NRM2 Bill of Quantities: Structure, Measurement Rules, and How NRM1, NRM2 and NRM3 Differ

The New Rules of Measurement are three volumes. All three current editions are dated October 2021, took effect on 1 December 2021, and were reissued by RICS in October 2022 as practice information with no material change to their content. RICS gives the publication of ICMS, the Cost prediction professional standard and the RIBA Plan of Work 2020 as the main reasons for the new editions.

Source: NRM 1, NRM 2 and NRM 3, title pages and section 1.5; RICS NRM page.

ICMS, the International Cost Management Standard (3rd edition, November 2021, published by the ICMS Coalition), is a classification for reporting construction and life cycle costs. It has no detailed measurement rules. NRM maps to it: NRM2 notes that ICMS can be mapped at its Level 4, the cost sub-group, to the NRM1 elemental breakdown.

NRM1 runs alongside the RIBA Plan of Work. Each stage has its own estimate or cost plan, and formal cost plans 2 and 3 are progressions of the previous plan, not new plans. NRM1 adds that whether each is prepared depends on the procurement route: an updated plan might not be needed at Stage 4 under design and build. The bill comes in at contractor engagement, as the pricing document.

The cost plan is organised by group elements, numbered 0 to 14. VAT is not one of them: NRM1 treats it as a separate assessment and recommends excluding it from estimates and cost plans. Risk allowances and inflation are also kept out of the base cost: NRM1 asks for a base cost estimate with no allowance for either, then risk allowances (design development, construction, employer change and other employer risks), then tender inflation to the tender return date and construction inflation to the mid-point of construction.

Source: NRM 1, Table 1.1, Table 2.1, sections 2.15 to 2.17, 3.4 and Part 4.

NRM2 covers bills of quantities and quantified schedules of works. A bill is either firm, to obtain a lump sum for a fully designed project, or approximate, to be remeasured as built. Either way it has the same parts.

Three further rules apply to the bill as a whole. Overheads and profit are added as a percentage on the preliminaries, the measured work (contractor-designed work included), the risk allowances and work from provisional sums. Where the contract has no fluctuations clause, the bill provides a fixed price adjustment. And VAT is excluded from the bill (NRM 2, 2.5.7 and 2.6).

A provisional sum is money in the bill for work that cannot yet be measured. NRM2 divides it in two, and the label decides who carries the programme and preliminaries consequences of that work.

Provisional sums exclude overheads and profit, which the bill provides for separately. A law firm's training material on the subject (Fenwick Elliott) adds two practical points: under the JCT Standard Building Contract, extension of time and loss and expense run for undefined sums, not defined ones; and NEC contracts do not refer to NRM2 or to provisional sums at all, since they manage change through compensation events. If your contract is an NEC, read the NEC4 compensation events guide before you rely on provisional sum mechanics.

Risks. Residual risks the client chooses to transfer go in a schedule of construction risks, each priced by the contractor as a lump sum for taking and managing it, excluding overheads and profit. Risks to be shared are handled with provisional quantities. Risks the client keeps stay in the client's cost plan and do not appear in the bill.

Dayworks. A provisional schedule of labour hours and lump sums for materials and plant, against which the contractor tenders rates and percentages. It may be included in the contract sum, in which case it is treated as a provisional sum, or left out.

NRM2 allows three breakdown structures for a bill. The rules of measurement are the same in each; what changes is the order of the items.

NRM2 notes the tension: contractors often prefer work section bills for pricing, while elemental bills make tender analysis and cost data easier. Its answer is coding. The codes used for the cost plan are the basis for the bill's codes: a project reference, then the bill number, group element, element and sub-element (predefined by NRM1), then a user-defined component and subcomponent. NRM2's own example is DPB27-3.1.1.2.1.1. A work section or works package bill keeps that code and adds a suffix, such as /04 for work section 4, so the same item can be sorted either way and every item still traces back to the cost plan.

Source: NRM 2, sections 2.8.1 to 2.8.4, Tables 2.3 and 2.4, Appendix A1.

Section 1 of NRM2 is the preliminaries; sections 2 to 41 hold the rules of measurement, from excavating and filling and in situ concrete to builder's work in connection with mechanical, electrical and transportation installations. Each work section has its own tables, but a set of general rules applies everywhere, and they are where most small quantity errors come from.

Apart from enumerated and itemised items, the unit is metric (metres, square metres, cubic metres), and every item carries its unit. NRM2 also reminds the reader that the bill is a legal document: its descriptions are what the contractor priced.

Most of the hours in a bill go into measuring, rounding, coding and checking: work that follows rules and can be prepared by software that reads the drawings and keeps each quantity linked to its source. The decisions that set the price and allocate risk cannot.

This is the boundary Mirage works to. Its agents measure from drawings and link every quantity to the sheet it came from: at OCBM, 100% of extracted quantities are traceable to a source drawing (OCBM case study). Mirage has not published a UK NRM deployment; the NRM quantity surveying page describes what a first one would involve, and the honest test is a bill your team has already priced, where you know the right answer.