Class 2 Cost Estimate: Control Estimate with Resource-Loaded WBS
The Class 2 estimate is the cost baseline for project control — built on detailed quantities, market labor rates, and equipment rental data. This is the estimate you manage against.
How Kpex implements Class 2 following AACE 18R-97
Kpex 2G guides the cost engineer through every step of the Class 2 workflow — from scope input to indexed, location-adjusted output — enforcing the AACE recommended methodology at each stage. The platform validates inputs, applies the correct indices automatically, and generates a documented Basis of Estimate aligned with AACE 18R-97.
What Is a Class 2 Cost Estimate?
The Class 2 Control Estimate is the cost baseline against which project execution is managed. Prepared when engineering is 30–70% complete, it achieves an expected accuracy of −10% to +20% — tight enough to serve as the financial benchmark for earned value management (EVM) and change control.
The defining feature of a Class 2 estimate is that it is resource-loaded: every quantity is priced using actual market rates for labour crews, construction equipment rental, and purchased materials — not factors or ratios. Nothing is estimated by analogy at Class 2.
What Changes from Class 3 to Class 2?
| Dimension | Class 3 | Class 2 |
|---|---|---|
| Engineering complete | 10–40% | 30–70% |
| Quantity basis | Engineered + interpolated | Detailed takeoff from IFC drawings |
| Labour pricing | % of direct cost | Crew rates × productivity × hours |
| Equipment rental | Included in factor | Day/month rates from Z.3 database |
| Contingency | 10–20% | 5–15% |
| Primary use | Budget appropriation | Contract award, EVM baseline, change control |
Class 2 Workflow — Step by Step
Step 1 — Carry Forward the Class 3 WBS
The four-level WBS structure from Class 3 is inherited. However, quantities are now re-taken from Issued for Construction (IFC) or Issued for Review (IFR) drawings, replacing any interpolated or parametric quantities used at Class 3.
Step 2 — Detailed Material Takeoff
For each L4 WBS item, perform a full material takeoff:
- Piping: ISO drawings → linear metres by diameter/spec, fitting counts, valve list
- Civil: Foundation drawings → concrete volumes, reinforcement tonnage, earthwork volumes
- Electrical: SLD, cable schedules → cable metres by size, conduit lengths, equipment counts
- Instrumentation: Instrument index → loop counts, junction box quantities
- Structural: GA drawings → steel tonnage by section
Step 3 — Apply Labour Crew Rates (Z.2)
Each work package is priced using labour crew compositions and rates from Kpex Module Z.2:
- Crew composition (e.g., 1 Foreman + 3 Pipefitters + 1 Helper)
- All-in hourly rate by trade and country (basic wage + burden + site allowances)
- Country-specific labour burden rates (social security, overtime premiums, transportation)
- Productivity factors (climate, shift, learning curve adjustments)
Quantity: 850 LM | Crew: 1 Foreman + 2 Pipefitters + 1 Helper
Productivity: 4.5 LM/crew-hour | All-in rate: SAR 185/crew-hour
Labour cost = 850 ÷ 4.5 × 185 = SAR 34,944 ≈ USD 9,315
Step 4 — Apply Equipment Rental Rates (Z.3)
Construction equipment (cranes, excavators, concrete pumps, air compressors, generators) is priced using day or month rates from Kpex Module Z.3, combined with estimated utilisation days per work package.
Step 5 — Price Bulk Materials
Bulk materials (pipe, fittings, cable, concrete, rebar, structural steel) are priced using current vendor quotations or market indices. Material price escalation from order date to delivery is applied using the Z.5 CAI time-adjustment factors.
Step 6 — Build Indirect Cost Schedule
At Class 2, indirect costs are detailed line by line — not applied as a percentage. The construction management team, site facilities, consumables, subcontractor mobilisation, testing and commissioning, and owner's project management costs are all explicitly scoped and priced.
Step 7 — Apply LFI and CAI
If the labour and equipment rate database is on a different country basis than the project location, apply Z.4 LFI. Apply Z.5 CAI for escalation to the project's mid-point of construction (weighted average of cost commitments over the schedule).
Step 8 — Risk Analysis and Contingency
At Class 2, contingency is determined through probabilistic risk analysis — Monte Carlo simulation using identified risk events, probability distributions, and cost impacts. The result is a P50 (expected value) and P80 (high-confidence) cost estimate, with contingency equal to P80 minus the deterministic base.
Key Z-Module Integrations
| Module | Data Provided | Applied At |
|---|---|---|
| Z.2 — Labor Rates | Crew compositions & all-in rates by trade/country | Every labour-loaded WBS item |
| Z.3 — Rental Equipment | Day/month rates by equipment category | Construction plant & equipment WBS items |
| Z.4 — LFI | Location factors for 196 countries | Estimate header — adjusts all direct costs |
| Z.5 — CAI | CEPCI / ENR time-based escalation | Estimate header — escalates to execution year |
| Z.6 — PDRI | Project Definition Rating Index score | Informs contingency & risk register |
How Kpex Implements Class 2 — AACE 18R-97 Compliance
- Resource-loaded WBS — Each L4 item carries quantity, unit rate, crew code, and productivity factor
- Z.2 integration — Labour crew rates pulled automatically from the database by trade and country
- Z.3 integration — Equipment rental rates loaded by machine category and utilisation schedule
- Change log — Track scope changes from Class 3 baseline to Class 2 update
- EVM baseline export — Cost loaded against the project schedule for earned value tracking
Class 2 in Kpex — Step by Step in the Platform
- Inherit the Class 3 WBS. In Kpex, the Class 3 estimate is promoted to Class 2 — the WBS hierarchy is carried forward; quantities and rates are updated in place. No re-entry of structure required.
- Update quantities from IFC drawings. Replace parametric/interpolated quantities from Class 3 with detailed takeoff values entered directly at each L4 node.
- Assign labor crew codes (Z.2). For each work package, select the applicable crew type (e.g., Piping Crew — Carbon Steel). Kpex fetches the all-in crew rate for the project country automatically from Module Z.2.
- Enter productivity factors: climate adjustment, shift schedule, site conditions. Kpex applies them to calculate labor cost per L4 item.
- Assign rental equipment (Z.3). Link construction equipment (cranes, excavators, generators) to the relevant work packages. Module Z.3 provides day/month rates by category and country.
- Build the indirect cost schedule line by line — staffing plan, site facilities, subcontractor mobilisation, testing.
- Apply Z.4 LFI and Z.5 CAI at the estimate header for any remaining geographic/time adjustments.
- Quantitative risk analysis: use the Z.6 CRI (Construction Readiness Index) to identify residual risks and set the probabilistic contingency range.
- Export the Control Estimate as the EVM baseline — cost-loaded against the project schedule, exportable to PDF and Excel.
AACE References
- AACE 18R-97 — Cost Estimate Classification System
- AACE 96R-16 — Basis of Estimate
- AACE 52R-06 — Developing the Project Control Budget
- AACE 40R-08 — Contingency Estimating — General Principles
