Class 5 Cost Estimate — definition
Earliest and least detailed AACE International cost estimate classification, typically accurate to a wide range and used for initial screening of concept-stage industrial projects.
AACE International defines five estimate classes, from Class 5 (concept screening, based on minimal engineering) to Class 1 (definitive, based on complete design). As a project progresses through feasibility and detailed engineering, estimate class improves and the expected accuracy range narrows.
Why it matters to industrial buyers
Understanding estimate class prevents decision-makers from treating an early, wide-range estimate as a firm budget, which is a common source of cost overrun disputes.
Key reference points
Typical accuracy range
Class 5 estimates are commonly quoted with an accuracy range on the order of -20/-50 percent to +30/+100 percent, though ranges vary by methodology.
Basis of estimate
Class 5 estimates are typically based on capacity-factored or analogous project data rather than detailed engineering.
Commonly confused with
Class 3 or Class 1 estimate
Later classes are based on progressively more complete engineering and design, narrowing the accuracy range as the project matures.
How it is used in practice
A concept study for a new processing plant is issued as a Class 5 estimate to support initial screening before detailed design.
Frequently asked questions
Can a Class 5 estimate be used for board approval?
It is generally used for initial screening only; most organisations require a more detailed estimate class before committing significant capital.
Who defines these estimate classes?
AACE International publishes widely referenced cost estimate classification guidelines used across process industries.
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Related terms
Feasibility Study
Structured assessment of the technical, commercial, financial and operational viability of a proposed industrial project before significant capital commitment is made.
Contingency Budget
Reserve of funds set aside within a project budget to cover identified and unidentified risks, cost estimate uncertainty and unforeseen changes during execution.
Business Case
Structured document that justifies a proposed capital investment by presenting its objectives, costs, benefits, risks and expected financial return to decision-makers.
Special Purpose Machine (SPM)
Special Purpose Machine (SPM) denotes equipment engineered for one defined process or product family rather than adapted from a standard catalogue design.
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Reference content only. Global B2B Group is independent of equipment manufacturers and financing institutions; definitions are provided for education and do not constitute engineering, financial or legal advice.