Last edited 22 Mar 2021

Director’s adjustment

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 NRM2: Detailed measurement for building works, a director’s adjustment is:

…a reduction or addition to the tender price, derived by the contractor’s estimating team, offered by the director(s) of the contractor.

The contractor’s directors, or other senior managers, will typically perform a commercial review of the estimated price with a view to how best to secure work. They may then decide to adjust to the estimated price, taking into consideration the need to secure work, the level of competition in the market, the company’s cash flow, financing charges and so on.

This will be identified as a separate line in the bill of quantities, where the contractor can insert their adjustment.

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