Order of Magnitude Costings

Order of magnitude costings are early, high-level estimates that show the likely scale of costs using a broad range rather than a detailed budget. They are typically accurate to around ±30–50% because they are prepared before detailed design work, supplier quotes, or quantity take-offs are available.

In an options business case, order of magnitude costings is used to screen and compare alternatives (including the “do-nothing” baseline), test whether each option is likely to be affordable, and support an initial Go/No-Go decision. They are usually based on benchmarks, comparable projects, and simple unit rates (for example, $/m², $/site, $/user, or $/FTE), with the key assumptions stated clearly.

Order of magnitude costings help decision-makers understand whether an option is plausibly viable and which assumptions drive costs the most. They are not appropriate for final implementation or procurement decisions.

A final implementation business case should replace order of magnitude ranges with validated estimates based on confirmed scope, detailed design, market testing, supplier pricing, and appropriate contingencies and risk adjustments.