The cost of implementing an ERP system is about 1% of annual revenue. This is what type of estimate?

The answer is a budget estimate. This type of estimate is used during the initial phases of a project when a rough approximation of costs is needed to support decision-making and planning. A budget estimate provides a ballpark figure for the financial resources required for an initiative, often expressed as a percentage of anticipated annual revenue.

In the context of implementing an ERP system, stating that the cost is about 1% of annual revenue aligns with what organizations typically use for budget estimates, allowing stakeholders to understand the financial implications without delving into precise calculations that would come later in the project lifecycle.

Order of magnitude estimates are generally more rough and are used in the very early stages of project conceptualization, while definitive estimates involve detailed calculations and specifications, which are not feasible at this point. Preliminary estimates might suggest a level of detail and accuracy less than a budget estimate, which provides a clearer financial framework for planning.