Develop Elemental Cost Plan 2

Section 1

Purpose

Formal Cost Plan 2 is the Stage 3 elemental cost plan, prepared from the spatially coordinated design produced at RIBA Stage 3. It is materially more robust than Cost Plan 1: it is based on coordinated architectural, structural and M&E drawings, carries measured elemental quantities rather than purely benchmark-derived allocations, and adopts a lower design contingency reflecting the reduced level of design uncertainty compared to Stage 2.

Under the RICS Cost Prediction Professional Statement (1st edition, effective 1 July 2021), Cost Plan 2 must include a cost movement schedule reconciling its total to Cost Plan 1, with all changes categorised and explained. This mandatory requirement ensures full transparency of cost movement from the approved Stage 2 baseline, and gives the client the information needed to either accept the revised position or instruct design changes before Stage 4 commences.

The RICS Cost Analysis and Benchmarking (2nd edition, 2024) guidance is central to Cost Plan 2 preparation: it confirms that the QS must continue to benchmark elemental unit rates against BCIS cost analysis data, applying TPI and location adjustments to ensure the comparison is on a like-for-like basis. Any element still diverging materially from BCIS norms must be flagged for VE review.

Section 2

Key Principles

NRM 1: RICS New Rules of Measurement — Order of Cost Estimating and Cost Planning (2nd edition, 2012), Parts 3 and 4: Part 3 defines the measurement rules for cost planning at Stage 3; Part 4 provides tabulated rules for elemental sub-division at a level of detail appropriate to the coordinated design.
RICS Cost Prediction (Professional Statement, 1st edition, effective 1 July 2021): mandates that cost plan reports state the change from the previous cost plan and the reasons for each change — mandatory, not guidance.
RICS Cost Analysis and Benchmarking (2nd edition, 2024): framework for benchmarking elemental unit rates against BCIS data; specifies the data to record in a cost analysis (GIA, storey count, tendering method, location, base date, specification outline).
BCIS Tender Price Index (TPI): adjustment from the BCIS data base date to the current base date, calculated as: ((current TPI − base TPI) ÷ base TPI) × 100%. BCIS publishes quarterly TPI values and forecasts.
BCIS Location Factors: regional tender price indices used to adjust BCIS benchmark data to the project location. London factor is typically the highest; North East and Wales among the lowest.
ICMS (International Construction Measurement Standards): RICS Cost Prediction Professional Statement recommends ICMS reporting format where in the client's best interests, particularly for international or public sector projects.

Section 3

Practical Application

Step 1

Gather the Stage 3 design information: coordinated architectural drawings (floor plans, sections, elevations at 1:100 or better), structural engineer's scheme drawings, M&E engineer's layout drawings and outline specification. Agree the information cut-off date with the design team — do not issue CP2 based on incomplete information.

Step 2

Prepare a cost movement schedule: tabulate the CP1 elemental breakdown alongside the current position, identifying gross increase/decrease per element and categorising each movement as (i) design development, (ii) scope change instructed by the client, (iii) market or inflation movement, or (iv) correction of CP1 error/assumption.

Step 3

Measure elemental quantities from the Stage 3 drawings using NRM 1 Part 4 tabulated rules. At a minimum, measure: GIFA per storey, external wall area, external window/door area, internal partition length, floor finishes area, ceiling area, and indicative M&E services quantities (number of risers, approximate AHU sizes, sanitary fixture counts).

Step 4

Apply BCIS benchmark elemental unit rates (adjusted for TPI and location) to the measured quantities. Cross-check each elemental unit rate against the CP1 EUR and the BCIS benchmark. Flag any element where the CP2 EUR is more than 10% above the BCIS benchmark as a VE target.

Step 5

Recalculate Preliminaries from the Stage 3 information: if the contract period has been updated, recalculate time-related preliminary costs. Confirm fixed and time-related splits. Preliminaries should remain in the range of 12–18% of measured works.

Step 6

Set the Stage 3 design contingency: typically 5–10% of construction cost, reduced from Stage 2. Document the basis: the selected rate should reflect the level of design completion (a partially coordinated design warrants a higher rate than a fully coordinated set).

