A conceptual estimate is an assessment of the cost or value of a project based on conceptual designs, rather than on pricing construction documents, and is considered in response to the owner’s statement of requirements or performance criteria.
Conceptual estimates play a very important role in the owner’s decision-making process, and are essential to the design-build process. One of the concepts of design-build is that, since the design-builder is responsible for both design and construction, it would be better able to determine, manage, and control project costs. Since design and construction are carried out under one contract, a conceptual estimate is used when the project is initially under consideration to establish a budget and to assess the feasibility of the project and help the owner decide whether or not the project should proceed.
Conceptual estimates are based on conceptual design information, including general characteristics such as size, shape, location, material selection, etc., and by necessity must include all items necessary to complete a project, whether or not explicitly shown or specified. The objective of a conceptual estimate is to develop a realistic project budget to ensure that funds allocated to a project are sufficient. It is important to understand the intent of the design in order to foresee all cost implications. Conceptual cost methodology typically includes the use of single-unit cost methods during the very early stages of concept and design, and multiple-unit cost methods thereafter as the design evolves.