Conceptual Construction Estimating: Budgeting Without Full Drawings

Conceptual estimating, also called early-stage or order-of-magnitude estimating, forecasts construction cost before the design is developed enough for a detailed takeoff. Owners and developers use it to decide whether a project is feasible, to size a loan, and to compare design options while changes are still cheap.

A conceptual estimate is not a less careful detailed estimate. It is a different product, with different methods, and its value depends on stating clearly how uncertain it is.

When Conceptual Estimates Are Used

• Feasibility and pro formas: can the project work at the expected rent, sale price or budget?
• Financing: lenders often need a construction budget before design is complete
• Design option comparison: steel vs. concrete frame, number of stories, parking above or below grade
• Budget setting: establishing a target cost the design team designs to
• Early value engineering: testing system choices before they are drawn in detail

Estimate Classes and Expected Accuracy

AACE International’s Recommended Practice 18R-97 defines five estimate classes based on how complete the project definition is. The ranges below are the ones commonly cited from 18R-97, which was written for the process industries. AACE publishes a separate practice (56R-08) for building and general construction with its own ranges, so treat these as a framework, not a guarantee.

Class	Project definition (approx. % complete)	Typical use	Typical methods	Accuracy range (AACE 18R-97)
Class 5	0% to 2%	Concept screening	Capacity factored, parametric, judgment	Low: -20% to -50%; High: +30% to +100%
Class 4	1% to 15%	Study or feasibility	Equipment factored or parametric	Low: -15% to -30%; High: +20% to +50%
Class 3	10% to 40%	Budget authorization or control	Semi-detailed unit costs with assembly-level line items	Low: -10% to -20%; High: +10% to +30%
Class 2	30% to 75%	Control or bid/tender	Detailed unit costs with forced detailed takeoff	Low: -5% to -15%; High: +5% to +20%
Class 1	65% to 100%	Check estimate or bid/tender	Detailed unit costs with detailed takeoff	Low: -3% to -10%; High: +3% to +15%

Two things stand out. First, the ranges are skewed: early estimates are more likely to come in low than high. Second, each class has a range of ranges; where a particular estimate falls depends on the project’s risk and the quality of the data behind it.

Method 1: Square-Foot Estimating

The square-foot method multiplies gross building area by a cost per SF for a similar building type, then adjusts for location, time and specific differences.

Sources for SF costs include your own completed projects (usually the best source) and published data such as RSMeans square-foot models from Gordian. Published models describe a specific building with a stated size, story height and quality level, so adjust when your project differs.

Worked example: square-foot budget

Example: a 3-story, 42,000 SF office building. All inputs are illustrative assumptions.

1. Base cost: national average basis of $285/SF (illustrative) 42,000 SF x $285 = $11,970,000
2. Location adjustment with a city cost index of 106.2 (hypothetical): Adjusted cost = national cost x CCI / 100 = $11,970,000 x 106.2 / 100 = $12,712,140
3. Escalation to the midpoint of construction, 18 months out, at an assumed 4% per year, linear: 4% x 18 / 12 = 6.0%; $12,712,140 x 0.06 = $762,728.40 Escalated cost: $13,474,868.40
4. Design contingency of 15% for undeveloped scope: $13,474,868.40 x 0.15 = $2,021,230.26 Total: $15,496,098.66, presented as about $15.5 million

If you judge this a Class 5 estimate at the narrowest end of the 18R-97 range (-20% / +30%), the range to report is:

• Low: $15,496,098.66 x 0.80 = $12,396,878.93, about $12.4 million
• High: $15,496,098.66 x 1.30 = $20,144,928.26, about $20.1 million

Reporting the range alongside the point estimate is what makes a conceptual budget honest. A single number with no range invites the owner to treat it as a bid.

Method 2: Assembly (Systems) Estimating

The assembly method prices major building systems per SF of building area or per unit of the system itself (SF of wall, SF of roof). It is usually organized by UniFormat (ASTM E1557) rather than CSI MasterFormat, because UniFormat groups cost by building element instead of by material or trade.

Worked example: assembly cross-check

Same 42,000 SF office, national average basis, illustrative costs:

UniFormat element	$/SF of building
A Substructure	$14
B10 Superstructure	$32
B20 Exterior enclosure	$48
B30 Roofing	$9
C Interiors	$38
D10 Conveying	$7
D20 Plumbing	$11
D30 HVAC	$36
D40 Fire protection	$5
D50 Electrical	$30
Building direct cost	$230

• Direct cost: 42,000 x $230 = $9,660,000
• General conditions, 9%: $9,660,000 x 0.09 = $869,400; subtotal $10,529,400
• Overhead and profit, 6%: $10,529,400 x 0.06 = $631,764; total $11,161,164
• Per SF: $11,161,164 / 42,000 = $265.74/SF

Against the $285/SF used in the square-foot method, the assembly result is about 7% lower (($285 - $265.74) / $285 = 6.8%). That gap is not an error to hide; it is a prompt to ask why. Perhaps the SF model assumes a higher-quality enclosure, or the assembly estimate is missing sitework (UniFormat G), which is excluded from both here. Running two methods and reconciling them is one of the most useful checks available at this stage.

Method 3: Parametric and Unit-Based Estimating

Parametric estimates use a cost driver other than area, based on historical projects:

• Cost per bed (hospitals, senior living)
• Cost per student or per classroom (schools)
• Cost per parking space (garages)
• Cost per unit or key (apartments, hotels)

These work well for screening but need a good historical dataset of similar buildings, adjusted to a common location and date.

Documenting a Conceptual Estimate

• Basis of estimate: drawings, narratives and dates used
• Gross area and how it was measured
• Pricing sources and the date of each
• Location index and escalation rate, with the midpoint date
• Design contingency and construction contingency, shown separately
• Inclusions and exclusions: sitework, soft costs, FF&E, land, financing, permits
• Estimate class and accuracy range

Checklist

• Estimate class identified and range reported
• At least two methods used and reconciled
• Location adjustment applied with a current index
• Escalation calculated to construction midpoint
• Contingency sized to design maturity
• Soft costs clearly included or excluded
• Assumptions written down for the next estimate to update

Common Mistakes

• Presenting a single number without a range.
• Using a SF cost from a very different building size or height.
• Omitting sitework, utilities or parking, which can be a large share of cost on suburban projects.
• Double counting contingency by using SF costs that already include it.
• Mixing construction cost and total project cost (which adds design fees, permits, FF&E and financing).

How F&K Estimatings Can Help

We prepare conceptual budgets for owners, developers and design teams using square-foot and assembly methods with location-specific cost indexes, and we state the basis and assumptions so the budget can be updated as design develops. Our approach is described on our methodology page, and budgets are part of our cost estimating services. For more on pricing sources, see our 2026 construction cost guide and RSMeans guide, or check pricing.