NRM 1 Cost Planning Guide
Why Cost Planning Matters
Cost planning is the discipline that ensures a building project is designed to a budget rather than budgeted after it has been designed. The quantity surveyor’s role is not simply to calculate what a building will cost — it is to advise the client, at every stage of the design process, whether the emerging design can be delivered within the approved budget, and to identify where cost savings or reallocations are needed before it is too late to change. A cost plan prepared at the right time, using the right method, with the right level of detail, is the single most effective tool for controlling construction cost.
The RICS New Rules of Measurement 1 (NRM 1) provides the standard framework for cost estimating and cost planning on UK building projects. NRM 1 defines how costs are to be classified, measured, and presented at each stage of the RIBA Plan of Work — from the earliest order-of-cost estimate through to the pre-tender estimate that forms the basis of the employer’s budget commitment. NRM 1’s elemental cost breakdown structure is aligned with the BCIS Standard Form of Cost Analysis, enabling every cost plan to be benchmarked against a database of comparable completed projects.
This article provides a practical guide to cost planning under NRM 1, walking through the full sequence from order-of-cost estimate to pre-tender cost plan using the same two-storey detached house featured in our NRM 2 Practical Measurement Guide. It includes a fully priced elemental cost plan with current UK rates, showing how the cost builds element by element and how the QS uses benchmarking to check that each element is within an acceptable range.
NRM 1: Structure and Purpose
The Three-Tier Elemental Hierarchy
NRM 1 organises construction costs using a three-tier hierarchy: Group Elements (Level 1), Elements (Level 2), and Sub-elements (Level 3). This hierarchy provides a common language for cost reporting that is consistent across all building projects — whether the QS is cost-planning a house, a hospital, or a headquarters building. The Group Elements are:
| Group Element | Name | What It Covers |
|---|---|---|
| 0 | Facilitating works | Demolition, site clearance, soil stabilisation, temporary diversions |
| 1 | Substructure | Foundations, ground floor construction, basement (all work below lowest floor finish) |
| 2 | Superstructure | Frame, upper floors, roof, stairs, external walls, windows, internal walls, internal doors |
| 3 | Internal finishes | Wall finishes, floor finishes, ceiling finishes |
| 4 | Fittings, furnishings and equipment | Kitchen units, wardrobes, ironmongery, specialist equipment |
| 5 | Services | Sanitary, mechanical, electrical, lift, fire, communications installations |
| 6 | Prefabricated buildings and building units | Complete modular or prefabricated units |
| 7 | Work to existing buildings | Alterations, renovations, repairs to retained structures |
| 8 | External works | Site works, drainage, landscaping, roads, paths, boundary walls, external services |
| 9 | Main contractor’s preliminaries | Site establishment, management, temporary works, plant, insurances |
| 10 | Main contractor’s overheads and profit | Head office overheads and profit margin |
| 11 | Project/design team fees | Architect, engineer, QS, planning, building control fees |
| 12 | Other development/project costs | Land costs, surveys, legal fees, decanting, enabling works |
| 13 | Risks | Design development risk, construction risk, employer change risk |
| 14 | Inflation | Tender price inflation from base date to tender date |
Group Elements 0–8 represent the building works estimate — the direct cost of constructing the building and its immediate site works. Group Elements 9–14 represent the project-wide costs that sit on top of the building works. The total of all Group Elements (0–14) gives the total project cost estimate or cost plan.
Cost Planning Through the RIBA Stages
How Detail Builds as Design Develops
NRM 1 is explicitly aligned to the RIBA Plan of Work. The level of cost detail increases as the design progresses from strategic definition through to technical design. The QS must match the cost planning method to the design stage — using broad-brush methods when little is known about the design, and increasingly detailed elemental methods as the design develops.
| RIBA Stage | NRM 1 Output | Method | Typical Accuracy |
|---|---|---|---|
| 0–1: Strategic Definition and Preparation | Order of cost estimate | Floor area (£/m² GIFA) or functional unit (£/bedroom) | ±15–25% |
| 2: Concept Design | Formal Cost Plan 1 | Elemental (Group Element level) | ±10–15% |
| 3: Spatial Coordination | Formal Cost Plan 2 | Elemental (Element and Sub-element level) | ±5–10% |
| 4: Technical Design | Formal Cost Plan 3 (pre-tender estimate) | Detailed elemental (full Sub-element breakdown) | ±5% |
The accuracy ranges shown are indicative — they reflect the inherent uncertainty at each stage, not the QS’s competence. At Stage 1, the QS may be working from nothing more than a brief and a site plan; at Stage 4, the QS has full technical design drawings, specifications, and a BIM model. The cost plan should be as accurate as the available information allows — no more, no less.
