Cost Plan vs Quote: The Difference That Costs Renovations Money

The legal distinction nobody explains

A quote and an estimate are not the same document, and a cost plan is neither.

The distinction is in the Consumer Rights Act 2015, section 50. A quote, once accepted by the customer within its validity period, is a binding price. The trader cannot charge more later because their costs have moved. An estimate is a non-binding indication. The trader can revise it. Citizens Advice puts the same point in plain terms: a quote becomes a contract on acceptance; an estimate does not. LABC Front Door covers the same definition for residential building.

A cost plan is neither.

A cost plan is not an offer at all. It is a forecast structured to expose risk. It does not bind anybody to a price. It tells the reader what the project is likely to cost, what it might cost if certain things turn up during the works, and which lines are still unresolved. The reader is not being asked to accept it. The reader is being given the document the builder used to think about the price.

Most homeowners conflate all three. The first round of conversations sounds like a price exercise. Three builders are asked for “a quote.” Sometimes they send what is legally a quote. Sometimes an estimate. Sometimes a one-page document that names a number, lists a few exclusions, and is neither. The homeowner compares the numbers. The numbers look comparable. They are not.

Most builders and contractors do not point out the distinction. Myrmex did not, in our first months. We were trying to win small jobs, and a five-page cost plan does not win small jobs. The fastest way to win a small job is to send a number quickly. The fastest way to lose a small job is to send a five-page cost plan when the homeowner asked for “a price for the kitchen.” We have done both. The first won us work. The second produced a better outcome on the work that started.

What this looks like in practice: a homeowner with three quotes on the desk thinks they are deciding between three prices. They are not. They are deciding between three different scopes, three different exclusion schedules, and three different sets of assumptions, all hidden behind a single number that looks like the answer.

What a cost plan actually contains

The industry-standard format for a UK cost plan is RICS New Rules of Measurement 1 (NRM1). The current edition is the second, operative since January 2013, with practice updates in October 2021 and October 2022. NRM1 organises a project’s cost into fourteen group elements: substructure, superstructure (frame, floors, roof, walls, windows, doors), internal finishes, fittings and furniture, services, work to existing buildings, external works, preliminaries, main contractor’s overheads and profit, project and design fees, other development costs, and risk allowances. Designing Buildings Wiki publishes the working summary if you want the full structure named line by line. The point of the elemental format is that every cost in the project lives somewhere on the chart, and nothing falls through the gap between two trades.

NRM1 is built for projects where the elemental level of detail is justified. New-build commercial. Large new-build residential. Public sector. The elemental measurement assumes the design is detailed enough at cost-plan stage to measure each element separately, item by item: the area of external wall, the linear metre of partition, the square metre of suspended ceiling. It also assumes the project is large enough that the measurement effort returns its cost.

On a £150k to £1m residential renovation, the elemental measurement is over-engineered. The design is not yet detailed enough at cost-plan stage to measure each element separately, and the project is not large enough to justify the measurement effort if it were. RICS NRM2 covers the same logic at the level of the bill of quantities, where the trade-by-trade measurement is fully detailed and priced. NRM2 is for the contract sum, not for the cost plan.

What works on residential renovation at this size is a package-level structure. Twelve to twenty packages instead of fourteen elements. Each package is a discrete piece of buildable work: strip-out, structural alterations, first fix mechanical and electrical, plastering, kitchen install, joinery, second fix MEP, decoration. Each package has a baseline cost, an exclusions list, any provisional sums sitting against it, and a clear handover point to the next package. Myrmex’s in-house cost-planning tool produces the package-level format. The format is not unique to Myrmex. Most CM-led residential cost plans on £150k to £1m work use a similar collapse from elemental measurement to package-level structure, because the elemental level of detail does not yet exist at cost-plan stage on a project of this size.

The principle from NRM1 carries over unchanged. Every line is visible. Every assumption is named. Every risk is separated from the baseline rather than absorbed into it. What a cost plan contains is the same regardless of whether the format is elemental or package-level. It is the discipline of separating the known from the unknown, line by line. The format follows the project. The discipline does not.

What a quote actually contains

A quote is the legal instrument defined in §1. A binding offer at a stated price, capable of acceptance within its validity period. On a residential renovation in the £150k to £1m bracket, the binding document is usually a lump-sum quotation. The supporting form, when signed, is typically a JCT contract: the Intermediate Building Contract or the Standard Building Contract for projects of that size.

The contract sum is the headline figure. One number, against the scope as the builder has understood it. Below the headline sit four other documents that change what the headline actually means.

A schedule of exclusions. On a typical lump-sum quote in pre-1900 stock, fifteen to thirty exclusion lines is normal. Asbestos removal not included. Structural opening-ups not included. Repair of pre-existing damp not included. Soft strip beyond what was visible at survey not included. Make-good around penetrations created by other trades not included. The exclusion schedule is the document that turns the contract sum from “the cost of the work” into something else. The contract sum becomes “the cost of the work I have priced, conditional on the things I have not priced not being there.”

A schedule of provisional sums. Sums entered against work that the builder cannot yet price because the scope is not settled. A provisional sum for waterproofing if the basement survey identifies water ingress. Provisional sums sit in the contract sum but are not committed. They are replaced by an actual figure when the work is instructed.

