The cost limit, or project budget, is the maximum expenditure the client is prepared to make in relation to the completed building. It includes construction costs, the cost of professional services, certain other project costs, items required after completion and during operation, and risk allowances.
The cost limit is set at the start of a project and is the figure the design must be developed to meet. Under NRM 1 the cost limit is reported both excluding inflation and, as the recommended cost limit, including inflation. Each cost estimate and cost plan should be checked against it, and any risk of exceeding it should be reported to the client promptly so that the scope, specification or budget can be reviewed.
- Also referred to as the authorised budget.
- Should be agreed with the client in writing.
Related terms: cost plan, cost target, risk allowance, recommended cost limit.
