Risk allowance
The New Rules of Measurement (NRM) are published by the Royal Institute of Chartered Surveyors (RICS). They provide a standard set of measurement rules for estimating, cost planning, procurement and whole-life costing for construction projects.
According to NRM1: Order of cost estimating and cost planning for capital building work, the term 'risk allowance' refers to:
'...the amount added to the base cost estimate for items that cannot be precisely predicted to arrive at the cost limit.'
Where the 'base cost estimate’ means:
‘…an evolving estimate of known factors without any allowances for risk and uncertainty, or element of inflation. The base cost estimate is the sum of the works cost estimate, the project/design team fees estimate and the other development/project costs estimate.’
ICMS: Global Consistency in Presenting Construction Life Cycle Costs and Carbon Emissions, 3rd edition, November 2021, published by the ICMS (International Cost Management Standard) Coalition, defines risk allowance as: ‘A quantitative allowance set aside as a precaution against risks and future needs to allow for the uncertainty of outcome. This may include an allowance for optimism bias and a contingency sum.’
[edit] Related articles on Designing Buildings
Featured articles
Check out some of the best features and news from Designing Buildings as well as key stories from around the web.
New Prime Minister delivers on ECA call for cut in electricity costs.
CIOB reacts to the announcement of Andy Burnham as Prime Minister.
Heritage and conservation science workforce survey - Have your say.
England's Suburbs 1820-2020. Book review.
New, more proportionate and targeted approach for higher-risk building assessments.
Government brings British Steel into public ownership.
UKCW Birmingham returns with bold new theme and focus.
New guidance published on competence requirements for self-certification schemes.
Construction Management, 8 July
NEETs crisis drives interest in trades, but apprenticeships barriers remain.
Passive fire protection webinar
MEP services penetration seals.
Where its at podcast (and video) - The role of the Architectural Technologist as an Expert Witness.
More than 200 remarkable buildings added to SAVE’s Buildings at Risk register.
Comments
[edit] To make a comment about this article, or to suggest changes, click 'Add a comment' above. Separate your comments from any existing comments by inserting a horizontal line.