AACE CEP Writing an Estimate Recommendation Memo

The CEP memo should explain the estimate in a form management can use. It should not read like a spreadsheet note or a generic project narrative. It should answer the prompt, state the recommendation, and make the estimate basis visible.

Memo structure

Use a direct structure:

1. State the decision or estimate purpose.
2. Give the recommended estimate, range, or action.
3. Summarize the basis, class, and key assumptions.
4. Identify exclusions, risks, contingency, and escalation treatment.
5. State the decision limits and next action.

What makes the answer defensible

A defensible estimate memo separates facts from judgment. Facts include quantities, pricing sources, scope documents, vendor quotes, and schedule assumptions. Judgment includes method selection, contingency treatment, reconciliation, accuracy range, and recommendation.

If the estimate is not suitable for a final funding commitment, say so. If it is suitable only for screening alternatives, say so. If management can approve conditional funding but should require additional design maturity before full authorization, make that recommendation clearly.

Common mistakes

• Reporting only the point estimate.
• Hiding exclusions in technical detail.
• Forgetting pricing date or escalation basis.
• Treating contingency as unexplained padding.
• Failing to connect the estimate to the decision requested.

Sample Exam Question

A memo prompt asks whether an early estimate should be used for full project authorization. The estimate is based on conceptual scope and parametric data. What is the strongest recommendation?

A. Approve full authorization because a parametric estimate is always accurate.
B. Reject all funding because conceptual estimates have no decision value.
C. Use the estimate for screening or staged funding, state its basis and uncertainty, and require additional definition before full authorization.
D. Present only the point estimate so management can decide faster.

Best answer: C

Why: Early estimates can support early decisions, but the memo must communicate limits and recommend decision controls appropriate to estimate maturity.

Why the others are weaker: A overstates reliability. B is too rigid. D hides the uncertainty management needs.