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RICS New Rules of MeasurementRICS New Rules of MeasurementOrder of Cost Estimating and Elemental Cost Planning
“Black Book”Black BookIntroductory Seminar
Warsaw, May 20th 2009
I i L d RICS P l k M t B d M bIain Leyden, RICS Polska Management Board Member
Program - 20th May 2009Introduction - what do the NRM cover? (30 minutes)
• An overview of the document’s purpose N R MAn overview of the document s purpose• Structure of the document• Use of document• Understanding how the NRM are linked to RIBA work stages and
OGC Gateway processes RICS new rulesof meas rement
N R MEstimating and cost planning process – as defined by the NRM (40
minutes)• Overview of the types of estimates and cost plans and how they fit
into the RIBA Plan of Work and OGC Gateway Processf f f (OC )
of measurementOrder of cost estimatingand elemental cost planning
• Defining the purpose of an order of cost estimate (OCE)• Information Required for OCE• OCE Format• Defining the purpose of elemental cost planning• Information Required for Formal Cost Plans (FCP)• Information Required for Formal Cost Plans (FCP)• Measurement rules for Building Work
Benefits of regulating cost estimating and cost planning (10 minutes)Question and Answer Session (10 minutes)
Purpose of NRMBest Practice Guidance and Standardizing MeasurementBest Practice Guidance and Standardizing Measurement
RulesUnderstandable by Employer and all parties to construction projectp p j
Direction on how to describe and deal with cost allowances not reflected in measurable building workwork
Based on UK Practice with Worldwide A li tiApplication
Structure of the Document• Part 1 – Places cost estimating and elemental cost planning in context of RIBA• Part 1 – Places cost estimating and elemental cost planning in context of RIBA Plan of Work and the OGC Gateway Process
• Part 2 – Describes Order of Cost Estimate and its contents, sets out rules for measurement and reporting
•Part 3 – Describes Elemental Cost Planning, defines its constituents and how to prepare an elemental cost planprepare an elemental cost plan
•Part 4 – Tabulated Rules of Measurement
A di•Appendices
Use of RICS new rules of Measurement: Order of cost estimating and elemental cost planningestimating and elemental cost planning
• Represent the essentials of Good Practice
S f• Structured basis for measuring building work
• Consistent approach from inception to completion of each project
Purpose of an order of cost estimateestimateEstablish Affordability for the Employer
Set Cost LimitSet Cost Limit -( during RIBA Work Stages A: Appraisal and B: Design Brief or OGC Gateway 1 (Business Justification) and 2 (Delivery Strategy)
Information requirements for OCE preparationF E lFrom Employer• Location and availability of site• Statement on use of Building• Initial Project/Design Brief• Details of enabling works decanting or other specific requirements• Details of enabling works, decanting or other specific requirements• Indicative programme/Time Schedule• Details of particular constraints to be imposed by the employer, statutory or
government bodies• Details of Site Conditions• Budget/Cashflow Constraints• Initial views on Procurement• Life span of the building• MEP Particular requirements• Treatment of Project/Design team feesTreatment of Project/Design team fees• Approach to other development/project costs• Treatment of inflation• Treatment of VAT• Other considerations
Information requirements for OCE PreparationF A hit tFrom Architect• Design Study Sketches for development options if
possible floor plans; roof plan; elevations; and sections to suitable scaleto suitable scale
• Schedule of GEA, GIFA, NIA, SA• Minimum Storey Height• Schedule of Accommodation• Car Parking Spaces• Car Parking Spaces• Design Intent or indicative specification• Indicative environmental/sustainability strategy d• Advice on likely site constraints
