Example
"Estimated $4,200 based on the visible run. Concealed damage is priced when found and approved before it is repaired."
Also called a ballpark, a budget price, or a rough order of magnitude.
What it means in practice
An estimate is not a price you are held to. It is what you expect the work to come to on the information you have, which is the honest answer when the scope cannot be pinned down before you open a wall.
Say on the document that it is an estimate, what it assumes, and how variation will be handled; the construction cost estimator has a notes field for exactly that. A client who was given an estimate and billed a quote's worth of certainty will dispute the difference.
Covered in full in the guide to change orders.
Where it shows up on the paperwork
An estimate looks like a quote and says something different. The word estimate goes on the document, and so do the assumptions it rests on and how variation will be handled.
What goes wrong
- Sending an estimate that reads like a quote, then billing the difference.
- Estimating without saying what it assumes, which is what makes the final number a surprise.
- Rounding an estimate down to win the work. The gap comes out of your margin, not the client's budget.
Common questions
Is an estimate legally binding?
Generally not in the way a quote is, because it does not offer a fixed price. What binds you is what the document says, so be explicit that it is an estimate and how the final price will be settled.
How much can an estimate change?
However much the work changes, which is why the document should say how variation is priced and approved. Telling a client at the start that concealed damage is priced when found is a different conversation from telling them at the end.