Last edited 20 Nov 2020

Cost per functional unit

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 ‘cost per functional unit’ (or functional unit cost) is:

‘…the unit rate which, when multiplied by the number of functional units, gives the total building works estimate (i.e. works cost estimate less main contractor’s preliminaries and main contractor’s overheads and profit). The total recommended cost limit (i.e. cost limit, including inflation) can also be expressed as a cost per functional unit when reporting costs.’

Where the term ‘functional unit’ means:

‘…a unit of measurement used to represent the prime use of a building or part of a building (e.g. per bed space, per house and per m2 of retail area). It also includes all associated circulation space.’

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