The New Rules of Measurement Volume 1 (NRM1), published by the Royal Institution of Chartered Surveyors (RICS), provides a structured framework for order of cost estimating and elemental cost planning at the early stages of a project. For construction firms that use it consistently, NRM1 is far more than a compliance document — it is the foundation of a meaningful benchmarking programme.
What NRM1 Is For
NRM1 applies at the early design stages of a project — from business case through to developed design. It sets out how to structure an order of cost estimate, how to allocate costs to elements, and how to account for risk, design development, and project-specific adjustments. Its elemental structure — substructure, superstructure, finishes, services, external works and so on — provides a common language for cost comparison across different projects.
This common language is the key to benchmarking. If every project estimates and reports costs using the same elemental structure, you can compare the cost of one project's structural frame against another's. You can track whether your mechanical and electrical costs are trending upward over time. You can identify which project types deliver the best cost efficiency and which consistently overrun at a particular element level.
The Gap Between Estimation and Actual Cost
One of the most persistent problems in construction is the gap between early-stage estimates and final outturn costs. NRM1 is used extensively at RIBA Stage 1 and 2, yet many firms abandon the elemental framework once the project moves into procurement and delivery. Costs are then tracked against trade packages or cost codes that don't map back to the original NRM1 elements.
The result is that the feedback loop never closes. You can't compare your Stage 2 estimate to your final account because they use different structures. You can't improve your early-stage estimating because you have no reliable data on where estimates go wrong. Closing this loop — ensuring that the Cost Breakdown Structure used at close-out maps back to the NRM1 elements used in the estimate — is one of the most valuable things a commercial team can do.
Building a Benchmarking Database
A benchmarking database built on NRM1 elemental costs is a genuine competitive asset. At its simplest, it is a structured record of elemental costs per square metre for completed projects, adjusted for location, procurement route and specification quality. Over time, with enough projects, it becomes a powerful tool for validating early estimates, challenging design decisions, and understanding your true cost base across different building types.
The critical requirements are consistency and discipline. Every project must use the same elemental structure. Final account data must be reconciled to that structure. Adjustments for location and specification must be applied consistently. This is not complex — but it does require a governance framework and leadership commitment to maintain standards across projects and across time.
Practical Steps
Start by adopting NRM1's elemental structure as your standard Cost Breakdown Structure for all projects, regardless of size. Define how your trade packages and subcontractor costs map to each element. Require a close-out reconciliation at the end of every project that maps final costs back to the CBS. Then begin building your database — even 10 projects of consistent data is enough to start drawing meaningful conclusions.
The firms doing this well are not the largest in the market. They are the most disciplined. And in an industry where margin is perpetually under pressure, that discipline is a genuine edge.