once a figure is shared, it can take on a life of its own and become a reference point for all later discussions.
Because first numbers carry weight, clarity is essential. Defining the estimate class, documenting assumptions, and applying risk buffers are not optional; they are safeguards against scope creep, disputes, and misinterpretation.
Understanding why early numbers are needed is only the start. The real skill lies in building a defensible price without full drawings, using benchmark data, parametric methods, and well-judged allowances to bridge the gaps.
What Class 4 and Class 5 Estimates Really Mean
When a design package is little more than a concept, detailed quantity take-offs are not possible. The role of the estimator is to work with the information available and fill in the gaps using data, logic, and professional judgment. The approach changes depending on whether you are producing a Class 5 estimate or a Class 4 estimate.
Class 5 estimates, representing the rough order of magnitude stage at 0–2% design, rely on high-level methods such as:
- Capacity-factored estimating: starting with the cost of a similar project and adjusting for capacity using scaling factors to reflect economies or diseconomies of scale.
- Parametric models: applying unit cost measures such as $/MW for power generation or $/m² for buildings, based on historical data.
- Analogous estimating: using the cost of a similar completed project and adjusting for differences in size, complexity, location, and schedule.
- High-level allowances: assigning lump sums for scope items that are known to be required but are not yet designed.
- Minimal take-offs: measuring only key dimensions for major cost drivers from concept sketches.
At this stage, accuracy is limited. In AACE terms, expect roughly –20% to –50% on the low side and +30% to +100% on the high side. In Canadian Class D terms, this equates to about ±20–30% design allowance.
Class 4 estimates, representing the feasibility stage at 1–15% design, allow for a more refined approach, often using:
- Parametric estimating with refined parameters: breaking down the model by system or work package and applying more specific cost drivers.
- Major system quantity take-offs: measuring preliminary quantities for key structural elements, earthworks, or major equipment from schematic drawings.
- Assembly-level estimating: applying unit rates for defined elements, such as per tonne of steel, per linear metre of piping, or per square metre of floor area.
- Early vendor budget pricing: obtaining budgetary quotes for major items to replace allowances with real numbers.
- Risk-based contingency: setting contingency using a risk register or simulation rather than a flat percentage.
When project capacity differs from your benchmark, adjust the parametric rate before applying it. Begin with the base rate from the benchmark (total cost divided by capacity) and apply a scale factor. Larger projects often see lower unit rates due to shared infrastructure and bulk procurement, while smaller projects may experience the opposite. For example, a 100 MW plant built for $1.4 million per MW might scale to $1.45 million per MW for an 80 MW plant, or down to $1.35 million per MW for a 150 MW plant. Always validate adjusted rates against market feedback.
Where details remain incomplete, provisional allowances prevent underpricing. Record the basis for each allowance so you can justify it later.
Even at this stage, market checks are invaluable. A quick conversation with a supplier or subcontractor can confirm that your rates are realistic.
Early-stage estimating is not guesswork. It is the process of combining partial design data with the best available cost intelligence and applying the right methodology for the level of design definition. Whether preparing a Class 5 or Class 4 estimate, the objective is the same. Produce a number that reflects the known scope while accounting for the uncertainty still ahead.
How to Build a Price Without Complete Drawings
When design information is thin, you need to anchor your estimate to something tangible. The best way to do that is to identify the project’s dominant cost drivers and use them as the backbone for your pricing. Let’s look at two examples, one for buildings and one for industrial projects, to see how this works in practice at Class 5 and Class 4.
Example 1: Building Project
At Class 5, you might only know the gross floor area and basic construction type. In this case, the cost per square metre from a relevant benchmark is your starting point. If your benchmark is a 12,000 m² office building completed last year at $3,200/m², you:
- Adjust for location using regional cost indices.
- Apply escalation to bring costs to current pricing.
- Add or subtract for known differences (e.g., underground parking, higher façade glazing ratio).
If the planned building is 9,000 m², multiply your adjusted unit rate by the gross area to get the base construction cost. Then layer in allowances for site work, landscaping, and mechanical/electrical systems if these are not fully captured in the m² rate.
At Class 4, schematic drawings might provide preliminary layouts and elevations. You can now break the m² cost into assemblies:
- Structural frame cost per tonne based on span and floor count.
- Envelope cost per m² of wall area, adjusted for cladding type.
