Preliminary Estimate

A Preliminary Estimate in the construction industry is an initial, rough calculation of the total costs associated with a proposed construction project. This estimate is based on early design information, project scope, and historical data. It provides a ballpark figure for the project’s overall cost, helping clients and project teams make informed decisions about project feasibility, budget allocation, and the need for any design adjustments.

Key Components:

  • Early Design Information: Utilises initial design concepts and sketches to estimate costs.
  • Project Scope: Considers the overall scope of the project, including size, complexity, and intended use.
  • Historical Data: Relies on cost data from similar past projects to inform the estimate.
  • Cost Categories: Includes broad categories such as labor, materials, equipment, and overheads.
  • Contingency Allowance: Often includes a contingency to account for unknowns and uncertainties at this early stage.


  • Feasibility Assessment: Helps determine whether a project is financially viable before committing significant resources.
  • Budget Allocation: Provides a basis for initial budget allocation and financial planning.
  • Informed Decision-Making: Supports early decision-making regarding project scope, design, and funding requirements.
  • Design Adjustments: Allows for early identification of potential cost issues, enabling adjustments to design and scope to stay within budget.


  1. Gather Initial Information: Collect early design sketches, conceptual plans, and project requirements.
  2. Define Project Scope: Outline the basic scope and objectives of the project.
  3. Analyze Historical Data: Review costs from similar completed projects to inform the estimate.
  4. Estimate Costs: Calculate rough costs for major categories such as labor, materials, equipment, and overheads.
  5. Include Contingency: Add a contingency allowance to cover uncertainties and potential risks.
  6. Review and Adjust: Review the preliminary estimate with stakeholders and make any necessary adjustments.

Applications in Construction:

  • New Project Proposals: Used to evaluate the feasibility and budget requirements for proposed new projects.
  • Project Planning: Helps in the early stages of project planning to set financial expectations and guide detailed design work.
  • Funding Requests: Provides a basis for initial funding requests or discussions with investors and lenders.
  • Design Evaluation: Assists in evaluating different design options and their associated costs.