Why it matters

Most cost problems on a building project start before work begins: a budget set without the fees, consents and VAT, a design that grows without anyone pricing the changes, or tenders returned on different assumptions that cannot be compared.

A cost plan built element by element, revised at each design stage and reported with its risks and assumptions, lets you bring the design back to the budget while the changes are still on paper. At tender, a measured pricing document means every contractor prices the same work, so the returns can be compared fairly and checked against the pre-tender estimate.

Who it is for

Homeowners and owners of listed and period buildings planning alterations, developers and landowners weighing up a site, managing agents, residents’ management companies and freeholders budgeting for major works, and commercial owners planning a refurbishment, across London, the South East and the East of England.

We are chartered building surveyors, and our cost planning is focused on the refurbishment, alteration, conversion and new homes projects we design and administer. On larger or more specialist schemes we will tell you at the outset, and say what further advice you need.

Key terms

Order of cost estimate

An early estimate of the likely cost of a project, prepared before there is a detailed design, from benchmark costs for similar buildings by floor area, functional unit or element. Under NRM 1 its purpose is to establish whether the project is affordable.

Elemental cost plan

The cost limit broken down into cost targets for each element of the building, such as the substructure, frame, roof, finishes and services. It shows how the budget is distributed across the building, and is updated at each formal cost plan stage as the design develops.

Cost limit

The maximum the client is prepared to spend on the completed building, also called the project budget or authorised budget. NRM 1 reports it both excluding and including inflation, with VAT assessed separately.

Risk allowance

A sum set aside for the uncertainty in an estimate. NRM 1 splits it into design development, construction, employer change and employer other risks, so you can see where the uncertainty lies.

Inflation allowance

An allowance for prices moving between the date of the estimate and the work being built. NRM 1 separates tender inflation, up to the return of tenders, from construction inflation, from tender return to the mid-point of the construction period.

Preliminaries

The main contractor’s costs of setting up, running and managing the site, such as site management, welfare, security and temporary works, which cannot be allocated to a specific element. In an NRM 1 estimate they are added as a percentage of the building works.

Contingency

A sum held for work that cannot be foreseen when the price is fixed. Before tender, NRM 1 deals with it through the risk allowance. In a tender document it is often included as a provisional sum, spent only on the contract administrator’s instruction.

Measurement

Quantifying the work from the drawings and specification by consistent rules. NRM 1 governs measurement for estimates and cost plans, and NRM 2 the detailed measurement and description of building works for tender.

Bill of quantities or pricing document

A bill of quantities lists the work in a contract with detailed descriptions and firm quantities, measured to NRM 2. Pricing document is the wider term for whatever tenderers price, which on smaller works may be a quantified schedule of works or a schedule of rates.

Development appraisal

A comparison of what a scheme will cost to deliver, from construction, fees and consents to finance and the land itself, with what it is expected to be worth, to test whether it is worth pursuing. We prepare and advise on the cost side; the value of land and completed property comes from you, your agent or a valuer.

How this maps to your RICS appointment

Cost planning is appointed under the RICS Quantity Surveyor Services schedule, used with the RICS Standard or Short Form of Consultant’s Appointment. That schedule covers a quantity surveyor’s full service through construction. We provide the pre-construction services under the headings below and agree the exact items with you before the appointment is signed, so the services you see here are the services you tick in your appointment. Cost control once work starts on site is covered by our Contract Administration service.

Guidance and briefings

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