- Mechanical system cost based on floor area and system type (e.g., VRF vs. rooftop units).
This allows you to tweak specific elements without relying on a single blended m² rate.
Example 2: Industrial Project with Equipment-Based Cost Drivers
At Class 5, you often start with a key performance or capacity metric; for example, tonnes per year for a processing plant, or installed megawatts for a power facility. If your benchmark is a 50,000 t/year plant that cost $180 million, you:
- Calculate the base unit cost ($/t/year = $180M ÷ 50,000 = $3,600/t/year).
- Apply a scaling factor for the new capacity. If the proposed plant is 60,000 t/year, and your exponent is 0.85, the adjusted cost is:
- $180M × (60,000 ÷ 50,000)^0.85 ≈ $205M.
- Add lump-sum allowances for site-specific items like bulk earthworks or utility tie-ins.
At Class 4, preliminary P&IDs and general arrangement drawings might identify major process equipment. You can now:
- Get budget pricing from vendors for large-ticket items (compressors, kilns, turbines).
- Apply installation factors (equipment cost × installation multiplier) to estimate installed cost.
- Develop preliminary quantities for supporting systems (pipework lengths, electrical cable tray runs) using schematic layouts, then price at system-level unit rates.
Why this approach works
By centring the estimate on the project’s primary cost drivers, m² for buildings, capacity or equipment for industrial plants, you keep the early-stage number tied to measurable quantities rather than a guess. At Class 5, those quantities are broad and come mostly from benchmarks; at Class 4, they are refined with schematic-level detail and early vendor input.
Understanding and Applying Scaling Factors in Early-Stage Estimates
When your project’s capacity is different from your benchmark, you need a way to adjust the cost without starting from scratch. That is where a scaling factor, also called a capacity exponent, comes in.
A scaling factor reflects the relationship between project size and total cost. In most projects, costs do not increase in a straight line with capacity. Doubling the capacity rarely doubles the cost, because certain expenses, like design, mobilization, and infrastructure, are fixed or only partially variable. This is the principle of economies of scale.
The scaling formula:
C2 = C1 × (Q2 / Q1)^x
Where:
- C2 = estimated cost of the new facility
- C1 = known cost of the reference facility
- Q2 = capacity of the new facility
- Q1 = capacity of the reference facility
- x = scaling factor (capacity exponent)
Typical scaling factor ranges:
- Buildings: 0.9–1.0 (costs scale nearly linearly with area; economies of scale are modest)
- Industrial plants/process equipment: 0.6–0.85 (lower factors mean stronger economies of scale)
- Utilities and infrastructure: 0.5–0.7 (significant shared costs make larger capacities more cost-efficient)
How scaling factors are determined:
- Historical project data: compare costs and capacities of similar completed projects and solve for x using the formula.
- Industry publications: references like AACE, process engineering guides, and sector-specific handbooks list common scaling factors.
- Vendor input: manufacturers and suppliers often know the cost–capacity relationships for their products.
- Engineering judgment: in the absence of data, use typical ranges from similar work and adjust for your project context.
Example in practice:
You have a benchmark: a 100 MW power plant built for $140 million. You are estimating a 150 MW facility. Industry data suggests a scaling factor of 0.82.
C2 = 140 × (150 / 100)^0.82
C2 ≈ 140 × 1.39 = 194.6 million
The cost increases by 39%, not 50%, because of shared systems and efficiencies at the larger scale.
Why this matters for Class 5 and Class 4 estimates:
- Class 5: Scaling factors allow you to adapt costs from a completed project to a new capacity when little else is known.
- Class 4: With more design definition, you can still use scaling for major systems, but refine it with preliminary quantities and vendor budget pricing.
Document the source of your scaling factor; whether it came from internal data, published references, or vendor advice. This will make your estimate defensible when capacity changes are questioned later.
Using Risk Buffers to Protect the Estimate
No matter how well you build an early-stage estimate, design and scope will change. A solid risk buffer is what keeps your number from collapsing when that happens. For Class 5 and Class 4 estimates, the size and structure of that buffer depend on the project type, the maturity of the design, and the volatility of the market.
For the building example:
At Class 5, most of your cost is anchored to a cost-per-square-metre benchmark. That figure hides a lot of unknowns: foundation depth, mechanical system type, façade complexity. A broad contingency, often in the range of 20–30% of the base estimate, is appropriate here. It absorbs changes like a thicker slab, a switch from precast to cast-in-place, or an expanded mechanical plant.