A schedule of PC sums. Prime cost sums are allowances for materials or specialist work where the supplier or specification is named but the price is held open. A PC sum for ironmongery. A PC sum for kitchen units. A PC sum for sanitaryware. The PC sum is the budget. The actual cost will be the supplier’s invoice plus the contractor’s overhead and profit, applied per the contract. RICS NRM2 §2.11 to 2.13 sets out the convention: provisional sums are exclusive of overheads and profit.

Qualifications. Conditions attached to the offer. Validity period: usually 28 days. Programme assumptions: start date, working hours, weekend access. Access assumptions: scaffolding allowance, parking, single-stair tenement access. Ground condition assumptions: bearing capacity, water table, contamination risk. Any departure from them re-opens the contract sum.

The argument here is not that quotes are the wrong document. A quote is the right document for the right project. A quote is a priced summary of a builder’s interpretation of a scope, and that interpretation is what a cost plan exists to discipline.

A real cost plan, opened up

This is a real cost plan from a project Denis ran before Myrmex was incorporated. Reproduced with the client’s permission, with names redacted.

The reference is CF-2024-12. The cost plan was produced before the main construction contract was signed. The figures below are the actual figures as they appeared in the cost plan and the final reconciliation.

The baseline package sum was £179,847 across twelve packages.

1. Prelims & Site Establishment: £21,847.
2. Strip-Out & Demolition: £10,762.
3. Structural Alterations: £22,140.
4. First Fix Electrical: £14,683.
5. First Fix Plumbing & Heating: £19,425.
6. First Fix Carpentry: £13,392.
7. Plastering & Screeds: £10,118.
8. Bathroom Installation (×2): £18,476.
9. Kitchen Installation: £9,438.
10. Second Fix MEP: £11,725.
11. Flooring (Engineered Oak + Tiles): £14,092.
12. Decoration & Snagging: £13,749.

Each package has a fixed cost against a defined scope and a defined hold-point at the boundary with the next package. Each package’s price is locked at award; the surrounding documents handle the unknowns.

The exclusions list was six lines.

1. Soft furnishings, curtains, blinds, AV equipment.
2. Loose furniture, art hanging, final styling.
3. Garden / external landscaping works.
4. Building Control fees, Party Wall surveyor fees, freeholder consent fees (Client direct).
5. Asbestos remediation if discovered (separate HSE-protocol quote).
6. Latent defects to existing structure or services not visible at survey stage.

Compare that to the fifteen to thirty lines normal on lump-sum. The shorter exclusion schedule is not a cleaner project. It is a project where the unknown items have been moved from the exclusions list into named provisional sums sitting inside the package structure, with trigger conditions and price ceilings against each. The exclusions that remain are the items that genuinely sit outside the construction work: client-direct soft furnishings, statutory fees the client pays direct, latent defects beyond what survey could find.

There were two provisional sums. PSum 3.3(i): £3,475 against the soil-stack re-routing required if the existing run failed survey at strip-out. PSum 3.3(ii): £4,180 against an investigation allowance for sub-floor and basement-level moisture, covering invasive opening-up at the lower-level wall and floor junctions where a visual survey was inconclusive. Both sat inside the package structure with named trigger conditions. Each would be drawn or returned based on what the strip-out actually exposed.

A contingency sat separately from the package sum, at 8% of baseline. £14,388. The contingency was governed by a written rule: drawn only on PM written instruction, against documented circumstances, with a single-line entry against the contingency log. The contingency was not a buffer the contractor could quietly absorb. It was a controlled fund with a paper trail.

Payment was structured against five gates: P1 through P5, each tied to a hold-point. P1 on contract execution and mobilisation. P2 on strip-out completion and sign-off of post-strip survey findings. P3 on first fix complete. P4 on second fix complete. P5 on practical completion, with retention released against the snagging cycle. The release at each gate was tied to the work being signed off as complete, not to an elapsed-time milestone.

The first variation came on 08 April 2024, two weeks into the works. Strip-out exposed a rotted timber stud wall and a failing internal brick wall. Both conditions were diagnosed under PSum 3.3(ii), the sub-floor and basement-level moisture investigation provisional sum. The PSum surfaced what the strip-out exposed. The cost of remediating both items was processed as a variation rather than absorbed silently into the contingency fund.

VR-001: +£20,124, +9 working days. Approved in writing by the client on 08 April 2024. The variation was issued with a fixed price and a fixed programme impact stated before the work proceeded. The PSum named the unknown before the work started. The investigation surfaced the problem on a defined budget. The variation priced the remediation on a written instruction, with the audit trail intact.

The final reconciliation closed at £199,971 against £179,847 baseline. 11.2% movement. The contingency closed at zero draw. The discovery was processed as a named variation, not absorbed silently by the contingency. The audit trail showed the difference: an 11.2% movement composed of one named variation against one documented post-strip discovery, with the contingency intact.

Why one is not a substitute for the other

A cost plan and a quote are not different prices for the same thing. They are different documents doing different jobs.

