When it comes to pricing up a bill, every estimator will have their own experiences, styles, preferences and techniques. However, one area which is consistent is the rules of measurements they use to price it up. The rules most commonly used are produced by the Royal Institute of Chartered Surveyors (RICS), have evolved over the years and are a potential area of confusion for estimators.
Carolyn Clay, Director at Laxton’s Building Price Books, explains how and why the New Rules of Measurement (NRM) were created, and crucially how this differs to the Standard Methods of Measurement (SMM), which many estimators still use to price jobs today.
Standard Methods of Measurement (SMMs)
Standard methods have been developed over time to ensure that all Quantity Surveyors/ Estimators are working to the same standards when pricing construction projects. These consist of guidance and a set of rules for the basis of measurement, to ensure that the same items are included (or excluded) in each rate, so that costs for that element can be accurately applied.
Standard Methods of Measurement are available in various forms worldwide and allow for the fairest type of competition as when a Bill of Quantities is produced all contractors price the exact same content with no unwelcome surprises once the contract has been awarded. i.e. everyone knows exactly what has been priced. SMMs are typically used for traditional estimating where Bills of Quantities are produced but can be used for itemising variations or as structures for schedules of rates.
RICS and Standard Methods of Measurements
The RICS produced their first edition in 1922, known as the Standard Method of Measurement of Building Works, following a collaboration between the RICS, the Quantity Surveyors Association and representatives of the building trade. It was declared necessary due to diversity of practice and differences between surveyors with the lack of uniformity meaning contractors often didn’t know what the estimator meant or the true meaning of items in the Bill of Quantities with numerous disputes occurring during construction.
The rules were updated every 10 years or so with the 7th edition – SMM7 – published in 1988. In 2006, SMM7 was due to be updated to SMM8, but following an investigation by a RICS quantity surveying and construction professional group into current practices, it was decided that new standards were required to encourage best practice and, reflect changes in construction processes and working practices since the original SMM was created more than 80 years previously.
Contractors now bid for work in many different ways, for example with a budget price and/or design, using cost plans, against a full Bill of Quantities or even considering the whole life cycle costs of the building from construction to demolition. Variations in estimating requirements also occur due to type of contract, e.g. design and build, construction management, framework agreements as well as the traditional route of producing a complete specification before prices are required
To reflect this a completely new suite of documents was created – The New Rules of Measurement or NRM
The New Rules of Measurement
The NRM suite consists of 3 volumes which were created based on UK practice using similar language and elemental order, but varying in complexity and detail, ensuring ease of use. They do not provide cost data but are a tool allowing data to be captured and measured in a consistent way.
- NRM1 – Order of Cost Estimating and Cost Planning for Capital Building Works (2009 and 2012) – provides a framework for preparation of pre-contract estimates and cost plans using an elemental breakdown. The aim is for Clients and construction professionals to see the advantages of clear and transparent cost data which should enable a database of historic cost information to be built.
- NRM2 – Detailed Measurement for Building Works (2012) – this directly replaces SMM7 and is used for pricing Bills of Quantities and consists of detailed breakdowns using unit rates. Detailed guidance is given on the preparation of Bill of Quantities including detailed coding and work breakdown structures.
- NRM3 – Order of Cost Estimating and Cost Planning for Building Maintenance Works (2014) – used to consider the maintenance and running costs of the building to assist with life cycle costs and is structured to match NRM1. This will become more important due to the sustainability push happening worldwide and governments expecting building owners to have more responsibility. It is thought that it costs, on average, three times more to run and maintain a building than it did to construct it and predicted costs within a recognised format are in demand.
The RICS states “The main benefit of NRM is that it uses a general protocol that should allow any surveyor to measure any type of construction from any era”.
NRM2 v SMM7
SMM7 was the starting point for delivering NRM2 therefore it has numerous similarities with alterations made to improve its usability and assist with consistency across the industry. NRM2 uses tables of building components in the same way as SMM7 along with levels of complexity for each element with further details provided to assist the estimator.
There are also some differences designed to reduce disagreements regarding the content of the priced work. These include;
- elements being broken down further within NRM2 with 41 work sections against the 22 trade sections in SMM7,
- flexibility for the QS to add additional information to the description with composite descriptions of works,
- many small items deemed to be included within the rates (these had to be priced separately within SMM7 which was a complete uneconomical use of a surveyor’s time),
- the flexibility to produce cost plans by using NRM1 when full drawings and a specification is not available with the expectation to use NRM2 as further details becomes available
- clearer definitions of prime cost and provisional works and allowances for risks,
- and the structure of NRM2 has been designed to be compatible with the widespread adoption of Building Information Modelling (BIM)
So why should an Estimator use NRM2?
Estimators should be aware that SMM7 is still being used successfully within the UK and around the world but NRM2 is recommended by RICS as best practice. In the worst-case scenario of a legal dispute, the court or tribunal might ask why NRM has not been used and as the NRM suite is no longer considered new, it is considered that there is no real defense.
As described previously, NRM2 provides up-to-date rules for measurement when pricing Bills of Quantities and anyone pricing a BQ should be familiar with the rules as some items are deemed to be included although not stated.
Once an estimator is familiar with NRM2 they will wonder why they didn’t transfer over earlier.