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Last edited 08 Jan 2021
Discount rate in the construction industry
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.
For example, if investing at 3 per cent interest, then the present value is discounted by 3 per cent as it is worth less than future earnings due to interest.
Where the present value is:
NB Guide to developing the project business case, Better business cases: for better outcomes, published by HM Treasury in 2018, defines the discount rate as: ‘The annual percentage rate at which the present value of a £, or other unit of account, is reduced over time. This is applied to values that are at constant prices and has nothing to do with currency inflation.'
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