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.
Government approach could undermine delivery and regeneration.
World's first mass timber data centre.
The overlooked environmental aspect of data centre development.
Introduction to radon awareness
New technical information sheet published by CIOB.
Updated supplier guide can help electrical contractors engage with NHP.
CIAT confirm the winners of the 2026 architectural technology awards.
Government launches a one stop shop for flood preparedness.
Sir Edwin Lutyens: Britain's greatest architect? Book review.
CIOB publishes free template to help assess and manage risks.
ECA's reflections on Party Conference season
Burnham wants to be confident of winning before asking for a fresh mandate.
New Chief Construction and Scientific Adviser
Sergio Cavalaro, Professor of Infrastructure Systems at Loughborough University.
Building safety levy for England
CIAT publish estimator tool for members.
Water sector faces a growing crisis that could slow the delivery of vital infrastructure.
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.