Stage 1: Order of Cost Estimate
The Floor Area Method
The order of cost estimate is the earliest formal cost advice the QS provides. At RIBA Stage 0–1, the design may consist of little more than a client brief (number of bedrooms, approximate size, site location) and perhaps a feasibility sketch. The QS uses the floor area method — multiplying the gross internal floor area (GIFA) by a cost rate per square metre derived from comparable projects in the BCIS database.
Worked Example: Order of Cost Estimate
For our case study — a four-bedroom detached house of 140 m² GIFA in the Midlands — the QS identifies comparable projects from BCIS and derives a benchmark rate of £2,100/m² GIFA (building works only, at current prices, adjusted for location using the BCIS location factor).
| Item | Calculation | Amount |
|---|---|---|
| Building works estimate | 140 m² × £2,100/m² | £294,000 |
| Main contractor’s preliminaries (10%) | 10% × £294,000 | £29,400 |
| Main contractor’s overheads and profit (6%) | 6% × £323,400 | £19,404 |
| Works cost estimate | £342,804 | |
| Project/design team fees (8%) | 8% × £342,804 | £27,424 |
| Risk allowance (15%) | 15% × £342,804 | £51,421 |
| Inflation to tender (2.5%) | 2.5% × £342,804 | £8,570 |
| Total order of cost estimate | £430,219 |
This gives the client a budget figure of approximately £430,000 at RIBA Stage 1. The risk allowance is deliberately high (15%) because very little design information is available — the QS must allow for the significant uncertainty inherent at this early stage. As the design develops and uncertainty reduces, the risk allowance will decrease.
The Functional Unit Method
An alternative at Stage 1 is the functional unit method — expressing cost per bedroom (for residential), per bed space (for hospitals or care homes), per pupil place (for schools), or per workstation (for offices). For our case study, a rate of £75,000 per bedroom would give 4 × £75,000 = £300,000 for the building works — a useful cross-check against the floor area method. The functional unit method is particularly useful when comparing options with different numbers of bedrooms or different accommodation mixes.
Stage 2: Formal Cost Plan 1
Moving to Elemental Cost Planning
At RIBA Stage 2 (Concept Design), the QS has outline drawings — floor plans, sections, and elevations — that allow approximate quantities to be measured for each Group Element. The cost plan moves from a single £/m² rate to an element-by-element breakdown, with each element costed using quantities derived from the concept design and rates derived from BCIS analyses and the QS’s own cost data.
Formal Cost Plan 1 is prepared at Group Element level — the QS provides a cost for each of the main Group Elements (substructure, superstructure, internal finishes, services, external works, etc.) without breaking them down into individual elements and sub-elements. The purpose is to establish the cost distribution across the building and identify any elements that appear disproportionately expensive compared with BCIS benchmarks.
Worked Example: Formal Cost Plan 1
Using approximate quantities from the concept design for our 140 m² house:
| Group Element | Element Total | £/m² GIFA | % of Building Works |
|---|---|---|---|
| 0: Facilitating works | £4,200 | £30 | 1% |
| 1: Substructure | £33,600 | £240 | 11% |
| 2: Superstructure | £117,600 | £840 | 40% |
| 3: Internal finishes | £18,200 | £130 | 6% |
| 4: Fittings, furnishings and equipment | £11,200 | £80 | 4% |
| 5: Services | £50,400 | £360 | 17% |
| 8: External works | £29,400 | £210 | 10% |
| Building works estimate (total) | £264,600 | £1,890 | — |
The QS checks each element against BCIS benchmarks for similar houses. If the substructure at £240/m² appears high (BCIS median for similar projects might be £180/m²), the QS investigates — perhaps the site has poor ground conditions requiring deeper foundations. If services at £360/m² appear within the BCIS range (£300–£400/m² for good specification residential), the QS is satisfied that the allowance is reasonable. This benchmarking discipline is what makes cost planning under NRM 1 reliable — every element is tested against comparable data, not assumed.