Ad i lik l Pl i C t i t• Advice on likely Planning Constraints• Definition of fit-out• Initial risk register/log
Information requirements for OCE PreparationF M h i l d El t i l E iFrom Mechanical and Electrical Engineer• Indicative design intent/specification for building services• Indicative environmental strategy/sustainability strategy• Advice on availability and/or adequacy of utilities services• Advice on availability and/or adequacy of utilities services
connections to site• Initial risk register/log
From Structural Engineer• Advice on Probable ground conditions• Indicative specification/design intent for structurep g• Initial risk register/log
Constituents of an order of costConstituent
1Building Works estimate2Main Contractor's preliminaries estimate3 Sub‐total [(3)=(1)+(2)]4Main Constractor's overheads and profit5Works cost estimate [(5)=(3)+(4)]5Works cost estimate [(5)=(3)+(4)]6Project/Design team fees estimate7Sub‐total [(7)=(5)+(6)]8Other development/project costs estimate9Base cost estimate [(9)=(7)+(8)]
10Risk allowance estimate [(10)=(10(a))+(10(b))+(10(c))+(10(d))][( ) ( ( )) ( ( )) ( ( )) ( ( ))]10 (a) Design development risk estimate10 (b) Construction risk estimate10 (c) Employer's change risk estimate10 (d) Employer other risk estimate11Cost Limit (excluding inflation) [(11)=(9)+(10)]12Tender Inflation Estimate13Cost Limit (excluding construction inflation) [(13)=(11)+(12)]14Construction inflation estimate15Cost Limit (including inflation) [(15)=(13)+(14)]
VAT AssessmentVAT Assessment
Constituents of an order of costConstituent
1Building Works estimate2Main Contractor's preliminaries estimate3 Sub‐total [(3)=(1)+(2)]4Main Contractor's overheads and profit5Works cost estimate [(5)=(3)+(4)]
Floor Area MethodBuilding Works estimate = 5Works cost estimate [(5)=(3)+(4)]
6Project/Design team fees estimate7Sub‐total [(7)=(5)+(6)]8Other development/project costs estimate9Base cost estimate [(9)=(7)+(8)]
10Risk allowance estimate [(10)=(10(a))+(10(b))+(10(c))+(10(d))]
Building Works estimate GIFA x cost/m²Functional Unit MethodBuilding Works estimate =N b f f i l i
[( ) ( ( )) ( ( )) ( ( )) ( ( ))]10 (a) Design development risk estimate10 (b) Construction risk estimate10 (c) Employer's change risk estimate10 (d) Employer other risk estimate11Cost Limit (excluding inflation) [(11)=(9)+(10)]
Number of functional units x cost per functional unitElemental MethodBuilding Works estimate =
12Tender Inflation Estimate13Cost Limit (excluding construction inflation) [(13)=(11)+(12)]14Construction inflation estimate15Cost Limit (including inflation) [(15)=(13)+(14)]
VAT Assessment
Building Works estimate Sum of element cost targetsCost target (for element) = element unit quantities EUQ x
l t it t EUR VAT Assessmentelement unit rate EUR
Constituents of an order of costConstituent
1Building Works estimate2Main Contractor's preliminaries estimate3 Sub‐total [(3)=(1)+(2)]4Main Contractor's overheads and profit5Works cost estimate [(5)=(3)+(4)]5Works cost estimate [(5)=(3)+(4)]6Project/Design team fees estimate7Sub‐total [(7)=(5)+(6)]8Other development/project costs estimate9Base cost estimate [(9)=(7)+(8)]
10Risk allowance estimate [(10)=(10(a))+(10(b))+(10(c))+(10(d))]
Cost estimate for main contractor’s preliminaries
At this stage in the process is [( ) ( ( )) ( ( )) ( ( )) ( ( ))]10 (a) Design development risk estimate10 (b) Construction risk estimate10 (c) Employer's change risk estimate10 (d) Employer other risk estimate11Cost Limit (excluding inflation) [(11)=(9)+(10)]
At this stage in the process is expressed as a percentage of the building works estimate
12Tender Inflation Estimate13Cost Limit (excluding construction inflation) [(13)=(11)+(12)]14Construction inflation estimate15Cost Limit (including inflation) [(15)=(13)+(14)]
VAT AssessmentVAT Assessment
