NRM 1: Order of cost estimating and cost planning for capital building works

The RICS new rules of measurement (NRM) is a suite of documents issued by the RICS QuantitySurveying and Construction Professional Group.

The rules have been written to provide a standard set of measurement rules that are understandable byall those involved in a construction project. They provide advice and best practice guidance to RICSmembers involved in the cost management of construction projects worldwide.

This volume, NRM 1: Order of cost estimating and cost planning for capital building works, providesfundamental guidance on the quantification of building works for the purpose of preparing cost estimatesand cost plans. Direction on how to quantify other items forming part of the cost of a constructionproject, but which are not reflected in the measurable building work items, is also provided i.e.preliminaries, overheads and profit, project team and design team fees, risk allowances, inflation, andother development and project costs.

NRM 1 is the cornerstone of good cost management of construction projects enabling more effectiveand accurate cost advice to be given to clients and other project team members, as well as facilitatingbetter cost control.

Although written primarily for the preparation of order of cost estimates and cost plans, the rules will beinvaluable when preparing approximate estimates.

In addition, the rules can be used as a basis for capturing historical cost data in the form required fororder of cost estimates and elemental cost plans, thereby completing the cost management cycle.

These rules provide essential guidance to all those involved in, as well as those who wish to be betterinformed about, the cost management of construction projects.

The second edition of NRM 1 strengthens the link between methods of measurement and how buildingprojects are now procured, and provides a common elemental and cost breakdown structure applicableto all stages of measurement.

The RICS new rules of measurement are based on UK practice but the requirements for a coordinatedset of rules and underlying philosophy behind each section have worldwide application.

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RICS new rules of measurement

NRM 1: Order of cost estimating and costplanning for capital building works

2nd edition

Acknowledgments

The project stages from the RIBA Outline Plan of Work 2007 are reproduced with the permission of the Royal Institute ofBritish Architects.

Published by the Royal Institution of Chartered Surveyors (RICS)

Surveyor Court

Westwood Business Park

Coventry CV4 8JE

UK

www.ricsbooks.com

No responsibility for loss or damage caused to any person acting or refraining from action as a result of the materialincluded in this publication can be accepted by the authors or RICS.

Produced by the Quantity Surveying & Construction Professional Group of the Royal Institution of Chartered Surveyors.

First edition published 2009 as RICS new rules of measurement: Order of cost estimating and elemental cost planning.

ISBN 978 1 84219 768 4

Royal Institution of Chartered Surveyors (RICS) April 2012. Copyright in all or part of this publication rests with RICS.No part of this work may be reproduced or used in any form or by any means including graphic, electronic, ormechanical, including photocopying, recording, taping or Web distribution, without the written permission of the RoyalInstitution of Chartered Surveyors or in line with the rules of an existing license.

Typeset in Great Britain by Columns Design XML Ltd, Reading, Berks

Printed in Great Britain by Page Bros, Norwich

ContentsForeword to the first edition vForeword to the second edition viAcknowledgments viiiIntroduction 1

Status of the RICS new rules of measurement 1The RICS new rules of measurement (NRM) suite of documents in context 2Identity 3Enquiries 3

Part 1: General 51.1 Introduction 71.2 Measurement in context with the RIBA Plan of Work and OGC Gateway Process 71.3 Purpose of NRM 1 91.4 Use of NRM 1 91.5 Structure of NRM 1 91.6 Symbols, abbreviations and definitions 10Part 2: Measurement rules for order of cost estimating 172.1 Introduction 192.2 Purpose of an order of cost estimate 192.3 Information requirements for order of cost estimates 202.4 Constituents of an order of cost estimate 222.5 Measurement rules for facilitating works 222.6 Measurement rules for building works 232.7 Elemental method 242.8 Measurement rules for elemental method of estimating 262.9 Unit rates and element unit rates (EURs) used to estimate the cost of facilitating

