Which type of estimate is often used for capital investment approval?

The Class D Estimate is often utilized for capital investment approval due to its nature of providing a rough order of magnitude for project costs when detailed information is limited. This estimate typically represents the earliest phase of project budgeting when feasibility and initial budgeting are being discussed. It helps stakeholders quickly assess whether a project is worth pursuing and provides a baseline for initial funding requests and strategic decision-making.

Class D Estimates are characterized by substantial variability, usually within a range of -20% to +25% of the actual cost. This level of estimation is suitable in early project stages when comprehensive project details and scopes are still being developed, allowing decision-makers to evaluate and compare potential investments without committing substantial resources at this stage. As the project moves forward and becomes more defined, more detailed estimates such as Class C, B, and A can be generated, reflecting increased accuracy and reduced uncertainty.