A cost plan is not a number. It is a structured argument about what a building will cost, and its usefulness depends entirely on whether that argument can still be followed six months later, when the design has moved and someone asks why the figure has changed.
The RICS New Rules of Measurement 1 give that argument a shape. NRM1 sets out elemental cost planning and order of cost estimating in a consistent hierarchy, which is what allows one project to be compared against another and one stage to be reconciled against the last. Applied properly it is the difference between a budget that absorbs design development and one that is quietly abandoned.
Start with the measurement basis, not the rate
Early cost plans fail more often on quantity than on rate. At RIBA Stages 1 and 2 the information is thin, so the temptation is to apply a cost per square metre and move on. That is defensible as an order of cost estimate, but it should be recorded as exactly that, with the gross internal floor area stated and its source identified.
As soon as the design supports elemental quantities, measure them. An elemental cost plan built on measured quantities can be re-measured as the design develops; one built on an all-in rate can only be replaced.
Write the assumptions down as you make them
Every early cost plan is built on assumptions about specification, ground conditions, procurement route and programme. Those assumptions are made quickly, held informally, and forgotten. When the cost plan is later challenged, the absence of a written assumption schedule is what turns a technical discussion into a commercial dispute.
The assumption schedule should sit alongside the cost plan, be numbered, and be revised with it. Each assumption should say what has been assumed, why, and what would happen to the cost if it proves wrong. Exclusions belong in the same document.
Treat the risk allowance as a register, not a percentage
NRM1 distinguishes between design development risk, construction risk, employer change risk and inflation. Collapsing all of these into a single percentage destroys the information the client actually needs, which is not how much risk money exists but what it is there for.
A risk register attached to the cost plan, with each item priced and owned, allows risk to be released deliberately as the design firms up. A flat percentage can only be argued about.
Reconcile every issue against the last
The single most valuable document in a cost planning exercise is the reconciliation between one cost plan and the next. It should account for every movement in the total under a small number of headings:
- Design development — the same scope, measured better
- Scope change — the client has asked for something different
- Rate and market movement — the same quantities, repriced
- Risk released or drawn down
- Correction of a previous error
A cost plan that arrives with this reconciliation invites a decision. One that arrives as a new total invites suspicion.
Carry the structure into NRM2
The value of working to NRM1 compounds when the project reaches detailed measurement. Because NRM1 and NRM2 share a common elemental logic, quantities measured for the cost plan can be developed into the Bill of Quantities rather than started again, and the tender return can be reconciled directly against the budget it was priced against.
That continuity is the point. A cost plan is not a document produced once at the start of a project. It is the reference against which every subsequent commercial decision is measured, and it only holds that position if it is structured, evidenced and revised with discipline.