The cost plan is a forecast structured to expose risk. Every line visible. Every assumption named. Every risk separated from the baseline. The document is not trying to win the work. It is trying to describe the work accurately, including the parts of the work that are still unresolved.

The quote is an offer structured to win the work. The document carries different incentives. The contract sum has to be competitive against the other quotes on the table, which means the assumptions sitting under the headline are pressured downward. The exclusions schedule absorbs the items the price will not bear.

Industry-wide data is consistent. Propeller Aero’s analysis of construction project performance puts the average overrun at 28% and reports that 85% of construction projects exceed budget. McKinsey’s 2017 Reinventing Construction finds 98% of megaprojects overrun by more than 30%. McKinsey’s data is megaproject (public infrastructure, mining, oil and gas) and does not generalise to residential. The figure is an upper bound on the kind of project where overrun is most studied, not a baseline for residential renovation.

In Central London period stock with listed-building, basement, or party-wall exposure, 20% to 40% is normal. The supporting evidence is the contingency convention itself. When standard residential guidance recommends 15% to 20% contingency on older or listed stock, it is admitting that overruns of that scale are expected on the underlying scope. Architecture for London’s 2026 update and the HouseUP listed-building guide both publish the convention. A 15% contingency is a rounded floor for problems the convention treats as likely.

CF-2024-12’s 11.2% movement is the result of a cost plan doing its job. It is not the absence of risk on the project. The project sat in the same period-stock band where 20% to 40% movement is normal. The 11.2% is the result of the unknowns being named, surfaced, and priced under instrument before they entered the contingency.

These are the categories Myrmex has hit on our own work. Damp extending into basements. Rotten walls. Asbestos in unexpected areas. 50+ year buildings with timber-and-clay or loam wall construction behind apparently solid surfaces. Programme delays from heritage consent cycles. Neighbour disagreements during party-wall negotiation. The cost plan format above is designed to surface them earlier than the lump-sum quote allows. We have learned them on our own projects, not in the abstract.

When you need each, on a £150k-£1m project

The cost plan is not the answer to every project.

On a £150,000 to £300,000 straightforward refurbishment in unlisted post-war stock, a thorough quote against a clear scope is often enough. The structure is sound. The services are recent. The scope is well-defined before tender. The risk profile is narrow. The exclusions schedule is short because most of the unknowns are not present in post-war construction. A competent JCT lump-sum form, signed against detailed drawings, will deliver the work on most of these projects. The same applies to apartment-level refurbishments in 1980s and later builds where the structure is shared and untouched, the services run through accessible riser points, and the scope reduces to interior finishes plus kitchen and bathroom replacement.

The threshold shifts as soon as any of the following enters the project. Pre-1900 stock, where the substrate is unknown until strip-out. Conservation area, where the consent cycle controls the programme. Grade II or Grade II* listing, where the consent cycle controls both programme and scope. Below-ground work (basement excavation, lower-ground waterproofing, party-wall underpinning), where the ground condition is not known until the dig starts. Whole-house refurbishment in a Georgian or Victorian terrace where previous works were carried out without retained drawings. Any combination of these.

For projects in that bracket, the order is cost plan first, then competitive trade tendering, then construction-phase management. The cost plan establishes what the project actually is. The trade tendering establishes what each package actually costs. The construction-phase management establishes how the work moves through the programme without the ground conditions or the heritage cycle silently consuming the contingency.

A cost plan is not free. The work to produce one (the buildability review, the package structure, the risk register, the trade engagement) is the same work the quote is trying to skip. On a £150k post-war kitchen refurbishment, skipping it is a defensible call. On a £600k Grade II refurbishment in a conservation area with a basement, skipping it is the decision that produces the variation register at month four.

The threshold is not a hard line. What a £150k-£1m renovation actually costs walks the cost ranges by project type. The decision logic above is the supplementary question: which of these documents is the right one to commission first, before the work starts.

Where Myrmex fits, and where Myrmex doesn’t

Myrmex sells construction management, two-stage open-book procurement under the Two-Stage Open Book mechanism the Cabinet Office issued guidance on in January 2014. The cost-plan format walked above is the central document. Myrmex’s PCSA is the agreement that produces it, before the main construction contract is signed.

How Myrmex runs a project is built around a small set of specific commitments. Every package cost is visible. Every variation is processed in writing, with a fixed price and a fixed programme impact stated before the work proceeds. Every PSum is drawn or returned with the documentary audit trail that makes the draw or the return verifiable. The contingency is governed by a written rule, not by trust.

The model is the right one for clients who want that level of visibility into the build-up of the price. It is the wrong model for clients who do not.

Some clients want a single number on day one and no further conversation about how it is built up. The cost plan, the package structure, the variation register, and the PSum mechanics are not features they want. They are friction. The right contract for that client is a JCT lump-sum form, signed against detailed drawings. The acceptance that comes with that contract is clear-eyed: any unknown surfaced after contract becomes a variation against the contract sum, priced at that point, on the contractor’s terms.

That is a defensible procurement. It is not a worse procurement. It is the wrong procurement for this firm to deliver, because the document this firm is built around is the one that client is choosing not to commission.