Budget pricing is an early cost estimate, prepared by an estimator or contractor from preliminary design information, used to check whether a project fits its budget before design is finished.
It sits between a rough order of magnitude estimate and a detailed bid. For a parking structure, budget pricing typically works from space count, structural system, number of levels and site conditions, with allowances for items not yet designed.
How it is used
- Choosing between options, such as precast versus post-tensioned, or above-grade versus below-grade.
- Setting the construction budget and contingency.
- Value engineering when the estimate exceeds the budget.
- Testing feasibility before committing to full design. See financial feasibility study.
Accuracy
- Accuracy improves as design advances; early budget pricing carries a wide range.
- Allowances and contingency should be visible, not buried.
- Escalation to the expected construction date matters in volatile markets.
The Parkonomics view
A budget price is only as good as the assumptions written next to it. Ask for the space count, the structural system and the contingency on the same page as the number.
Related terms: Rough Order of Magnitude, Hard Construction Costs, Soft Construction Costs, First Cost, Design-Build, Progressive Design-Build