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New rules for a new era

Sachin Sandhir, MD & country head, RICS India, discusses the new rules of measurement that aim to facilitate quantifying the elements of construction works.

Quantities are, without doubt, the best control of cost on a project. However, clients, contractors and sub-contractors need quantities for different reasons at different stages of the project – even though, ultimately, they are all measuring the same works.  What is required is a suite of measurement options that meets the needs of these different stakeholders.

The ‘New rules of Measurements’ is a suite of documents to provide a standard set of measurement rules that are understandable by all those involved in a construction project. They provide advice and best practice guidance to those involved in the cost management of construction projects worldwide.

Cost estimates and cost plans need to be prepared by the quantity surveyor/cost manager at various stages of a construction project. To address this requirement, we have determined a series of formal cost estimating and elemental cost planning stages and the rules provide guidance on how to quantify all elements involved in building works.

These rules provide the basis of a toolkit for more transparent, accurate and consistent cost forecasting. With the full effects of the downturn being felt in real estate asset values, delivering to budget has never been more important. Equally in the public sector, cost is increasingly being viewed as a key driver.

The new rules place cost estimating and elemental cost planning in context with the ‘RIBA (Royal Institute of British Architects) Plan of Work’, an industry recognised framework.

Before deciding to build, a client will want to establish if the proposed building project is affordable and, if so, to establish a realistic cost limit for the building project.

The purpose of an order of cost estimate is to determine the possible construction costs of one or more building/scheme options, based on the client’s fundamental requirements, before design of the referred option is developed.

Order of cost estimating and elemental cost planning provides fundamental guidance on the quantification of building works for the preparation of cost estimates and cost plans.

Direction on how to quantify other items forming part of the cost, but which are not reflected in the measurable building work items, is also provided, i.e. preliminaries, overheads and profit, project team and design team fees, risk allowances, inflation, and other development and project costs.

The new rules describe how to prepare order of cost estimates using the following methods:
1. Floor area method (based on cost/sq m of GIFA)
2. Functional unit method (e.g. per bed space, per house type and per sq m of retail area)
3. Elemental method (i.e. individual elements).

Elemental cost planning is an iterative process, which is performed in steps of increasing detail as more design information becomes available.

Changes to the project design require estimates to be prepared at different levels during the design process with increasing degrees of information provided. It should also be noted that within each level of estimate preparation, not all portions of the design would be at the same level of completeness.

Estimates within each of these levels may be prepared multiple times during the design process as more information becomes available or changes are made to the scope. As the level of the estimate increases it will become more detailed as more information is provided; ‘unknowns’ are eliminated; fewer assumptions are made; and the pricing of the quantities become more detailed.

Industry experts in India believe that while the design changes seven times on average, the quantities are often not recalculated. There is also no guidance available to enable cost estimates and cost plans to be drawn across project life stages and that’s exactly what these rules will guide quantity surveyors to do, ensuring the estimates and plans reflect an accurate picture at all times. This in turn will help minimise cost overruns.

Although written primarily for the preparation of order of cost estimates and cost plans, the new rules will be invaluable when preparing rough estimates. In addition, they can be used as a basis for capturing historical cost data in the form required for order of cost estimates and elemental cost plans, thereby completing the ‘cost management cycle’.

The author can be reached at ssandhir@rics.org.

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