A basis of estimate is a document that accompanies a cost estimate and describes the scope it covers, the pricing basis, the methods used, and the qualifications, assumptions, inclusions and exclusions on which it relies.
In practice the basis of estimate allows anyone reading the figures to understand what has and has not been priced and how reliable the numbers are. It is particularly important on large or phased projects where estimates are reviewed by funders, boards or assurance teams, and where the estimate will be revisited at later stages. A clear basis of estimate also makes it much easier to explain movements between successive estimates.
- Design information and drawings relied on, with revision numbers.
- Source of rates, base date and allowances for risk and inflation.
- Key assumptions, exclusions and any items priced provisionally.
Related terms: cost estimate, assumptions, exclusions, base date.
