Next month, the RICS launches a suite of guidance and standards that is set to transform the way that costs are managed through the life-cycle of a building. Stuart Earl explains how it works

On 24 April, the RICS will launch its landmark measurement initiative, the New Rules of Measurement (NRM). The guidance, which is free to all RICS members, is arguably the most significant launch to the construction sector by the RICS in the past 30 years. The suite, written by a cross-section of the industry, sees the RICS addressing the long-existing need for
a common measurement standard for the comparison of costs through the life-cycle of cost management.

Too many QSs see measurement as a one-off activity at the end of a design period. This may be true for the production of a bill of quantities, but cost planning is an iterative process and the NRM should be at the heart of controlling costs as the design develops.

There has never been a more pressing time to introduce this kind of initiative. The reforms proposed in the government’s Construction Strategy, as well as chief construction adviser Paul Morrell’s 20% efficiency agenda, the increasing focus on Building Information Modelling (BIM), and the economic challenges the industry faces, all demand a step change in working culture.

The relevance of the NRM within a BIM-enabled industry is particularly pertinent. BIM is intended to address issues of process and data retention, bringing the collection of data to the forefront. The NRM is linked to this, enabling the consistent collection of cost data and maintenance costs.

A life-cycle solution

The suite has been developed to ensure that at any point in a building’s life there will be a set of consistent rules for measuring and capturing cost data, thereby supporting the procurement of construction projects from cradle to grave. The NRM suite comprises:

  • NRM1 - Order of cost estimating and cost planning for capital building works. This underpins how we budget and design our buildings
  • NRM2 - Detailed measurement for building works. This is a supporting set of detailed measurement rules enabling work to be bought either through bills of quantities or schedules of rates for capital or maintenance projects
  • NRM3 - Order of cost estimating and cost planning for building maintenance works. This enables the measurement of capital cost plans to be integrated with maintenance and life-cycle replacement works.

The rules consider the total costs of construction, including non-construction-related aspects such as consultants’ fees, the cost of acquiring land and property, fees and charges, planning contributions, decanting and relocation costs, marketing costs and the cost of finance.

Meeting the challenge

It is important to understand that the NRM is a toolkit for cost management, not just a set of rules for how to quantify building work. It provides guidance on:

  • how measurement changes as the design progresses - from high level cost/m2 or cost/functional units to more detailed measurement breakdowns of elements and sub-elements
  • total project costs - how all cost centres can be considered and collated into the project cost plan
  • risk allowances based on a properly considered assessment of the cost of dealing with risks should they materialise – dispensing with the use of the widely mismanaged concept of contingency
  • total project fees - how fee and survey budgets can be calculated
  • the design and survey information that a client needs at each RIBA Stage/OGC Gateway, for the QS to be able to provide more certainty in their cost advice
  • the key decisions that clients need to make at each RIBA Stage/OGC Gateway
  • a framework for codifying cost plans so they can be converted into works packages for procurement and cost management.

Another way of looking at it is that NRM1 is for capital expenditure and NRM3 is for operational expenditure. The RICS’ Building Cost Information Service (BCIS) has produced a new edition of the Elemental Standard Form of Cost Analysis (SFCA) using the same definitions, coding structure and measurement rules as NRM1 and NRM3. This will allow cost plan reporting, cost analysis and the benchmarking of capital and life-cycle cost to use a common format. If clients wish to benchmark costs, they need to do so on a common basis.

The launch

Since the first edition of NRM1 was published in 2009, a number of factors have driven the need for an updated version. These include aligning the building elements within the SFCA with those in NRM1, and ensuring a correlation between NRM1 and NRM3.

NRM2 is a new document. It provides a detailed set of measurement rules to support the procurement of construction works and uses a protocol that should allow a QS to measure any type of construction from any era. It simplifies and modernises existing Standard Method of Measurement for Building Works (SMM7) rules and allows the QS to measure areas where most costs exist.

NRM2 supports all aspects of bills of quantities production, including defining the information requirements and dealing with the quantification of non-measurable work items, such as contractor-designed works and risks. Guidance is also provided on the content, format and benefits of bills of quantities and caters for their use in both main building contracts and work packages.

NRM2 will be a replacement for SMM7, which will be discontinued in 2013. NRM3 is expected to be formally launched in autumn.

In addition, JCT will amend its contracts to recognise the NRM suite.

A collaborative future

The hope is that clients will be encouraged to use the tools within the wider NRM suite and embed them into their delivery systems. For example, clearly defining design deliverables at each RIBA Stage/OGC Gateway is a simple way for clients to ensure they get the design they are paying for. QSs will also be helped by getting the best design information available at any point so they can provide accurate cost advice. And these rules are for the whole supply chain, not just the QS. During the estimating and cost-planning stages, designers can be better informed as to what the wider team is planning to achieve and how the rules can be used for all to work together as a team.

This set of rules for measurement and data collection is, initially, intended for the UK, but there is potential to adapt the NRM for the global market. This is supported by a recent RICS survey of its international members on the use and benefits of the Principles of Measurement (International) (POMI). The results suggest that while most thought POMI was fit for purpose, a significant number felt that further guidance would be useful. There is of course, progress to be made in the UK post-launch in the first instance, but the long-term potential of this measurement initiative is encouraging.

Stuart Earl MRICS is chairman of the RICS Measurement Initiative and a director at Gleeds