Stage 3: Formal Cost Plan 2
Element and Sub-Element Breakdown
At RIBA Stage 3 (Spatial Coordination), the design is sufficiently developed to measure quantities for individual elements and sub-elements. The QS now breaks Group Element 2 (Superstructure) into its constituent elements — frame, upper floors, roof, stairs, external walls, windows and external doors, internal walls and partitions, internal doors — and costs each one using measured quantities and elemental rates. This is the cost plan that forms the baseline for cost control through the remainder of the design process.
Worked Example: Full Elemental Cost Plan
The following table shows Formal Cost Plan 2 for our case study house at RIBA Stage 3. All rates are at Q1 2026 prices for the Midlands region. Quantities are derived from the developed design drawings for the same 140 m² four-bedroom detached house specified in the NRM 2 guide.
| Element | Qty | Unit | Rate | Total | £/m² GIFA |
|---|---|---|---|---|---|
| 0: Facilitating works (site clearance) | 1 | item | £4,200 | £4,200 | £30 |
| 1: Substructure | 72 | m² | £420 | £30,240 | £216 |
| 2.1: Frame (N/A — loadbearing masonry) | — | — | — | £0 | £0 |
| 2.2: Upper floors | 72 | m² | £110 | £7,920 | £57 |
| 2.3: Roof | 100 | m² | £165 | £16,500 | £118 |
| 2.4: Stairs | 1 | nr | £4,800 | £4,800 | £34 |
| 2.5: External walls | 165 | m² | £245 | £40,425 | £289 |
| 2.6: Windows and external doors | 24 | nr | £680 | £16,320 | £117 |
| 2.7: Internal walls and partitions | 134 | m² | £75 | £10,050 | £72 |
| 2.8: Internal doors | 12 | nr | £480 | £5,760 | £41 |
| 3.1: Wall finishes | 379 | m² | £22 | £8,338 | £60 |
| 3.2: Floor finishes | 140 | m² | £45 | £6,300 | £45 |
| 3.3: Ceiling finishes | 140 | m² | £28 | £3,920 | £28 |
| 4: Fittings, furnishings and equipment | 140 | m² | £80 | £11,200 | £80 |
| 5: Services (M&E — all) | 140 | m² | £365 | £51,100 | £365 |
| 8: External works | 1 | item | £28,000 | £28,000 | £200 |
| Building works estimate | £245,073 | £1,751 |
Adding Project-Wide Costs
| Cost Category | Basis | Amount | £/m² GIFA |
|---|---|---|---|
| Building works estimate | As above | £245,073 | £1,751 |
| 9: Main contractor’s preliminaries (10%) | 10% of building works | £24,507 | £175 |
| 10: Main contractor’s overheads and profit (6%) | 6% of (building works + prelims) | £16,175 | £116 |
| Works cost estimate | £285,755 | £2,041 | |
| 11: Project/design team fees (8%) | 8% of works cost | £22,860 | £163 |
| 13: Risks (8%) | 8% of works cost (Stage 3) | £22,860 | £163 |
| 14: Inflation (2.5%) | 2.5% of works cost (base Q1 2026 to tender Q3 2026) | £7,144 | £51 |
| Total cost plan (Formal Cost Plan 2) | £338,619 | £2,419 |
The total project cost at Stage 3 is approximately £339,000 — or £2,419/m² GIFA all-in. Note how this has reduced from the Stage 1 order of cost estimate of £430,000 — the reduction is primarily due to the lower risk allowance (8% at Stage 3 vs 15% at Stage 1) as the design has developed and uncertainty has decreased. The building works estimate itself has become more precise, reflecting actual measured quantities rather than a single £/m² benchmark rate.
Stage 4: Formal Cost Plan 3 (Pre-Tender Estimate)
The Final Cost Check
At RIBA Stage 4 (Technical Design), the QS prepares the pre-tender estimate — the final cost plan before the project goes to tender. This is the document against which tenders will be assessed, and it must be as accurate as possible. The QS reviews every element against the detailed technical design, updates quantities where the design has changed since Stage 3, refines rates to reflect the latest market intelligence, and reduces the risk allowance to reflect the near-complete design (typically 5% at Stage 4).
The pre-tender estimate also serves as the basis for the bill of quantities prepared under NRM 2 — the elemental quantities in the cost plan provide the starting point for the detailed measurement that populates the bill. This is the critical link between NRM 1 and NRM 2 — the cost plan drives the design; the bill of quantities prices it.
