Building a pricing document | C-Link

Building a pricing document

by Dean Suttling

If you are looking to value variations, put your own cost plan together or compare prices back from the market, then you can utilise construction price books for rates and prices in order to establish current market rate. The benefits of price books are that they are compiled from industry feedback and analysis, therefore you can use them with confidence in establishing a range of project costs.

Having access to suitable rates and prices is paramount for contractors in order to bid for, estimate, and win works. Similarly, a developer working between stages to build a case for investment may not have access to a contractor, therefore price books become important.

Many of the price books in use across the industry have been around for well over fifty years and have become intertwined with the standard methods of measurement across the differing sectors such as building and civil engineering.

Price books are linked back to construction price and cost indices (PCI’s) produced on behalf of the government that are subsequently used in estimating, cost checking and fee negotiation on public sector works. The Building Cost Information Service (BCIS), on behalf of the RICS, historically carried out this analysis, but from 2013 it has been provided by AECOM, which in turn compile the most popular form of price book, Spon’s.

What the different types of price books?

There are many different price books on the market, and whilst some specialise in a particular market or sector, there are others that are for general use. Some of the examples include:

SPON’s Architects and Builder’s Price Book

This suite of price books contains rates and prices for general building work plus civil engineering and highways, mechanical and engineering works and external works and landscaping.

The benefits of the Spon’s price book is that you use its tender indexing to factor the rates and prices dependent on the location of the works whilst also making consideration for other market conditions such as inflation.

Not only does Spon’s provide a rate for the type of work, but it also includes the rate build up that makes up the unit rate. The benefit of such an approach is that you can alter the build-up to make them project specific for more accurate pricing, reducing the level of challenge whilst increasing price certainty.

Compared to other price books, Spon’s positions itself as the only price book on the market that can accurately value works that exceed four million pounds in value.

BCIS Online – Provided by the RICS

Now provided as an online tool via the RICS website, but also available as price books, the portfolio available from BCIS includes the Comprehensive Building Price Book, Alterations and Refurbishment Price Book, Guide to Estimating for Small Works, Painting and Decorating Price Book, and thee Building Maintenance Price Book.

Laxton’s Building Price Book

The builder’s price book has been in use for over 150 years and is now pushing nearly two hundred editions. Whereas Spon’s aligns to the RICS New Rules of Measurement (NRM), Laxton’s produces a version for NRM2 and its predecessor SMM7. Also available in a book or CD format, it is generally used for works in value from £25k to in excess of £5m.

The prices contained in Laxton’s are built up using first principles that depict allowance for labour, the cost of materials including any wastage, and plant enabling fully resourced price lists. The rates and prices in the book are for works of relatively small value, but there are percentages that can be used to factor the prices up for smaller or higher value works.

Similar to Spon’s price book, Laxtons has sections on contractor’s preliminaries, the ability to consider and factor for regional variances, plus the National Working Rule Agreement adjustment on labour rates.

CESMM4 (Civil Engineering Standard Method of Measurement) Carbon and Price Book

Published by the Institute of Civil Engineers, the first version of CESMM was only published in 1976, so compared to other price books it has only been around a short time. CESMM3 was published in 1991 and linked to ICE Conditions of Contract 6th Edition. However, with ICE subsequently backing NEC as the preferred form of contract, this led to the publication of CESMM4 in 2012 and the Carbon and Price book following in 2013.

Unlike building projects, civil engineering projects can have larger swings in the nature of pricing dependent on the technical aspects of the solution and the general characteristics of each project. There is less standardisation on civil engineering projects compared with traditional building projects, as each one generally required a unique solution.

However, not everything is different, as the price book makes allowance for approximate estimating, similar to Spons and Laxtons, whilst also including the National Working Rule Agreement. The rate build ups are based on construction outputs which can then factored dependent on each projects specific constraints.

PSA Schedule of Rates

More of a niche pricing book than Spon’s or Laxtons’s, the PSA Schedule of Rates is aimed at works covering government, local authority work and utilities, but perhaps more generally covers building works, M&E, and maintenance works. It does cover 20,000 rates and prices, but is aimed more at term maintenance works, and with local authorities favouring long terms frameworks for maintenance works, the PSA Schedule of Rates has its place amongst the other pricing books.

However, as Carillion compiled the price book, then due to their demise of its author in 2018, the PSA Schedule of Rates for Building Work had its last publication in 2015.

Hutchins Priced Schedules

Their price books have been in operation since 1945 and are ideally aimed at minor building works up to the value of circa £250k, but it also covers maintenance works. It has been superseded by SMM7, and more recently by the RICS’s NRM, and in fact it is based on SMM6, but nevertheless it still offers value and continues to update publications.

