What is a basis of estimate?
AACE International’s Recommended Practice 34R-05 says a well-written BOE states the purpose of the estimate, the project scope, pricing basis, allowances, assumptions, exclusions, cost risks and opportunities, and any deviations from standard practices. It travels with the estimate so that someone who did not build the number can follow it.
What goes in a basis of estimate
| Section | What it says |
|---|---|
| Purpose and class | Why the estimate was prepared and how detailed it is |
| Scope | What is included, by division or trade |
| Documents | Drawings, specifications and addenda priced, with dates |
| Quantities | How they were measured and by whom |
| Pricing basis | Where labor, material, equipment and subcontract prices came from |
| Allowances | Amounts carried for items not yet defined |
| Assumptions | Conditions the price depends on |
| Exclusions | What is not in the number |
| Contingency and escalation | How risk and price changes over time are covered |
| Risks and opportunities | What could move the number either way |
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Get a fixed quoteBasis of estimate example: a tenant fit-out drywall estimate
- Purpose: bid estimate for the drywall and framing subcontract.
- Scope: metal stud partitions, gypsum board, finishing to the levels in section 09 29 00, acoustical insulation in rated walls.
- Documents: architectural sheets and specification sections listed by number and date, addenda 1 and 2.
- Quantities: measured by wall type from the floor plans and partition schedule; heights from the sections.
- Pricing basis: material from current supplier quotes; labor at the company’s production rates and wages.
- Allowances: none.
- Assumptions: normal working hours; owner provides a clear floor.
- Exclusions: firestopping, ceilings, painting.
- Risks: partition heights not shown in two areas; listed as open questions.
Free basis of estimate template (Word)
The download above is a Word template with each section as a heading and a prompt under it. Fill it in as you build the estimate, not after. It carries the Bidmere name and site address in the footer; delete them if you like.
Basis of estimate on federal and public work
Agencies and owners that ask for cost proposals often want each cost element explained, which is what a BOE does. Follow the solicitation’s own instructions first. See federal negotiated proposals and the sample estimate for how assumptions and exclusions are written.
Frequently asked questions
What is a basis of estimate?
The document that explains a cost estimate: purpose, scope, documents priced, how quantities and prices were set, allowances, assumptions, exclusions, contingency and risks.
Who prepares the basis of estimate?
The estimator who builds the number, at the same time as the estimate.
Is there a basis of estimate template?
Yes. The free Bidmere template is a Word file with one heading and prompt per section.
What is the difference between assumptions and exclusions?
An assumption is a condition the price depends on; an exclusion is work that is not in the price at all.