Preliminary vs. Detailed Estimates: When to Use Each
How preliminary and detailed estimates differ by design stage, accuracy band and method, how to carry contingency at each step, and how owners and GCs should use them.
LEEDS Preconstruction Desk
Preconstruction advisors
Owners ask for a number before there are drawings, and contractors are expected to stand behind a number once there are. Between those two moments the estimate changes in method, accuracy and purpose. Knowing which type a project needs at each stage, and saying so plainly, prevents the most common preconstruction failure: an early budget treated as a bid, or a bid-level effort spent on drawings that are about to change.
What a preliminary estimate is for
A preliminary estimate, also called a conceptual, order-of-magnitude or budget estimate, exists to support a decision: whether to proceed, how big to build, which site to buy, or how much to borrow. It is built from parametric data such as cost per square foot by building type, cost per apartment unit, per hospital bed, per parking stall or per classroom, adjusted for location, size and the few known scope items that move the number. It takes days, not weeks, and it is explicitly a range. The deliverable is the number plus the assumptions, and the assumptions are the more valuable half.
What a detailed estimate is for
A detailed estimate exists to commit: to bid, to set a guaranteed maximum price, to buy out subcontractors or to validate a bid someone else submitted. It is built from a quantity takeoff of the drawings and specifications, section by section, with labor units, current material quotes, equipment, general conditions and markups applied line by line. It takes a week or more depending on size, it is only as good as the documents it is built from, and its accuracy is tight enough that a 3% miss is a problem.
Accuracy by design stage
Accuracy tracks document completeness more than estimator skill. The same estimator produces a ±25% number from a concept sketch and a ±4% number from a bid set, because the information simply is not there earlier. The bands below are the ones we use when setting expectations with owners; they are consistent with the industry classification systems but rounded to what matters in a budget meeting.
| Design stage | What you have | Estimate type | Expected accuracy | Contingency to carry |
|---|---|---|---|---|
| Concept or feasibility | Program, site, massing, building type | Preliminary: cost per SF or per unit | ±20% to ±30% | 15% to 20% |
| Schematic design (SD) | Floor plans, elevations, outline specs | Preliminary: system-level (UniFormat) with key quantities | ±15% to ±20% | 10% to 15% |
| Design development (DD) | Sized structure and MEP, finish schedules, draft specs | Hybrid: takeoff of major items, assemblies for the rest | ±10% | 5% to 10% |
| Construction documents (CD) | Complete drawings and specifications | Detailed: full takeoff by MasterFormat section | ±3% to ±5% | 2% to 5% |
| Bid or GMP set with addenda | CDs plus addenda, RFI responses, subcontractor quotes | Detailed, with leveled subcontractor bids | ±2% to ±4% | 1% to 3%, plus owner contingency |
Cost per square foot versus line items
The two methods are not competitors; they fit different stages. Cost per square foot works when the building is a recognizable type and your reference data is recent, local and adjusted for size and quality. It fails when the project has an unusual program, heavy MEP, a difficult site or a long schedule, because none of those show up in a square-foot average. A 60,000 SF medical office on a sloped site with a 400 kW generator is not the same cost per square foot as the one you built last year on flat ground, and a parametric number will not tell you that.
Line-item estimating catches those differences because it prices what is actually drawn. Its weakness is the reverse: it requires drawings, and applied to a schematic set it produces false precision. A 400-line estimate from SD drawings is still a ±15% number, however many decimal places it carries.
- The square footage, unit count and building type the number is based on, and the source of the reference data.
- The location factor and the pricing date.
- Major items included by allowance, such as site work, utilities and MEP system type.
- What is excluded: land, soft costs, FF&E, financing and owner contingency.
- The accuracy band and the design contingency carried inside the number.
Contingency: two kinds, and when to shrink them
Design contingency covers scope that is not drawn yet but will be. It belongs inside the estimate at every stage before CDs and should shrink as drawings progress, from 15–20% at concept to 2–5% at construction documents. Construction contingency covers the unknowns that remain after documents are complete: unforeseen conditions, coordination issues and owner changes. It is usually held by the owner, often 3–5% on new construction and 10% or more on renovation. The two should never be blended into a single percentage, because the owner cannot then see what is covering design growth and what is covering risk.
How owners use each type
Owners use preliminary estimates to make go or no-go decisions, size a loan, set a project budget and test design options against it. The number should arrive early enough to change the design, which means a budget estimate delivered after SD is approved has missed its purpose. Owners use detailed estimates to validate bids, negotiate a GMP, approve change orders and set the schedule of values. An owner who treats the preliminary number as the budget without carrying the stated contingency has made a decision the estimate did not support.
How general contractors use each type
General contractors use preliminary estimates in pursuit and preconstruction: to qualify a project, to give a design-build team a target, and to run cost models through SD and DD so the design lands on budget rather than needing value engineering at CDs. They use detailed estimates to bid, to buy out, to level subcontractor proposals against an independent number and to defend pricing to the owner. The transition usually happens at DD, when there is enough drawn to take off the structure, envelope and major MEP, and assemblies cover the rest.
An early number is a decision tool. A bid is a commitment. Everyone in the room needs to know which one they are holding.
Moving from preliminary to detailed without losing the thread
- Carry the same work breakdown forward, in UniFormat through DD and mapped to MasterFormat at CDs, so each update reconciles to the last.
- Replace allowances with takeoff quantities as each system is drawn, and document the variance from the previous estimate by system.
- Reduce design contingency only against resolved unknowns, and report the remaining contingency separately from the base estimate.
- At CDs, re-quote materials with a pricing date and level subcontractor bids against the detailed estimate before committing to a GMP or bid.
Choosing the right one
If the question is whether, or how big, use a preliminary estimate and state the band. If the question is how much, exactly, and the drawings are complete enough to answer it, use a detailed estimate. If the drawings are somewhere in between, say so, deliver a hybrid, and resist the pressure to present it as either. The cost of the wrong estimate type is not the estimating fee; it is a project that is either overbuilt for its budget or committed at a number nobody could have known.