The price book itself has extensive coverage of labour and material rates, but laid out by trade, it continues to provide insight of current market rates for small to medium builders and estimators alike.

Griffiths Building & Civil Engineering Price Book 2020

First published in 1954, and now on its 64th edition, it provides a price book for general building and civil engineering works, plus also a mechanical and electrical price book, Griffiths is able to assist with price build ups for projects that are typically up to £1m in value.

The rates are based on UK averages, but there is the option to use location factors to allow for regional variances.

Produced by the same organisation as the Hutchins Priced Schedules, Griffiths is based on SMM6 and therefore in recent years has also been superseded by NRM but remains popular for SMEs.

What are the different unit types?

Price books can be of use across the industry, but it’s imperative to have a standard way of measuring construction works, as without this it would be difficult to benchmark prices and ensure consistency. The most used example of a standard method of measurement is the New Rules of Measurement, which is published by the RICS. It replaced the previous version in 2012 which was called SMM7.

NRM is a suite of documents prepared by the RICS and the Quantity Surveying and Construction Professional Group. Spon’s price books are published in line with the RICS’s New Rules of Measurement, with NRM1 used for order of magnitude estimating and cost planning for capital building works. NRM2 is used for detailed measurement of building works and NRM3 is similar to NRM1 but used for building maintenance works.

In order to work out order of magnitude cost estimates, you will not have a fully detailed design to use where you could utilise NRM2, therefore you will be using nominal measurement from feasibility design or client’s requirements i.e. if you were planning on building a hotel then you could use information such as:

  • Number of beds
  • Number of floors which might be as per the site constraints
  • Location of the site
  • Project brief as to desired level of quality
  • Design life requirements
  • Any site specific risks
  • Programme duration or estimated build duration.

Using these factors, you can work up a cost plan and benchmark the forecast cost against your cost plan. NRM1 uses “Elemental Unit Quantities” that are captured at a high level e.g. facilitating works, substructure, superstructure, all largely based on area or number in terms of quantity. Alternatively, there are rates based on cost/m2 which can be applied to the gross internal floor area or GIFA. These rates are then factored to include for inflation dependent on the base date stated in your pricing book.

Once your project is more developed and you are able to produce a more accurate take off, then you will be using NRM2. This more detailed standard method of measurement will define the unit of measurement for each work type e.g.

  • m or lm = metre or liner metre
  • m2 = metre squared
  • m3 = metre cubed
  • nr = number
  • tn = tonne
  • Item = Fixed Charge
  • Week = Time related charge

When do you use each unit type (e.g. m2, l/m, nr, item, etc.)?

The unit types noted above are driven by work type when producing a bill of quantities, for example single number items will be for doors and ironmongery kits, whereas measurements in length will be items such as handrails.

Area is the one measurement used the most as it can be used for gross internal floor area, or to be more specific, areas for flooring types, painting of walls, concrete slabs, brickwork and landscaping. Volume i.e. m3 or tonne will be where material use dictates it, such as concrete, gravel or steel.

As an example of the above that corresponds to a pricing book, say for pricing a substructure:

  • Strip foundations are measured and priced in metres or ‘m’.
  • Column bases are measured and priced in ‘nr’ or number.
  • Piling work are measured and priced by m3 when first constructing a piling mat, but the actual piles are measured by the m.
  • Concrete ground beams are measured and priced by the metre.
  • Temporary works are measured and priced by number or ‘nr’ due to the individual characteristics of each set of temporary works, meaning it is difficult to benchmark a rate or measure.

An example of a pricing document with groundworks

Below is a typical example from Spon’s where they provide rates based on approximate estimating i.e. they include for overhead and profit plus the direct costs of carrying out the works. However, not they do not include for Contractors preliminaries, VAT or professional fees.

They are intended to be used for cost plans and for general estimating, hence the terms approximate, therefore proceed with caution if you are considering using this type of assessment for the actual pricing of works.

In terms of the preliminaries, there are details within Spon’s as to how to make allowance based on certain percentages of the tender sum, these are again taken on an approximate basis when using the estimating rates below.

Best practice with any cost plan, using the various pricing books, is that you should continue to refine it once you are receipt of better particulars so you can increase the accuracy of your estimate.

 

Image credit: iStock.com/primeimages

About Dean Suttling

A member of the Royal Institution of Chartered Surveyors, Dean has twenty years of experience in commercial management and quantity surveying, undertaking roles for contractors, clients, and consultants.

Related Articles

blog post image
Valuing variations with a Schedule of Rates
blog post image
Structuring project cash flow
blog post image
Early contractor engagement in two stage tendering