Constituents of an order of costConstituent
1Building Works estimate2Main Contractor's preliminaries estimate3 Sub‐total [(3)=(1)+(2)]4Main Contractor's overheads and profit5Works cost estimate [(5)=(3)+(4)]5Works cost estimate [(5)=(3)+(4)]6Project/Design team fees estimate7Sub‐total [(7)=(5)+(6)]8Other development/project costs estimate9Base cost estimate [(9)=(7)+(8)]
10Risk allowance estimate [(10)=(10(a))+(10(b))+(10(c))+(10(d))]
Cost estimate for main contractor’s overheads and
[( ) ( ( )) ( ( )) ( ( )) ( ( ))]10 (a) Design development risk estimate10 (b) Construction risk estimate10 (c) Employer's change risk estimate10 (d) Employer other risk estimate11Cost Limit (excluding inflation) [(11)=(9)+(10)]
profit
At this stage in the process is expressed as % of sub-total 3
12Tender Inflation Estimate13Cost Limit (excluding construction inflation) [(13)=(11)+(12)]14Construction inflation estimate15Cost Limit (including inflation) [(15)=(13)+(14)]
VAT Assessment
expressed as % of sub total 3
VAT Assessment
Constituents of an order of costRisk Allowance given more Constituent
1Building Works estimate2Main Contractor's preliminaries estimate3 Sub‐total [(3)=(1)+(2)]4Main Contractor's overheads and profit5Works cost estimate [(5)=(3)+(4)]
Risk Allowance given more significance at this stage.Acknowledgement of the rise of risk management within the
5Works cost estimate [(5)=(3)+(4)]6Project/Design team fees estimate7Sub‐total [(7)=(5)+(6)]8Other development/project costs estimate9Base cost estimate [(9)=(7)+(8)]
10Risk allowance estimate [(10)=(10(a))+(10(b))+(10(c))+(10(d))]
industry and the need to properly identify, assess, monitor and control risks during the project cycle [( ) ( ( )) ( ( )) ( ( )) ( ( ))]
10 (a) Design development risk estimate10 (b) Construction risk estimate10 (c) Employer's change risk estimate10 (d) Employer other risk estimate11Cost Limit (excluding inflation) [(11)=(9)+(10)]
cycle
12Tender Inflation Estimate13Cost Limit (excluding construction inflation) [(13)=(11)+(12)]14Construction inflation estimate15Cost Limit (including inflation) [(15)=(13)+(14)]
VAT AssessmentVAT Assessment
Constituents of an order of costTender inflation and Construction Constituent
1Building Works estimate2Main Contractor's preliminaries estimate3 Sub‐total [(3)=(1)+(2)]4Main Contractor's overheads and profit5Works cost estimate [(5)=(3)+(4)]
Tender inflation and Construction inflationBoth expressed as a percentage which can be computed using
5Works cost estimate [(5)=(3)+(4)]6Project/Design team fees estimate7Sub‐total [(7)=(5)+(6)]8Other development/project costs estimate9Base cost estimate [(9)=(7)+(8)]
10Risk allowance estimate [(10)=(10(a))+(10(b))+(10(c))+(10(d))]
published indices such as:•Retail price index•Tender price index•Building cost indices (BCIS) [( ) ( ( )) ( ( )) ( ( )) ( ( ))]
10 (a) Design development risk estimate10 (b) Construction risk estimate10 (c) Employer's change risk estimate10 (d) Employer other risk estimate11Cost Limit (excluding inflation) [(11)=(9)+(10)]
Building cost indices (BCIS)
12Tender Inflation Estimate13Cost Limit (excluding construction inflation) [(13)=(11)+(12)]14Construction inflation estimate15Cost Limit (including inflation) [(15)=(13)+(14)]
VAT AssessmentVAT Assessment
Order of cost estimate reporting
Minimum contenta) Project Titleb) Project descriptionc) Statement of cost (including cost limit)c) Statement of cost (including cost limit)d) Details of the information and
specification on which the cost plan was prepared
e) A statement of floor areasf) Basis of cost estimate (i.e. assumptions)g) Estimate base date (to which inflation
has been applied)has been applied)h) Estimated costs of and request for
decision on any alternative proposalsi) Inclusions and exclusions
Purpose of elemental cost planningTo provide advice to designers to enable a practical and p g pbalanced design within budget
