A formal cost plan is an elemental cost plan that is formally reported to the client on completion of a specific RIBA Stage or OGC Gateway.
Under NRM 1, cost planning progresses from the order of cost estimate through a series of formal cost plans, each prepared at the end of a design stage and each more detailed than the last as the design develops. Typically, formal cost plan 1 is prepared at the end of RIBA Stage 2, formal cost plan 2 at the end of Stage 3 and formal cost plan 3 at the end of Stage 4, before the pre-tender estimate. Each formal cost plan should:
- show cost targets for each element against the cost limit;
- reconcile with the previous plan, explaining every significant movement;
- state the information used, the estimate base date, assumptions and exclusions.
The client’s approval of each formal cost plan is usually a condition of moving to the next design stage.
Related terms: Elemental Cost Plan, Formal Cost Plan Stage, Order of Cost Estimate, Pre-tender Estimate.
