Order of cost estimating

Not all cost information has the same reputation for accuracy and reliability and care should be exercised when choosing cost data to a new estimate.

Building Cost Information Service (BCIS)

BCIS publishes a wealth of cost data on a wide variety of building types. The advantages of are that the service is available online, for a subscription fee, and is published in standard cost analysis format. BCIS is also a useful source of cost data for calculating cost forecasts,.

Price books

Cost information from published price books such as Wessex, Spons or Laxtons. Price books are published annually and contain range of prices for standard bills of quantities items. Because they are in book form the information can be several months old.

Previous projects

Priced bills of quantities from previous projects can be used. They are a useful source of information as the cost information tends to be current. As with other forms of cost information, there is a need to adjust for differences such as location.

In-house

Depending on the size of organisation, cost analysis and cost models produced in-house can be the most reliable source of cost information. The data will be good quality and in a familiar format. Disadvantage of relying on this source is the time and cost taken to prepare and store the information.

The method of measuring and the unit of measurement for each of the elements are set out in a number of documents including The RICS New rules of measurement: Order of cost estimating and elemental cost planning.

This breakdown together with allowances for main contractor’s preliminaries and main contractor’s overheads and profit will give the base cost estimate. To this must be added allowances for risk and inflation to determine the cost limit for the project. The amount included for risk and inflation will vary according to the type of project and the market conditions.

The RICS Code of measuring practice, 6th edition (2007) and New rules of measurement: Order of estimating and cost planning.

Net internal area

While previous editions of the Code of measuring practice have included in the definition of the net internal area reference to the usable area, there has been no definition of this term. Following Kilmartin v Safeway where this point was considered, the 6th edition includes the definition of usable area as stated in that judgment:

'an area is usable if it can be used for any sensible purpose in connection with the purposes for which the premises are to be used'.

This clarification led to the re-examination of certain parts of the code where issues had arisen concerning 'usability'.

NRM3 Order of cost estimating and cost planning for building maintenance works

The final part of the NRM suite, NRM3, came into effect on 1 January 2015. Following extensive collaboration with RICS BCIS, the Chartered Institution of Building Services Engineers (CIBSE) and the Building Engineering Services Association (BESA) have agreed to adopt the NRM3 expanded cost structure. This means that the NRM3 elemental cost structure is now fully aligned with industry standard planned preventative maintenance task schedules and the economic reference life expectancy data structure published by CIBSE Guide M and the BCIS cost analysis.

NRM3 provides a structured basis for measurement of building maintenance works, encompassing the annualised maintenance and life cycle major repairs and replacements of constructed assets and building components – which are carried out post-construction procurement and throughout the in-use phases of the constructed assets, or built environment.

The prime functions of these rules of measurement is to provide consistent rules for the quantification and measurement of building maintenance work items – for the purposes of producing order of cost estimates, elemental cost plans and detailed asset specific work programmes, throughout the entire building life cycle.

The secondary functions of these rules of measurement include, among others, to provide information for:

• Input into life cycle cost plans in a structured way so that the same approach is adopted for all life cycle cost plans cash flows and option appraisals. This in turn will facilitate meaningful comparison and more robust data analysis.
• Advising clients on the likely cash-flow requirements for the purpose of annual budgeting (and initiating sinking funds) and informing forward maintenance and life cycle renewal plans.
• Informing the implementation of maintenance strategy and procurement stages and cost control of expenditure on maintenance works.