By Class 4, schematic drawings start revealing those decisions. Contingency can be reduced, but still needs to cover variables like interior fit-out level, unforeseen site conditions, or market-driven changes in finishes. A more targeted approach works here:
- Risk register to identify potential changes (e.g., HVAC system upgrade, additional parking levels).
- Assign a probability and cost impact to each.
- Add the weighted totals to determine a realistic contingency.
For the industrial equipment example:
At Class 5, the base estimate is often a scaled figure from a benchmark facility. The risk here comes from equipment specs that are still in flux and installation conditions that are undefined. Contingency is usually higher,25–35% of the base, to cover changes in equipment capacity, material selection, or layout that could drive up steel tonnage, piping, or electrical systems.
By Class 4, P&IDs and general arrangements start locking down equipment counts and major dimensions. Contingency can be more focused:
- Assign higher percentages to still-undefined systems (e.g., fire protection, instrumentation).
- Use early vendor budget pricing to reduce contingency on major equipment.
- Reserve some allowance for construction risks like crane access, modularization feasibility, or unexpected underground obstructions.
Visible vs. embedded contingency
Some clients prefer to see contingency as a separate line item; others expect you to carry it within your unit rates or allowances. Whichever you choose, document the logic. A transparent contingency discussion early on is easier than explaining overruns later.
Why this matters
For both project types, a risk buffer is not just a safety net, it’s a planning tool. It protects you from absorbing the cost of changes you could not predict and gives the client a realistic picture of the uncertainty ahead. Without it, you are gambling that the early design will hold perfectly, which rarely happens in the real world.
Mistakes That Can Sink an Early Estimate
Early-stage estimates are meant to be directional, but certain mistakes can turn them into landmines. Most are avoidable if you know where they hide. Here are the most common pitfalls that trip up Class 5 and Class 4 estimating.
- Using outdated cost data. Historical benchmarks are only valuable if they reflect current market conditions. Steel prices, labour rates, and equipment costs can shift dramatically in a few months. If your benchmark is more than a year old, apply escalation or, better yet, update it with fresh supplier and subcontractor checks.
- Missing indirect costs. It’s easy to focus on direct construction costs and forget the indirects: mobilization, temporary works, permitting fees, design support, and project management. At Class 5, these are often allowances; by Class 4, they should be tied to actual scope definitions or early vendor input.
- Ignoring site conditions. Soil quality, access restrictions, weather windows, and environmental constraints can change productivity and cost. At Class 5, you may only know the general location, so use conservative productivity factors. By Class 4, preliminary geotech and site logistics plans should inform your unit rates and durations.
- Underestimating escalation. Market escalation is not just inflation, it’s driven by supply chain bottlenecks, trade shortages, and commodity spikes. At early stages, carry an escalation allowance that reflects the likely timeline to construction start, not just today’s prices.
- Overconfidence in incomplete quantities. At Class 4, early quantity take-offs are useful, but they are still based on incomplete design. Resist the urge to treat them like final numbers. Maintain allowances for undefined scope and keep contingencies proportional to the level of certainty.
- Not documenting assumptions. If you don’t record what your rates include, why you chose certain benchmarks, and where you applied allowances, you lose the ability to defend your number later. In early estimates, your backup is as important as the number itself.
- Dropping contingency too early. Stakeholders love to see contingency shrink as the design develops, but dropping it before major risks are retired is asking for trouble. Keep contingency tied to actual risk exposure, not just project stage.
Why this matters
Most early estimates don’t fail because the math was wrong; they fail because key risks were ignored, scope was assumed instead of defined, or old numbers were recycled without adjustment. Avoiding these mistakes is less about complex estimating techniques and more about disciplined, transparent practice.
How to Explain the Number to a Client
A Class 5 or Class 4 estimate is not just a price; it’s a story. The client needs to understand where it came from, what it includes, and how confident you are in it. If you leave them with only the final figure, you invite unrealistic expectations.
- Start with the purpose of the estimate. Make it clear that early estimates are for feasibility and decision-making, not for signing contracts. Explain whether it is Class 5 (concept screening, 0–2% design) or Class 4 (study or budget planning, 1–15% design) so they understand the level of definition.
