es is set out in the New Rules of Measurement (NRM). The price agreed with the successful tenderer is entered ino the contract as the contract sum. Unfortunately it is fairly common for there to be a significant difference between the prices offered by contractors and the cost consultants pre-tender estimate.
The complexity of construction projects, the differences in circumstances, duration and level of specification between one project and another, and the continually changing state of the market due to fluctuations in supply and demand, inflation and so on mean that it is impossible to give rule of thumb figures (such as a cost per sq. m) for the likely cost of construction works.
Until 2015, The Department for Business, Innovation and Skills published quarterly construction price and cost indices for estimating, cost checking and fee negotiations on public sector construction projects. The responsibility has since been transferred to the Official for National Statistics (Construction Output Price Indices).
Private sector organisations such as the Building Cost Information Service (BCIS) provide cost and price information to the construction industry to help estimate the likely cost of construction works.
Construction is only a small part of the cost associated with a built asset. There may be land acquisition costs, fees, taxes and so on incurred before construction begins, and management, maintenance and other costs once the project is completed. These may be categorised as capital costs and operational costs
- Land or property acquisition.
- Statutory fees.
- Consultant fees directly associated with the development.
- Materials, plant and equipment.
- Fixtures and fittings.
- Project insurance, inflation, taxation and financing.
- Internal costs directly associated with the development.
This is considered a better way of assessing value for money than construction costs, which can result in lower short-term costs but higher ongoing costs through the life of the building. This can also apply to things such as design fees, where saving money on fees at the beginning of a project can be outweighed by very much higher ongoing costs through construction and occupation.
Life cycle costing (LCC) provides a methodology for the evaluation of combined capital, operating and end-of-life costs of a range of construction project alternatives, to ensure long-term value is delivered.
Often referred to as 'brick-and-mortar costs', hard costs refer to the cost of physical construction. Soft costs refer to those costs that, unlike hard costs, are not instantly visible or tangible, and are not directly related to labour or building materials.
Hard costs might include:
- Labour, equipment and materials required to complete the built structure.
- Site costs, such as utilities, drainage and so on.
- Landscape costs.
Soft costs might include:
- Land costs.
- Off-site costs.
- Loans, accounting fees and interests.
- Insurances and taxes.
- Public relations and advertising costs.
 Related articles on Designing Buildings Wiki
- Approximate quantities cost plan.
- Bill of quantities.
- Business plan.
- Capital cost.
- Construction price and cost indices.
- Contract sum.
- Contract sum analysis.
- Cost certainty.
- Cost consultant.
- Cost control.
- Cost information.
- Cost plans.
- Front-loaded costs.
- Life cycle assessment.
- Life cycle costs.
- Elemental cost plan.
- Final account.
- Hard costs v soft costs.
- Initial cost appraisals.
- International Construction Measurement Standards (ICMS).
- Operational costs.
- Outturn cost.
- Pre-tender estimate.
- Price certainty.
- Prime cost sum.
- Provisional sum.
- Tender pricing document.
- Sunk cost.
- Utilising life cycle costing and life cycle assessment.
- Whole life costs.
Featured articles and news
Survey reveals green skills gap.
America's economic collapse produced scores of PWA Moderne projects.
The benefits of glowing aggregates and cement.
Urgent need for open communication to address mental health issues.
Guidance offered on COVID-19 green recovery, building safety and more.
Providi