Last edited 28 Jan 2021

Externalities in construction

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 NRM3: Order of cost estimating and cost planning for building maintenance works, the term ‘externalities’ as:

‘…the quantifiable costs or benefits that specifically occur when the actions of organisations and individuals have an effect on people other than themselves, such as non-construction costs, income and wider social and business costs.’

The Green Book, Central Government Guidance On Appraisal And Evaluation, Published by HM Treasury in 2018, suggests that externalities: ‘…occur when consuming or producing a good or service produces benefits or costs for others that are not directly involved in the consumption or production.’

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