Meaning
Semi detailed financial projection based on approximately forty percent project definition. A class 3 cost estimate usually supports the request for full funding of a capital project. It provides enough detail to set a realistic budget while allowing for some uncertainty in the final execution costs.
Design Maturity
Level of engineering completion required to produce a reliable budget figure. Developing a class 3 cost estimate depends on having a finalized process flow diagram and a firm list of major equipment. Without these documents the projection remains too speculative for a board of directors to approve.
Funding Authorization
Formal process of granting the financial resources needed to move into the construction phase. Because the class 3 cost estimate represents the baseline for project success it functions as the primary tool for investment committees. The approval of this figure sets the contingency levels that the project manager must work within for the remainder of the schedule.
Project Control
Monitoring system used to track actual spending against the established budget baseline. Once the work begins the class 3 cost estimate becomes the reference point for measuring performance and identifying potential overruns. Monthly reports compare the progress on site with the line items in the original document to identify any early signs of financial distress.
The project team uses these figures to determine if the current burn rate will lead to an overrun of the authorized amount. Adjustments to the execution plan are often made based on the variances found during this rigorous comparison.
