For developers and owners planning a build
Construction Cost Plan: How It Is Built
Sviatoslav JerdetchiiCEO & Founder of Craftex. Updated , 4 min read
The short answer
A construction cost plan is the budget for a building, broken into elements and checked at each design stage. It starts as an order of cost estimate and becomes a pre-tender estimate before contractors price the job.
- RICS NRM 1 sets the standard method: order of cost estimate, then formal cost plans 1, 2 and 3.
- Elements follow a fixed list, from substructure and frame to services, preliminaries and fees.
- Risk is held as separate allowances, not hidden inside the rates.
- A cost plan is only as good as the design and the market data behind it.
A construction cost plan is the budget for a building, broken into elements and checked at every design stage. Done well, it tells you what the scheme will cost before contractors price it. Done badly, it is a single number that the first tender breaks.
Most cost plans in the UK follow RICS NRM 1, the standard for cost estimating and cost planning. This guide walks through how a cost plan is built, stage by stage, and where it usually goes wrong.
Before you rely on one, test it against the people who would build the scheme. Ask for our free cost and buildability review, or send us your drawings and we will tell you where the risk sits.
How a construction cost plan develops
A cost plan is not written once. It grows with the design, and each version is more detailed than the last.
| Stage | When | What it is based on |
|---|---|---|
| Order of cost estimate | Brief, before a design | Floor area, functional units or broad elements |
| Formal cost plan 1 | RIBA Stage 2, concept design | Cost targets for each group element |
| Formal cost plan 2 | RIBA Stage 3, spatial coordination | Elements and sub-elements, measured from drawings |
| Formal cost plan 3 | RIBA Stage 4, technical design | Detailed measurement and specification |
| Pre-tender estimate | When contractors are engaged | The pricing documents the contractors will price |
Each stage should narrow the range. If the figure jumps between stages, something in the design or the brief changed, and the plan should say what. Keep every version, so the change can be traced.
The order of cost estimate
The order of cost estimate answers one question: is the budget realistic for this brief? It comes before there is a design to measure.
NRM 1 allows three methods at this stage:
- Floor area method. A cost per square metre of gross internal floor area.
- Functional unit method. A cost per unit of use, such as per bed space, per house type or per square metre of retail area.
- Elemental method. Broad costs for the main elements of the building.
Whatever the method, the estimate should state its basis, the date of its rates and what it excludes. An estimate without those three is a guess with a total.
The elemental cost plan under NRM 1
Once a design exists, the cost plan breaks the building into elements and sets a cost target for each one. NRM 1 fixes the list, so two cost plans can be compared line by line.
| Group | What it covers |
|---|---|
| 0 to 1 | Facilitating works and substructure |
| 2 to 4 | Superstructure, internal finishes, fittings and equipment |
| 5 | Services: mechanical, electrical, plumbing and lifts |
| 6 to 8 | Prefabricated units, work to existing buildings, external works |
| 9 to 10 | Main contractor's preliminaries, overheads and profit |
| 11 to 12 | Project and design team fees, other project costs |
| 13 to 14 | Risks and inflation |
On a refurbishment or conversion, group 7, work to existing buildings, often carries the most uncertainty. That is where surveys pay for themselves.
Risk allowance and contingency
NRM 1 treats risk as a cost in its own right, not as padding hidden in the rates. It recommends holding risk as separate allowances:
- Design development risks, for the design still to be finished.
- Construction risks, such as ground conditions and existing structure.
- Employer change risks, for changes the client may still make.
- Employer other risks, such as programme or funding issues.
When an element overruns, the overspend is covered by a transfer from the right allowance. When an element comes in under its target, the surplus goes back. The allowances should shrink as the design firms up.
Our guide to how much contingency a project needs covers sizing it by stage.
Craftex has completed a range of both small and large-scale projects on our commercial property with exceptional precision and quality. Dmitriy consistently delivers courteous, prompt service and has shown great flexibility in accommodating last-minute changes to plans and timelines. I highly recommend Craftex for their professionalism and outstanding workmanship.
From cost plan to tender
The last version, the pre-tender estimate, is the figure the tenders are judged against. It is only useful if it was built from the same documents the contractors price.
Three things keep the plan and the tenders comparable:
- One set of documents. The drawings, specification and scope the plan measured are the ones that go out to tender.
- The same exclusions. Anything left out of the plan is left out of every tender, in writing.
- Provisional sums with figures. Undesigned items carry the same amount in the plan and in every price; see provisional sums in construction.
If the tenders still come back above the plan, value engineering is the next step, before anyone cuts scope.
Who prepares the cost plan
On most projects a quantity surveyor or cost consultant appointed by the client prepares the cost plan. Their independence is the point: they check the design team's ambitions against cost.
What a consultant's plan cannot do is test prices against a live supply chain. That is where a contractor's pre-construction input adds value. On a two-stage tender or under a pre-construction services agreement, the builder prices the elements while the design can still change.
We do both sides of that conversation. An RICS-qualified quantity surveyor on our team reads the cost plan. Our in-house construction team, around 60% of the labour on our projects, prices how it would actually be built.
Already holding a cost plan or a quote? Send it to us. We'll beat it for the same scope, and we reply the same working day. Or get a free cost review before you go to tender.