works and building works36

2.10 Updating unit rate and other costs to current estimate base date 382.11 Measurement rules for main contractors preliminaries 382.12 Measurement rules for main contractors overheads and profit 392.13 Measurement rules for project/design team fees 402.14 Measurement rules for other development/project costs 402.15 Measurement rules for risk 412.16 Measurement rules for inflation 432.17 Value Added Tax (VAT) assessment 452.18 Other considerations 452.19 Reporting of order of cost estimates 45Part 3: Measurement rules for cost planning 473.1 Introduction 493.2 Purpose of cost planning 493.3 Constituents of a cost plan 513.4 Formal cost planning stages 523.5 Reviewing and approving cost plans 523.6 Cost control in procurement 533.7 Building projects comprising multiple buildings 533.8 Information requirements for formal cost plans 533.9 Format, structure and content of elemental cost plans 543.10 Measurement rules for facilitating works 54

EFFECTIVE FROM 1 JANUARY 2013 RICS NEW RULES OF MEASUREMENT | iii

3.11 Measurement rules for building works 543.12 Unit rates used to estimate the cost of building works 553.13 Updating unit rates and other costs to current estimate base date 563.14 Measurement rules for main contractors preliminaries 563.15 Measurement rules for main contractors overheads and profit 573.16 Measurement rules for project/design team fees 593.17 Measurement rules for other development/project costs 613.18 Measurement rules for risk allowances 613.19 Measurement rules for inflation 633.20 Value Added Tax (VAT) assessment 653.21 Other considerations 653.22 Reporting of elemental cost plans 66Part 4:Tabulated rules of measurement for elemental cost planning 674.1 Introduction 694.2 Use of tabulated rules of measurement for elemental cost planning 694.3 Work not covered by the rules of measurement for elemental cost planning 714.4 Method of codifying elemental cost plans 714.5 Method of codifying elemental cost plans for works packages 72

Tables 75Group element 0: Facilitating works 75Group element 1: Substructure 89Group element 2: Superstructure 103Group element 3: Internal finishes 143Group element 4: Fittings, furnishings and equipment 151Group element 5: Services 161Group element 6: Prefabricated buildings and building units 219Group element 7:Work to existing buildings 225Group element 8: External works 237Group element 9: Main contractors preliminaries 277Group element 10: Main contractors overheads and profits 307Group element 11: Project/design team fees 309Group element 12: Other development/project costs 317Group element 13: Risks 321Group element 14: Inflation 327

Appendices 329A Core definition of gross internal area (GIA) 330B Commonly used functional units and functional units of measurement 335C Core definition of net internal area (NIA) 337D Special use definitions for shops 343E Logic and arrangement of levels 1 to 3 for elemental cost planning 347F Information requirements for formal cost plans 352G Template for elemental cost plan (based on level 1 codes) 364H Template for elemental cost plan (based on level 2 codes) 366Bibliography 369Index 370

iv | RICS NEW RULES OF MEASUREMENT EFFECTIVE FROM 1 JANUARY 2013

NRM 1: ORDER OF COST ESTIMATING AND COST PLANNING FOR CAPITAL BUILDING WORKS

Foreword to the first edition

Since 1922 the Standard Method of Measurement (SMM) has provided quantity surveyors with rules ofmeasurement for building works. However, these rules were specifically drafted to advise quantity surveyorson how to measure building work items for inclusion in bills of quantities which, in turn, are used for thepurpose of obtaining a tender price for a building project. Previous SMMs did not provide specific guidanceon the measurement of building works for the purpose of producing cost estimates or cost plans. In theabsence of any rules for measuring and describing building works for estimates and cost plans, quantitysurveyors have generally adopted the principles described in the SMM. This, however, has resulted ininconsistent approaches being used by quantity surveyors to the measurement and description of buildingworks for estimates and cost plans. This lack of consistency in measurement and description makes itextremely difficult for the employer and project team to understand what is included in the cost estimate,cost limit or cost target advised by the quantity surveyor; often resulting in doubts about the cost adviceprovided. Moreover, this lack of uniformity afforded a just ground of complaint on the part of the employer,as the employer was often left in doubt as to what was really included in a cost estimate or cost plan.

A Steering Group was set up by the RICS Quantity Surveying and Construction Professional Group toresearch the problems associated with the measurement of building works at all stages of th