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Construction cost estimating is not a one-time process. Rather, it evolves throughout the life of a project as design details are developed and refined. Early on, many details remain unknown—building systems haven’t been finalized, materials haven’t been selected, and the design is still taking shape. As a result, cost estimating happens in stages, with estimates becoming progressively more detailed and accurate as the project moves from concept through design and bidding.
Each stage of cost estimating provides Owners and project teams with clearer insight to guide decisions, manage budgets, and reduce financial risk. These stages help Owners answer key questions, such as:
In this article, we’ll walk through the 5 major stages of construction cost estimating and explain how each step helps refine project costs as the design develops.
An Order of Magnitude (also called Rough Order of Magnitude or ROM) estimate is the earliest stage of cost estimating. It is typically prepared during the initiation phase, when only limited information about the project is available.
At this stage, the project may consist of little more than a concept, such as building size, intended use, and location. Because the design has not yet been developed, the goal of an Order of Magnitude estimate is not precision, but to establish a reasonable cost range that helps Owners evaluate high-level financial feasibility and align early expectations regarding project scope and budget.
These early estimates often rely on factors such as:
While the accuracy range at this stage is broad, ROM estimates provide critical early insight. They help Owners determine whether to move forward, refine the project scope, or reconsider the investment altogether. In addition, these also help establish an initial budget framework and support early planning and decision-making.
As the project moves into early design, additional detail becomes available, allowing the initial estimate to be refined into a Conceptual Estimate.
At this stage, preliminary design information—such as early floor plans, elevations, and outline specifications—begins to define the project more clearly. Estimators can evaluate major building systems and develop a more structured understanding of how the design aligns with the project budget.
Conceptual Estimates are typically based on a combination of:
With this added detail, the estimate begins to reflect major project components, including structural systems, mechanical and electrical systems, and key architectural elements.
For Owners, this stage is a critical checkpoint. Conceptual Estimating helps:
Because key design decisions are being made during this phase, the conceptual estimate plays an important role in maintaining budget alignment and avoiding costly changes later in the project.
As the design progresses, cost estimates are updated at key milestones to reflect increasing levels of detail, accuracy, and alignment with the project budget.
During Schematic Design, the overall building layout, size, and major systems begin to take shape. The estimate at this stage provides a high-level evaluation of project cost and confirms that the general design direction remains aligned with the established budget. Accuracy typically improves to within approximately 10-15%.
As the design advances, building systems and materials are more clearly defined. The estimate becomes more detailed, often based on system assemblies rather than broad assumptions. This stage provides a more refined cost projection and represents a key opportunity to make design adjustments or implement value engineering before the project progresses further.
By the Construction Documents stage, drawings and specifications are nearly complete. Estimators can perform detailed quantity takeoffs, resulting in a highly refined estimate—typically within 3-5% accuracy. This estimate serves as a final budget check before the project is released for contractor bidding.
| Design Milestone | Typical Accuracy | What It Confirms |
|---|---|---|
| Schematic Design (SD) | ±10–15% | Overall layout, size, and major systems align with the established budget |
| Design Development (DD) | Moderate refinement | Cost based on system assemblies; key window for value engineering |
| Construction Documents / GMP (CD) | ±3–5% | Detailed quantity takeoffs; final budget check before bidding |
Once Construction Documents are complete, the project moves into the bidding phase, where contractors submit proposals to perform the work. Bid Evaluation involves comparing these bids against an independent cost estimate to determine whether the pricing is reasonable and consistent with the project scope.
This process typically includes:
An independent estimate provides Owners with a valuable benchmark to ensure they receive fair and competitive pricing. Depending on the procurement method, Owners can take this a step further through parallel estimating—a process in which an independent cost estimate is developed alongside the CM’s design/GMP estimates, for direct comparison and objective, third-party verification.
Even with careful planning, changes during construction are inevitable. As the project evolves, contractors may submit change orders requesting adjustments to the contract price.
Change Order Review involves evaluating these requests to confirm that costs accurately reflect the revised scope of work. It’s not just about checking the numbers—it’s about understanding what’s changing and whether the cost is justified. This process typically includes:
An independent review of change orders helps Owners avoid unnecessary costs, reduce the risk of overpayment, and maintain control over the project budget.
Each stage of construction cost estimating builds on the previous one, bringing more clarity to the project budget. As estimates are updated throughout planning, design, and construction phases, Owners gain better visibility into costs and can make more confident decisions.
At Concord, our independent cost estimating and cost management services support Owners at every stage of this process—helping teams establish realistic budgets, evaluate contractor pricing, and maintain cost control from concept through completion. For more information on construction cost estimating and how you can turn your vision into reality, contact The Concord Group.
The five stages are Order of Magnitude, Conceptual Estimate, Design-Phase Estimates (Schematic Design, Design Development, and Construction Documents/GMP), Bid Evaluation, and Change Order Review.
An Order of Magnitude estimate is the least precise stage. It establishes a broad cost range based on preliminary scope, size, and market conditions, used to test financial feasibility before design begins.
A Conceptual Estimate is based on early, preliminary design information such as floor plans and outline specifications. Design-Phase Estimates are updated at later milestones (Schematic Design, Design Development, and Construction Documents/GMP) with accuracy improving from roughly 10–15% to within 3–5%.
As the design develops, estimators gain access to more detailed drawings, specifications, and system information. Estimates are updated during Schematic Design (SD), Design Development (DD), and Construction Documents (CD) phases, improving accuracy from broad budget ranges to detailed projections that are often within 3–5% of actual costs.
Bid Evaluation compares contractor bids against an independent cost estimate to confirm that pricing is complete, consistent, and competitive before construction begins.
Change Order Review evaluates cost adjustment requests submitted during construction, confirming that costs accurately reflect the revised scope of work and protecting the project budget.
About The Author
Eamon Ryan is Chief Operating Officer at The Concord Group, specializing in construction cost estimating and cost management. With over two decades of experience across the U.S. and abroad, he oversees Concord’s cost management services and helps guide the firm’s overall growth strategy. Eamon is recognized for his expertise in delivering accurate, data-driven cost analysis that supports owners in making informed decisions on complex projects.
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The Concord Group is a development + construction consulting firm providing a comprehensive and fully integrated suite of project management controls that mitigate risk throughout the lifecycle of a project or capital program. We specialize in Owner’s Representation, Cost Estimating, Building Performance Services (including Commissioning, Facility Condition Assessments, and Sustainability Management), and Medical Equipment Planning.
Since 1996, our team of highly skilled construction cost consultants, project managers, owner representatives, cost estimators and engineers have successfully completed over 4,000 projects throughout the United States. We have built a reputation for delivering high quality, accurate and timely work for governmental agencies, healthcare organizations, institutional clients and architectural/engineering firms along with retail, residential and property development companies.
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