BCIS Benchmarking: The QS’s Reality Check
How to Use BCIS Data
The BCIS (Building Cost Information Service) is the RICS’s construction cost data service. It provides cost analyses of completed projects, tender price indices, cost forecasts, and benchmarking data — all structured using the NRM 1 elemental framework. For the QS preparing a cost plan, BCIS is an essential tool for sense-checking elemental rates and identifying where a project’s costs sit relative to comparable schemes.
The process is straightforward. The QS searches BCIS for analyses of similar completed projects (same building type, similar specification, comparable size). BCIS provides the elemental cost breakdown in £/m² GIFA for each analysis, adjusted to current prices using the Tender Price Index. The QS compares each element of their cost plan against the BCIS range — if the external walls on their project are costing £289/m² and the BCIS median for similar houses is £260/m², the QS can investigate whether the specification justifies the premium or whether the rate needs adjustment.
BCIS also provides location factors — indices that adjust national average costs to reflect regional price variations. A project in London will have a location factor above 1.00 (typically 1.15–1.25), while a project in the North East may have a factor below 1.00 (typically 0.85–0.92). The QS must apply the relevant location factor when using BCIS data to ensure the benchmark is meaningful for the project’s location.
Preliminaries, Risk, and Inflation
Group Element 9: Preliminaries
Main contractor’s preliminaries cover the project-wide costs of running the site — management, accommodation, temporary services, plant, scaffolding, waste removal, insurances, and compliance. Under NRM 1, preliminaries are expressed as a percentage of the building works estimate. For a single house with a 20-week programme, 10% is a reasonable allowance; for larger projects with economies of scale, 6–8% may be more appropriate; for complex or constrained sites (city centre, phased, occupied buildings), 12–18% may be necessary.
Preliminaries are sometimes the most poorly estimated element of a cost plan. The QS should avoid applying a standard percentage without considering the specific project circumstances — the duration of the programme, the site constraints, the contract requirements (e.g. phased handover, restricted working hours), and the specification of temporary works all affect the actual preliminaries cost.
Group Element 13: Risks
NRM 1 identifies three categories of risk allowance. Design development risk covers the cost uncertainty arising from incomplete design information — this is highest at Stage 1 and should reduce progressively as the design develops. Construction risk covers the uncertainty inherent in the construction process — weather, ground conditions, productivity, supply chain disruption. Employer change risk covers anticipated (but not yet defined) changes to the client’s brief.
NRM 1 emphasises that risk allowances should not be a blanket percentage applied without thought. Each risk should be identified, assessed for probability and impact, and costed individually. In practice, however, most cost plans at Stage 2–3 use an overall percentage — reducing from around 15% at Stage 1 to 5–8% at Stage 3 and 3–5% at Stage 4. The QS should maintain a risk register that supports and justifies the allowance shown in the cost plan.
Group Element 14: Inflation
Every NRM 1 cost plan has a base date — the date at which the rates and prices in the plan are current. If the project will not go to tender until a later date, the costs must be adjusted for inflation between the base date and the expected tender date. The adjustment uses the BCIS Tender Price Index (TPI), which measures the movement in tender prices for building projects.
For our case study, the cost plan is prepared at Q1 2026 prices. If the project is expected to go to tender in Q3 2026 (six months later), and BCIS forecasts annual tender price inflation of approximately 2.7%, the inflation allowance is approximately 1.35% (half-year adjustment) — or 2.5% to allow a margin. This translates to £7,144 on a works cost of £285,755. The inflation allowance is shown as a separate line in the cost plan (Group Element 14) so that the client can see the base cost and the inflation adjustment independently.
The Relationship Between NRM 1 and NRM 2
Cost Planning and Measurement: Two Sides of the Same Framework
NRM 1 and NRM 2 are designed to work together. NRM 1 provides the cost planning framework — defining the elemental structure, the estimating methods, and the cost presentation format. NRM 2 provides the measurement rules — defining how each work item is classified, described, and quantified in the bill of quantities. The two share the same elemental hierarchy, so a cost plan prepared under NRM 1 at Stage 3 can be reconciled directly against a bill of quantities prepared under NRM 2 at Stage 4.