- Walk through the methodology. Briefly describe how you arrived at the number: benchmarks, parametric models, scaling factors, allowances, and any preliminary quantities. Keep the language plain; you are building confidence, not showing off technical jargon.
- Highlight key cost drivers.
- Identify the two or three big-ticket items that make up most of the cost. For a building, it might be structure, envelope, and MEP systems. For an industrial facility, it might be process equipment, foundations, and bulk materials. This shows that you understand what matters most in the budget.
- Show what is included, and what is not. Clients often assume “the estimate covers everything.” Spell out the scope covered in your number and list any exclusions, such as land acquisition, certain permits, or specialist systems. This prevents disputes later.
- Be upfront about contingency and escalation. Explain that contingency is not “extra money to spend” but protection against the unknowns in an incomplete design. If you’ve added escalation, note the basis: market trends, project timeline, or supplier advice.
- Use visuals when possible. Charts, graphs, or a simple cost breakdown pie chart can make the number more digestible. Even for technically minded clients, seeing how the cost is distributed helps reinforce the logic.
- Tie it back to decision-making. End the conversation by connecting the estimate to the next step. For Class 5, that might mean deciding whether the concept is viable enough to study further. For Class 4, it might mean refining scope, seeking funding, or moving to detailed design.
Why this matters
When clients understand the “why” behind the number, they are more likely to trust it, and less likely to be surprised later. Your job is not just to calculate; it is to communicate clearly and manage expectations from day one.
Practical Strategies for Pricing with Limited Scope
When the scope is fuzzy and the drawings are thin, the challenge is not just building a number, it is building a defensible number. Here are strategies that keep your early pricing on solid ground:
- Build and maintain reliable data sources. A personal database of historical costs is worth its weight in gold. Track actuals from completed projects, breaking them down by labour, materials, and equipment. Keep it tagged by project type, size, and location so you can filter and compare later.
- Set realistic escalation assumptions. Prices do not stay still between an early estimate and actual procurement. Use published construction cost indices, recent supplier trends, and your own procurement experience to project realistic escalation. Document the basis for your escalation rate.
- Create repeatable conceptual models. For project types you price often, develop templates or parametric models. These should include common scope items, default productivity rates, and scalable cost drivers (e.g., building area, equipment throughput, length of pipeline). The goal is speed without sacrificing logic.
- Validate with multiple methods. If possible, run your estimate using two different approaches; for example, a parametric model and a benchmark check. When the results align within reason, you know your base is solid. When they do not, you know you need to dig deeper.
- Never skip contingency. Contingency in early estimates is not a luxury; it is a necessity. The less defined the scope, the higher the contingency should be. Align it with industry ranges for Class 5 or Class 4 estimates, and explain exactly what it covers.
A Real-World Example of a Class 4 Estimate in Action
A mid-size industrial facility expansion provides a clear example of how early pricing can evolve without losing control of the budget.
At project start, the design was at 15% completion; just enough to outline the process equipment layout and rough building footprint. The initial Class 5 estimate was developed using a combination of parametric rates (based on plant capacity) and historical benchmarks from two similar projects. A contingency of 30% was carried to cover design unknowns.
As design advanced to about 35% completion, the estimate was upgraded to Class 4. Preliminary equipment specifications were available, structural layouts were defined, and site preparation requirements were clearer. This allowed the estimator to replace allowances with preliminary quantity take-offs for concrete, steel, and piping. Vendor budget quotes were obtained for key process equipment, reducing uncertainty in the largest cost drivers.
Throughout this process, every assumption, from escalation rates to soil condition allowances, was documented in the Basis of Estimate. When unexpected design changes surfaced, there was no debate about whether they were included in the earlier budget; the documentation made it clear. The result was a budget that stayed within 5% of the final award price, despite starting with incomplete information.
Takeaways for Smarter Early-Stage Pricing
Early-stage estimating is about direction, not precision. The best estimators use every tool at their disposal to build a credible number, protect it with well-reasoned buffers, and make sure the client understands exactly what is, and is not, included.
The key takeaways:
- Early estimates are decision tools, not final budgets.
- Use multiple methods to validate your numbers.
- Maintain a clean, current database of costs for benchmarks and parametric models.
- Apply contingencies based on the actual level of design definition.
- Document every assumption so there are no surprises later.
When you approach Class 5 and Class 4 estimates with this discipline, you give clients what they truly need, not a false sense of precision, but a reliable foundation for moving the project forward with confidence.
