Especially early in the process, any value in your budget is based on more or less information resulting in more or less risk that the number is correct. As the client, you are entitled to understand the reliability of budgets that you rely on.
I always record the thinking that goes into each number. I find it useful to use shorthand labels to identify my confidence in a number and guide further investigation.
Estimate – This is based on a well defined scope of work with solid unit cost data. For example: You have a difinitive floor plan and can measure length of walls, number of doors, areas of different floor finish, areas of different ceiling treatement. You have good industry data for each.
Allowance – An allowance is based on a much less definitive scope. For example: You’re building an office building on a 100,000sf site. You determine the footprint of the building will be 20,000sf, leaving 80,000sf of site work. Some will be parking and other hardscape and the rest landscape. You take an educated guess at the proportions and apply the appropriate cost/sf to each.
ROM (Rough Order of Magnitude) – You may not have specific scope of work or level of quality, but from experience you may have some idea of what those might be. For example: Your project is an administative building of approxmately 25,000 square feet. You need a budget for the interior improvements. From some data source you have heard that office interiors, can run $90/sf to 150/sf. Is this an economy project or a fancy project? Pick a rate and that’s your ROM.
WAG (Wild Ass Guess) – Here, you’re depending on your gut. For example: You’re adding a new building and renovating several older buildings on a school campus. It’s clear that there has been substantial deferred maintenance for many years. You expect that there will be significant cost involved in upgrades and expansion of the utility infrastructure but have no hard information. In other projects you’ve seen costs from $200K to $600K. It looks bad but not dire. Take a guess, $450K. Now that’s a WAG, but not completely uneducated.