To provide robust cost information upon which the employer can make informed decisionsemployer can make informed decisions
Keep expenditure within cost limit approved by the employer
ensure that employers are provided with value for money
To develop employer and designers awareness of cost consequences of desires and proposals
Information requirements for Formal Cost Plan 1F E lFrom Employer• Confirmation of the cost limit• Confirmation of the project/design brief• Confirmation of Programme/Time Schedule• Procurement Strategy• Contract Strategy• Phasing• Facilitating works
Treatment of project/design fees• Treatment of project/design fees• Insurances• Approach to dealing with other development/project costs e.g. Tree
Cutting• Treatment of Employers risk, inflation, VAT, and other considerationsTreatment of Employers risk, inflation, VAT, and other considerations• Post Completion requirements• Authority to commence RIBA Work Stage or OGC Gateway Approval
Information requirements for Formal Cost Plan 1F A hit tFrom Architect• Concept drawings to a suitable scale including GA plans,
General Elevations, General Sections, external landscaping, plan of key building functions, detailed elevations, sketches showing key details, concept design for rooms common areas and site constraints plan.
• Schedule of GEA, GIFA, NIA, SA• Outline Specification
R D t Sh t• Room Data Sheets• Schedule of Key FFE• Strategies for environmental/sustainability, car parking,
vertical movement, IT, Fire, Acoustics, Disabled Access, window cleaning refuse/waste disposal securitywindow cleaning, refuse/waste disposal, security
• Topographical survey and desktop studies• Definition of fit out• Risk Register/log
Information requirements for Formal Cost Plan 1From Mechanical and Electrical EngineerFrom Mechanical and Electrical Engineer•Concept Design Drawings to a suitable scale•Outline Specification information• Strategies for environmental/sustainability, vertical movement, removal/decommissioning of existing plant and or equipment
•Underground services survey•Details of utilities connections•Methodology of facilitating works•Risk register/log
From Structural Engineer•Reports on environmental contamination, geotechnical properties•Concept drawings to a suitable scale•Environmental risk assessment•Advice on ground conditionsg•Formation and excavation levels•Outline specification information•Estimates of reinforcement content and mass of steelwork in framing•Methodologies of facilitating the work•Risk register/log
Constituents of an elemental cost planConstituent
1Building Works estimate
2Main Contractor's preliminaries estimate
3Sub‐total [(3)=(1)+(2)]
4Main Contractor's overheads and profit
5Works cost estimate [(5)=(3)+(4)]
6Project/Design team fees estimate [(6=(6(a))+(6(b))+(6(c))]j / g [( ( ( )) ( ( )) ( ( ))]
(a) Consultants' fees
(b) Main contractor's pre‐construction fee estimate (if applicable)
(c) Main Contractor's design fee estimate (if applicable)
7 Sub‐total [(7)=(5)+(6)]
8Other development/project costs estimate
9B t ti t [(9) (7)+(8)]9Base cost estimate [(9)=(7)+(8)]
10Risk allowance estimate [(10)=(10(a))+(10(b))+(10(c))+(10(d))]
10 (a) Design development risk estimate
10 (b) Construction risk estimate
10 (c) Employer change risk estimate
10 (d) Employer other risk estimate
11Cost Limit (excluding inflation) [(11)=(9)+(10)]
12Tender Inflation Estimate
13Cost Limit (excluding construction inflation) [(13)=(11)+(12)]
14Construction inflation estimate
15Cost Limit (including inflation) [(15)=(13)+(14)]
VAT Assessment
Constituents of an elemental cost planConstituent
1Building Works estimate
2Main Contractor's preliminaries estimate
3Sub‐total [(3)=(1)+(2)]
4Main Constrictor's overheads and profit
5Works cost estimate [(5)=(3)+(4)]
