Cost Estimate Definitions
The current Treasury Board (TB) classification definitions are as follows:
An Indicative Estimate: is an estimate that is not sufficiently accurate to warrant TB approval as a cost objective and provides a rough cost projection used for budget planning purposes in the early stages of concept development of a project. It is usually based: on an operational statement of requirement (SOR), a market assessment of products and technological availability that would meet the requirement and other considerations such as implementation, life cycle costs and operational savings.
Indicative Estimates are used to seek Preliminary Project Approval (PPA) and Lease Project Approval (LPA) - Policy on the Management of Projects.
A Substantive Estimate is one of high quality and reliability and is based on:
4.1 detailed system and component design, design adaptation, work plans and drawings for components, construction or assembly, and installation. It includes site acquisition, preparation and any special requirements estimates. Contingency funding requirements must be justified based on line-by-line risk assessments, including market factors, industrial capability and labour considerations;
4.2 all significant and identifiable deliverables, as well as the costs of the government's contribution to employee benefit plans (20 percent of all salaries charged to the project);
4.3 all agreed objectives, including those resulting from procurement review; and,
4.4 market assessment, where acquisition is through lease, lease purchase or capital lease. The provisional allowance for fit-up or special tailoring requirements will be subject to review and possible revision at the contract approval stage.
Substantive Estimates are used to seek Effective Project Approval (EPA) - Policy on the Management of Projects.
Real Property Branch (RPB) Estimating Process:
For complex or sizeable projects, five categories of estimates are prepared in RPB. The process begins with the development of an initial estimate that is further developed during the early phases of the project. It is recommended that Public Services and Procurement Canada (PSPC) Cost Planners be involved in preparing overall project budgets for funding submissions, particularly for projects that are more complex than general-purpose office or warehouse space. Estimates should generally differentiate between base building and fit-up costs, as well as all site, PSPC, consulting, other contracts and risk potential costs.
Broad Cost Projection: based on historical data from similar projects, indicates a budget for resources to develop a project up to PPA as well whether or not total project costs are expected to exceed $1 million. This is not a construction estimate.
Class 'D' (Indicative) Estimate: to be in unit cost analysis format (such as cost per m² or other measurement unit) based upon a comprehensive list of project requirements (i.e. scope) and assumptions; the Class D estimate is evolved throughout the phases of the Project Identification Stage, finally being incorporated into the cash flows in the Analysis Phase; for more complex projects such as laboratories, elemental cost analysis and the input of specific disciplines may be required; the Class D Indicative estimates developed during the National Project Management System (NPMS) Feasibility Phase shall be revisited with cost planners in the Analysis Phase before finalizing.
Class 'C' Estimate: to be in elemental cost analysis format latest edition issued by the Canadian Institute of Quantity Surveyors and based on a comprehensive list of requirements and assumptions, including a full description of the preferred schematic design option, construction/design experience, and market conditions; Class C estimates are developed during the NPMS Design Phase
Class 'B' (Substantive) Estimate: to be in elemental cost analysis format latest edition issued by the Canadian Institute of Quantity Surveyors and based on design development drawings and outline specifications, which include the design of all major systems and subsystems, as well as the results of all site/installation investigations; Class B estimates are developed during the NPMS Design Phase;
Class 'A' (Pre-Tender) Estimate: to be in both elemental cost analysis format as well as trade divisional format latest edition issued by the Canadian Institute of Quantity Surveyors and based on completed construction drawings and specifications prepared prior to calling competitive tenders. The Class 'A' Estimate is generally expected to be within 5% to 10% of the actual contract award price for new construction. Tendering risks should be included in the project risk plan and costed accordingly. The accuracy of Class 'A' estimates can be influenced by many factors, including complexity of project, volatile market, remote locations, tight schedules, and unclear contract documents; Class 'A' estimates are prepared during the NPMS Implementation Phase and can be a more accurate Substantive Estimate, depending on the complexity of the project;
Forms, samples and checklists
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