Class 3 vs. Class 2: The FID Line That Transforms Your CAPEX Estimate
A Class 3 and a Class 2 estimate are not just different levels of accuracy — they operate in fundamentally different data environments. The Financial Investment Decision is the structural dividing line that changes everything: the inputs, the procurement actors, and the reliability of every number in your CAPEX model.
Class 3 — Budget Estimate
A Class 3 estimate is produced during the extended basic engineering phase. The project is real enough to have a defined scope, but not yet authorized for full execution. At this stage, the Procurement Committee begins to engage the market. Discipline-by-discipline contractor bids are solicited — Civil, Piping, Electrical, Instrumentation, Structural — and the estimator's primary task is to evaluate and select the First Runner: the most competitive, technically compliant offer for each discipline.
Where no contractor bid exists for a discipline, Kpex Module A steps in as a validated parametric fallback. The estimate is never incomplete — every line item carries a documented cost basis, whether from a real offer or a calibrated cost curve.
After FID, engineering firms, construction contractors, and technology licensors that were previously competing independently now form EPCM joint ventures — integrated alliances that submit consolidated offers covering engineering, procurement, construction, and management as a unified package. These agreements carry a level of commercial and technical commitment that simply did not exist before the FID milestone.
Class 2 — Control Estimate
With project definition now between 30 and 75 percent complete, the Class 2 estimate operates in a fundamentally different data environment. The primary input is no longer a collection of individual contractor bids — it is the body of EPCM joint venture agreements that emerged from the post-FID procurement process. Material Take-Off quantities are measured, not estimated. Crew productivity is site-calibrated. The cost model reflects commitments, not projections.
Where EPCM joint venture agreements define the cost — those figures enter the estimate directly. Where scope gaps remain not covered by any active agreement, Kpex Module A parametric curves and Module B benchmarks complete the picture with documented, methodology-backed values. The system ensures no scope is left unpriced and every figure is auditable.
Side-by-Side: Class 3 vs. Class 2
The Lifecycle Obligation: CAPEX · OPEX · ABEX
One principle applies equally to both Class 3 and Class 2: a cost estimate does not end at construction completion. Both classes must deliver three interconnected cost components that together enable the project's full economic study update.
Total Installed Cost of the facility — equipment, bulk materials, civil works, construction labor, and all indirect costs.
Annual cost to operate the facility over its productive lifetime — energy, maintenance, personnel, consumables, and insurance.
Cost of safe decommissioning at end of asset life — dismantling, environmental remediation, site restoration, and regulatory compliance.
The difference between Class 3 and Class 2 is not whether OPEX and ABEX are included. It is the maturity of the data that feeds them.
In Class 3, lifecycle costs are still substantially parametric — driven by facility type, capacity, and industry benchmarks. In Class 2, they are increasingly grounded in contracted scope, defined facility configurations, confirmed equipment lists, and site-specific productivity data. The economic study in Class 2 is not an approximation — it is a commitment.
Published by CAF Corporation · Kpex Methodology Series · AACE Cost Engineering Standards
