Basis of Estimate (BOE)
The written record of what an estimate includes, excludes, and assumes.
Quick Answer
A basis of estimate (BOE) is the document that explains how a cost estimate was built: the scope covered, the drawings and specifications used, key assumptions, exclusions, allowances, pricing sources, and contingency. It turns a spreadsheet total into something a reviewer can understand and challenge, and shows whether later changes are errors or scope changes.
The Full Picture
Every estimate rests on decisions that aren't visible in the numbers: which drawing issue was priced, whether the owner furnishes equipment, how unsuitable soils were handled, what labor rates were used. The basis of estimate exists to write those decisions down. AACE International publishes a recommended practice on preparing a BOE, and the U.S. GAO's Cost Estimating and Assessment Guide treats thorough documentation as a core characteristic of a credible estimate.
A typical BOE covers the project description and estimate purpose, the estimate class or design stage, the documents used with dates and revision numbers, the estimating methodology, pricing sources and escalation approach, key assumptions, exclusions, allowances, risks and contingency, and any known deviations from standard practice. It should also note who prepared and reviewed the estimate.
In practice, the BOE travels with the estimate at each milestone. When the owner compares the design development estimate to the schematic estimate, the two BOEs show whether the documents, assumptions, or scope changed. When a subcontractor bid later comes in far off the carried value, the BOE shows what the estimator had assumed.
In preconstruction, a clear BOE protects the contractor and the owner alike. Exclusions and assumptions stated in the BOE often become the clarifications in a GMP or bid proposal. Vague ones, or missing ones, are where disputes start, because each party remembers the scope differently.
Real Examples
Common Misconceptions
People assume: The BOE is paperwork that only government projects need.
Actually: Any estimate that someone else will review, compare, or rely on benefits from a BOE. Private owners and lenders ask the same questions: what's included, what's assumed, and what drawings were priced.
People assume: Listing exclusions is enough.
Actually: Exclusions are only one part. A BOE also needs the document set, methodology, pricing sources, and assumptions, because most estimate disagreements come from different assumptions about included scope, not from exclusions.
Does MeltPlan Solve This?
Partially — adjacentPartially — MeltPlan handles quantity takeoff and drawing review, which feed directly into a basis of estimate. A MeltPlan takeoff is produced from a specific drawing set and verified by US estimators, giving the quantity side of your BOE a documented starting point. Writing the BOE itself, including assumptions, pricing sources, and exclusions, remains your estimating team's work.
Start your estimate from a verified takeoff →Frequently Asked Questions
What should a basis of estimate include?
At minimum: project and scope description, estimate class or design stage, documents used with dates and revisions, methodology, pricing and labor rate sources, escalation, assumptions, exclusions, allowances, contingency and risk, and who prepared and reviewed the estimate.
Who prepares the basis of estimate?
The estimator or estimating team that built the estimate, usually reviewed by the chief estimator or preconstruction manager. On owner-side estimates, the cost consultant prepares it.
How does a basis of estimate relate to GMP qualifications?
The BOE records the assumptions and exclusions behind the number; when the contractor submits a GMP, many of those items become formal qualifications and clarifications in the proposal, defining exactly what the price covers.
Why does a basis of estimate matter in preconstruction?
Estimates change at every design milestone. A BOE for each one makes it possible to tell whether the number moved because of design changes, scope changes, or different assumptions, which is the foundation of budget reconciliation.