6Project/Design team fees estimate [(6=(6(a))+(6(b))+(6(c))]Quantities for building works shall be determined in j / g [( ( ( )) ( ( )) ( ( ))]
(a) Consultants' fees
(b) Main contractor's pre‐construction fee estimate (if applicable)
(c) Main Contractor's design fee estimate (if applicable)
7 Sub‐total [(7)=(5)+(6)]
8Other development/project costs estimate
9B t ti t [(9) (7)+(8)]
shall be determined in accordance with Part 4:Tabulated Rules of Measurement for elemental
9Base cost estimate [(9)=(7)+(8)]
10Risk allowance estimate [(10)=(10(a))+(10(b))+(10(c))+(10(d))]
10 (a) Design development risk estimate
10 (b) Construction risk estimate
10 (c) Employer change risk estimate
10 (d) Employer other risk estimate
cost planning (i.e. group elements 1 to 9)
11Cost Limit (excluding inflation) [(11)=(9)+(10)]
12Tender Inflation Estimate
13Cost Limit (excluding construction inflation) [(13)=(11)+(12)]
14Construction inflation estimate
15Cost Limit (including inflation) [(15)=(13)+(14)]
VAT Assessment
Group elements for estimating building worksGroup Element 1 Substructure
Group Element 2 Superstructure
Group Element 3 Internal Finishes
Group Element 4 Fittings, furnishings and equipment
Group Element 5 Services
Group Element 6 Completed Buildings and building unitsGroup Element 6 Completed Buildings and building units
Group Element 7 Work to existing buildings
Group Element 8 External works
Group Element 9 Facilitating works
Other Group elementsGroup Element 10 Main contractor’ s preliminaries
Group Element 11 Main contractor’s overheads and profit
Group Element 12 Project/design team fees
Group Element 13 Other development/project costs
Group Element 14 Services
Group Element 15 Completed Buildings and building unitsGroup Element 15 Completed Buildings and building units
Benefits of regulating cost estimating and cost planning •Provides a common and consistent basis on which to measure areas
and building works items – for new works and rehabilitation works •Presents a clear framework that facilitates a systematic approach to compiling cost estimates and cost plans•Establishes formal cost estimating and cost planning stages that areEstablishes formal cost estimating and cost planning stages that are aligned to both the RIBA Plan of Work and the OGC Gateway Process •Covers modern construction methods including modular units and
l t b ildicomplete buildings •Defines preliminaries that can be used for any procurement or contract strategy (including prime contracting and PFI) •Defines categories of risk, dispensing with the term “contingency” g , p g g y•Promotes the view that risk allowances should not be a standard percentage, but a properly considered assessment of the risk
Benefits of regulating cost estimating and cost planning •Helps with value engineering
•Gives transparency to cost estimates and cost plans •Acts as an aide memoir •Helps with improving the accuracy of cost estimates and cost plans •Promotes clear and effective communication between the employerPromotes clear and effective communication between the employer and project team members and ensure that risks associated with the project are identified, analysed and responded to •Provides a method for codifying elemental cost plans so that they
b t d t k k f t d tcan be converted to works packages for procurement and cost management during the construction stage •Provides robust basis for capturing historical cost data in the form required for future cost estimates and cost plans, thereby completing q p , y p gthe “cost management cycle” •Can be integrated into an organisation’s quality management system.
RICS New Rules of Measurement: N R MOrder of cost estimating and elemental cost planning RICS new rules
of meas rement
N R MRICS Books www.ricsbooks.com
of measurementOrder of cost estimatingand elemental cost planning
RICS Books ISBN: 9781842194461 Item Code: 17792 310 Pages Paperback Mar 2009 Price: £45.00