Step 7

Update the risk allowance: sum the EMV totals from the updated Stage 3 Risk Register. Do not embed risk within elemental rates — carry as a separate named provision.

Step 8

Compile the Cost Plan 2 report including: executive summary, elemental breakdown with quantities/rates/costs/EURs, cost movement schedule (CP1 vs CP2), assumptions register, exclusions list, BCIS benchmark comparison, design contingency basis, and risk allowance cross-reference. Issue for client sign-off.

Section 4

Common Mistakes to Avoid

Omitting the cost movement schedule from the Cost Plan 2 report — under RICS Cost Prediction (2021), stating the change from the previous cost plan with reasons is a mandatory professional obligation.
Maintaining Stage 2 contingency (10–15%) without justification — if design is sufficiently developed to reduce contingency, carrying an inflated rate misleads the client about true design cost.
Applying TPI without documenting base date, current date and TPI values used — the BCIS adjustment must be transparent and auditable; an undocumented TPI uplift cannot be defended at audit.
Using NIA instead of GIFA for elemental unit rate calculations — all BCIS benchmark rates and NRM 1 rules are based on GIFA; substituting NIA overstates EURs and produces an incorrect benchmark comparison.
Issuing CP2 from partially coordinated information — a cost plan is only as reliable as the information on which it is based; the design team's information status must be documented as a qualification.
Combining risk allowance and design contingency into a single 'contingency' line — these provisions have different derivations and purposes; presenting them as one sum prevents effective cost management.

Section 5

APC Competency & Quick Reference

APC Competencies: Cost Management (L2) | Design Economics & Cost Planning (L2) | Procurement & Tendering (L1) | Programming & Planning (L1)

How is tender price inflation calculated for Cost Plan 2?

Tender inflation is calculated as: ((Current TPI − Base TPI) ÷ Base TPI) × 100%, where the base TPI is the index at the cost plan base date and the current TPI is the index at the expected tender return date. BCIS publishes quarterly TPI values and forecasts. Construction inflation (from tender return to mid-point of construction) is calculated using the same formula applied to the construction period.

What design contingency rate is appropriate at Stage 3?

Typically 5–10% of construction cost, reduced from the 10–15% carried at Stage 2. The rate should reflect the degree of design completion: 7–10% for a partially coordinated design where significant M&E specification remains outstanding; 5–7% for a fully coordinated design. The basis must be documented in the report.

What data must be recorded when preparing a BCIS cost analysis for Cost Plan 2?

Per RICS Cost Analysis and Benchmarking (2nd edition, 2024): GIA and NIA; wall-to-floor ratio; number of storeys; tendering method; procurement route and form of contract; project location and base date; start on site and completion dates; sustainability rating; elemental cost breakdown; and outline specification. This enables meaningful future benchmarking.

Section 6

Cost Plan 2 Checklist

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Stage 3 design information cut-off date agreed with design team

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Cost movement schedule prepared (CP1 elemental vs CP2 elemental, changes categorised)

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Elemental quantities measured from Stage 3 coordinated drawings (NRM 1 Part 4)

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BCIS TPI and location adjustment applied and documented (base date, index values stated)

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Elemental unit rates compared against BCIS benchmarks; VE targets flagged

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Preliminaries recalculated using Stage 3 contract period

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Stage 3 design contingency set (5–10%) with basis documented

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Risk allowance updated from Stage 3 Risk Register EMV total

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Cost Plan 2 report compiled (elemental breakdown, cost movement schedule, assumptions, exclusions)

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Client sign-off obtained on Cost Plan 2 before Stage 4 gateway

Section 7

CPD Learning Outcomes

Prepare Formal Cost Plan 2 at RIBA Stage 3 using NRM 1 Part 3/4 measurement rules, applying BCIS TPI and location adjustments and benchmarking elemental unit rates against BCIS cost analysis data.
Prepare a cost movement schedule reconciling Cost Plan 2 to Cost Plan 1, categorising each variance by type, in compliance with the mandatory requirements of RICS Cost Prediction (Professional Statement, 2021).
Apply the appropriate Stage 3 design contingency rate (5–10%) and explain the reduction from Stage 2 (10–15%) in terms of design development and reduced uncertainty.

Section 8