Types of Construction Estimates: Order of Magnitude to GMP Explained

The main types of construction estimates are conceptual (order of magnitude), square-foot, systems and assemblies, detailed unit-price, and the GMP or contract-value estimate. Gordian puts their accuracy at about 25%, 20%, 10-15% and 10%. Each type matches a stage of design, and a more detailed estimate needs more complete drawings.

This article is part of our construction cost estimating guide, which explains how these estimates fit into the full project lifecycle.

What are the five types of construction estimates?

Two vocabularies are in common use, and mixing them confuses owners. Gordian's RSMeans group names estimate types by method. The Association for the Advancement of Cost Engineering (AACE) classifies them by how well the project is defined. Both describe the same idea: the more design information you have, the tighter the range.

The Gordian figures are vendor guidance, published in September 2022, and have not been independently validated. Treat them as a sensible planning frame, not a guarantee.

What is a conceptual or order-of-magnitude estimate?

A conceptual estimate is a quick judgment made before design starts. It answers the question "Is this project in the right neighborhood?" Gordian says it is usually within about 25% and can be prepared in minutes, drawing on similar past projects and a handful of drivers such as size, building type and location.

Use it to screen sites, compare programs, and decide whether a project deserves funding for design. Do not use it to set a loan amount or a final budget. AACE's Class 5, the closest equivalent, can range from roughly -20% to -50% on the low side and +30% to +100% on the high side.

What is a square-foot estimate?

A square-foot estimate multiplies gross building area by a historical cost per square foot for similar buildings. It takes hours, not days, and Gordian puts it at roughly 20%. It works when you know the size, the building type and the use, but not the structure, facade or systems.

The weakness is what the average hides: site conditions, quality level, local labor and escalation. Our article on cost per square foot in construction shows why two buildings with the same area can differ by hundreds of dollars per square foot. A related technique, covered in parametric estimating in construction, uses other drivers such as beds or seats.

What is a systems and assemblies estimate?

Also called an elemental estimate, this type prices building systems rather than whole-building averages. It might price the structure, the exterior wall, the HVAC (heating, ventilating and air conditioning) system and the plumbing fixtures as separate assemblies, each with its own unit cost.

Gordian says systems and assemblies estimates come within 10-15% of final cost and take days. Secondary sources place the schematic-design band at roughly plus or minus 15-25% and design development at about plus or minus 15%. This is where the owner first sees which systems drive the budget, so it is the right point to test alternatives, such as two structural systems or two facade types, before they are locked in.

What is a detailed unit-price estimate?

A unit-price estimate counts project-specific quantities (cubic yards of concrete, linear feet of pipe, square feet of drywall) and multiplies each by a unit cost for labor, material and equipment. Gordian says it lands within about 10% and takes weeks. Secondary sources describe construction-document estimates at roughly 5-10%.

It requires nearly complete drawings and specifications. If the drawings are thin, the estimator fills the gaps with assumptions, and the accuracy falls back toward the systems level, regardless of the label on the estimate.

What is a GMP estimate?

A guaranteed maximum price is a contract term, not a different estimating method. In AIA's A133 construction manager agreement, the GMP is an amount the Contract Sum shall not exceed, where the Contract Sum equals the construction manager's fee plus the Cost of the Work. The GMP exhibit itemizes components such as allowances, the manager's contingency, alternates and the fee.

Because the cap is a commitment, a GMP estimate usually rests on documents at or near completion. Any gap between what the estimate assumed and what the drawings show becomes a negotiation. For the line items inside a GMP, see our construction budget breakdown.

How do AACE estimate classes compare?

AACE ranks estimates from Class 5 (concept screening) to Class 1 (check estimate). The expected accuracy ranges below are the commonly cited AACE class ranges.

Two cautions apply. AACE's practice 18R-97 was written for process industries, so building projects use these ranges as rules of thumb. One source also suggests complex or risky projects may run two to three times wider. The ranges also exclude scope additions that nobody had foreseen when the estimate was prepared.

Why do published accuracy ranges disagree?

Owners who compare sources find numbers that do not match, and the reason is basis. Gordian's figures are single plus-or-minus percentages tied to estimate method. AACE's figures are asymmetric ranges tied to the percent of project definition. Study guides and continuing-education material report yet another set: conceptual at roughly plus or minus 25-50%, schematic design at 15-25%, design development at about 15% and construction documents at 5-10%.

None is wrong. They describe different projects, different definitions of "complete" and different industries. When you cite an accuracy range in a board memo or a loan package, name the source and the estimate type, and state that the range is a planning benchmark rather than a promise.

What does an accuracy range mean in dollars?

Illustrative example: an owner of a 40,000 SF two-story medical office building in Phoenix receives a $24 million estimate. These figures are assumed for the arithmetic, not market data.

The same $24 million point estimate spans a $12 million window at the conceptual stage and a $4.8 million window at the unit-price stage. That difference is the money you hold as contingency. It is also the reason a lender or board should see the estimate type next to the number, not just the number.

Remember that the Gordian percentages apply symmetrically, while AACE's ranges lean upward. If your project is complex, has unknown subsurface conditions or sits in a fast-escalating market, plan for the high side of the range.

Which estimate should you use at each stage?

Match the estimate to the decision.

1. Deciding whether to proceed: conceptual estimate, with a wide range acknowledged openly.
2. Setting an initial budget: square-foot or parametric estimate, plus design contingency in line with typical contingency percentages by phase.
3. Choosing between design options: systems and assemblies estimate.
4. Confirming the budget before bid: unit-price estimate, ideally reconciled against an independent one.
5. Awarding the contract: lump sum or GMP built on the detailed estimate.

Owners with a rigorous process request estimates at set milestones. A City of Greenville, North Carolina, solicitation, for example, asks for independent estimates at 100% schematic design, 100% design development, 60% construction documents and 100% construction documents. For what usually moves between these checkpoints, read how construction estimates change.

Questions to ask whoever hands you an estimate

• Which type or AACE class is this, and what range do you attach to it?
• What drawings or program documents is it based on?
• What is excluded: site work, escalation, soft costs, owner-supplied equipment?
• How much contingency is included and how was it sized?

One caveat applies to every range in this article: the percentages are benchmarks from published sources, and costs vary by market and date. Your decisions should rest on a project-specific estimate.