In practice, the NRM 1 cost plan is the precursor to the NRM 2 bill. The quantities measured for the cost plan (areas of external wall, areas of roof, volumes of concrete) provide the basis for the more detailed measurement required by NRM 2. The QS working on a project from inception to tender will progress seamlessly from NRM 1 cost planning to NRM 2 measurement — and the discipline of having prepared a thorough cost plan makes the bill of quantities preparation faster and more reliable, because the quantities have already been estimated and validated.
For practitioners working with BIM, the integration is even tighter. A BIM model at Stage 2 provides approximate quantities for NRM 1 cost planning; at Stage 4, the same model — now fully developed — provides the precise quantities for NRM 2 measurement. The elemental classification (supported by Uniclass 2015) bridges the two methods, ensuring that quantities extracted from the model can be used for both cost planning and detailed measurement.
Common Cost Planning Errors
Where QS Professionals Go Wrong
Applying a single £/m² rate at Stage 3. The whole point of elemental cost planning is to move beyond a single overall rate. At Stage 3, the QS should be costing each element individually using measured quantities and specific rates. A single £/m² rate provides no visibility of the cost distribution across elements and no basis for value engineering.
Using outdated BCIS data without adjustment. BCIS analyses are dated to the quarter in which the project was tendered. Using a 2019 analysis at 2026 prices without applying the TPI adjustment will significantly understate costs. Always rebase BCIS data to the cost plan’s base date using the Tender Price Index.
Ignoring the location factor. National average rates do not reflect regional price variations. A project in the South East will cost 15–20% more than the national average; a project in the North of England may cost 10–15% less. Applying the BCIS location factor is essential for meaningful benchmarking.
Under-estimating services (M&E). On residential projects, services typically represent 15–20% of the building works cost. On complex buildings (hospitals, laboratories, data centres), services can represent 40–50% or more. Under-estimating this element is one of the most common causes of cost plan overruns — particularly where the services design is less developed than the architectural design at Stage 2–3.
Using a fixed risk percentage at every stage. A 10% risk allowance may be appropriate at Stage 2 but excessive at Stage 4 (when the design is essentially complete). NRM 1 expects the risk allowance to decrease as the design develops and uncertainty reduces. Failure to reduce risk allowances at later stages results in inflated cost plans that undermine the QS’s credibility with the client.
Not reconciling the cost plan with the bill of quantities. When the NRM 2 bill is priced and returned, the total should be close to the Formal Cost Plan 3 pre-tender estimate. If the lowest tender is 15% above the cost plan, something has gone wrong — either the cost plan was too optimistic, the market has moved, or the design has changed without the cost plan being updated. Regular reconciliation between cost plan stages is essential to catch discrepancies early.
Practical Tips for Effective Cost Planning
Benchmark every element. Do not rely on a single overall £/m² check. Compare each element individually against BCIS data — this is where you find the anomalies, the over-allowances, and the under-estimates that a single total figure would mask.
Update at every stage. The cost plan is a living document. Update it at each RIBA stage to reflect the developing design — do not prepare a cost plan at Stage 2 and assume it remains valid at Stage 4. Design changes, specification refinements, and market movements all affect cost.
Document your assumptions. Every cost plan involves assumptions — about specification, ground conditions, procurement route, programme, and market conditions. Document these assumptions clearly so that the client understands the basis of the cost advice and the QS can revisit and update them as information becomes available.
Present cost plans clearly. The cost plan should be easy to read, well-structured, and transparent. Use the NRM 1 elemental format, include £/m² GIFA for every element, and show the cost distribution as percentages. Include a summary page that the client can read in five minutes, with the supporting detail available for those who want it.
Use the cost plan for value engineering. The elemental breakdown is not just a reporting format — it is a decision-making tool. When the cost plan exceeds the budget, the element-by-element breakdown shows where the money is being spent and where savings might be found. The QS can identify the elements that are disproportionately expensive and work with the design team to find cost-effective alternatives without compromising the client’s requirements.
What Comes Next
This article has provided a practical guide to cost planning under NRM 1, from the order of cost estimate at Stage 1 through to the pre-tender estimate at Stage 4. The fully priced worked example shows how the cost builds element by element for a typical UK residential project, and how benchmarking against BCIS data provides the QS’s reality check at each stage. Future articles on ProQS.site will explore cost planning for commercial and infrastructure projects, value engineering techniques, and the integration of whole-life costing under NRM 3 with capital cost planning under NRM 1. For QS professionals at any career stage, cost planning under NRM 1 is a core competence — the framework within which all subsequent cost management activities are structured.