Top Down Estimating Methods
Top down estimating is often used by a Client or Asset Owner.
It is used to develop an estimate at the very early stages of the design process, mainly at the planning stage where is scope is not clear. A concept estimate is often prepared using a top down method.
One top down estimating technique used by management is to estimate the total cost of a project from information available in a database of similar projects previously executed.
This database would consist of captured unit rates based on final costs and normalised. These rates are then applied to the quantities derived from the little information that exists, with a high level of contingency.
The cost drivers vary depending on asset type. For example, pump stations can be costed based on a $/kW or $/megalitre throughput approach. A waste water treatment plant can be costed on a $/megalitre or $/population.
This method contains a list of critical assumptions.
An estimate prepared using a top down method improves as the scope and design is matures.
Examples of estimates based on previous or similar projects include:
- Average house $/m2
- Average fence $/m
Top down estimating is used to determine order of magnitude in the early stages of the project initiation. It uses the actual cost from previous projects used as a basis for estimating costs of the current project.