Jon Bentley-Leek

How much will your building project cost?

by 19th Jan, 2016

Cost is a key factor in any building project and ‘how much will it cost?’ is understandably one of the first questions we are asked. Unfortunately, it isn’t an easy question to answer straight away. The reality is that only when you complete the project do you finally know its total cost. However, we recognise that isn’t an answer that is any practical use when planning a building project. To help to address this we focus on cost and value throughout our relationship with our clients. As part of our process we seek to provide valuable cost information at each stage.  This blog explains how we approach this critical aspect of architecture in detail.

Understanding costs at the start of your project

During our very first discussions with you there are three questions we seek to answer about your project:

  • Is it legally possible? (i.e. if it’s needed, will it get planning permission?)
  • Is it technically possible? (i.e. can your vision be physically realised?)
  • Is it financially possible? (i.e. are your vision and your budget, broadly speaking, aligned?)

We will only advise that we proceed with your project if we are confident we can answer ‘yes’ to all three questions.

Stage Zero: understanding cost vs value

It is important to note that sometimes these three questions are easier to answer than others. This is especially true when it comes to the finances. This is because cost needs to be assessed in relation to value.

When working on something such as a home extension you can decide whether the changes you make will give you value for money in terms of creating a property that enhances your quality of life by giving you what you need in the short, medium and long terms. If there is an element of uncertainty about whether your project is achievable with the budget you have available, you can proceed to Stage One to find out. The sum of money you invest in doing this will be relatively small in relation to the sum of money required to undertake the complete project and it will give you a degree of certainty that it would be otherwise impossible to get.

But when it comes to the re-ordering of a church, for example, it is impossible to put a value on preserving a building for the community and the nation. In the early stages it is also difficult to ascertain exactly what works are required. In cases such as these, the answers are so complex and difficult to arrive at that we will recommend undertaking a feasibility study to address them before the project proceeds any further. The resulting documentation often forms part of funding applications made to grant funders who may fund the project because it seeks to benefit the community and the nation.

Understanding costs in Stage One

Stage One of your project is about developing the design and gaining planning permission. By the end of the Stage, as well as having planning permission, we will also have an understanding of how much it is likely to cost.

We start the Stage by working out what you’ve got at the moment and what you want to get.

We do this by:

  • looking at your needs
  • making detailed survey drawings of your building as it is at present
  • carefully assessing the site’s views, assets, access and circulation.

Once we have this information we create a drawing that presents our solution to your needs. This drawing allows us to put together a basic cost plan.

We refine this cost plan further as we move through the Stage. This is because we:

  • create drawings that are more detailed than our initial ones
  • make a pre-application enquiry to your planning officers to get an understanding of anything the plans may need to take into account
  • put together information to be able to ask a Quantity Surveyor to assess the project in relation to cost if we want the extra certainty.

Understanding costs in Stage Two

By the end of Stage Two, we will have a clear and accurate actual cost for your project. This cost will be the lowest possible market cost to deliver your project because it will have been priced by the person who will be carrying out the work.

To get to this cost, we will:

  • detail every element of the building from the depth of the foundations to the door handles so we have an itemised list of everything involved in your project and we understand everything that is involved. The project may also require other designers to be involved. Typically a Structural Engineer will need to be appointed, but your project may also involve a kitchen designer, for example. We will work with you and others to coordinate all the design information so that is all works together and can then be priced as a whole project.
  • put the resulting schedule of information out to competitive tender to competent contractors with strong track records in achieving projects like yours
  • select a preferred contractor, usually the one who quotes the lowest cost
  • undertake a value engineering process with the preferred contractor to look at further cost saving measures and accurately assess the benefit of each and every item within the project in relation to its cost.

Understanding costs in Stage Three

The work we do in Stages One and Two will have removed as much of the uncertainty around the price for your project as is possible, giving you greater confidence that your project will come in at a price you are comfortable with. We will have made intelligent decisions about what is required and we will have built in a contingency to cover the cost of any unknown unknowns. The cost of your project as given by your building contractor is underpinned by a contract which means that if everything is carried out as planned, the building contractor is contractually obliged to honour the price given.

However, things are rarely that straightforward. Sometimes the site throws up unforeseen challenges we could not have predicted or allowed for, even though we will have done everything we reasonably can to minimise this risk. Whenever the unexpected or unforeseen occurs we will work with you and the contractors to make the necessary changes to achieve the project. Generally, these changes are covered financially by the contingency we allowed and the works are carried out within the agreed cost of the project. Interestingly, in our experience, the bigger impacts on cost tend to come from additions or changes made by clients themselves once work starts on site. The works involved often make excellent sense (for example, while machinery is on site to dig the foundations, it is cost effective to start landscaping the garden at the same time) but since they are in addition to the agreed schedule of works, the cost needs to be calculated and added. When this happens, we work with you to ensure that the additional costs are fairly priced, even though they may be in addition to the agreed sum.

Costs during this Stage are checked and managed on a monthly basis to ensure the price paid is in line with the contract price and that any changes are fairly priced. The building contract we use has payment being made monthly in arrears, less 5%. This means that if the contractor leaves the contract for any reason, there are still funds to be able to appoint a replacement. It also means that if any works are not carried out in accordance with the contract, they can still be fixed within the budget.

Understanding costs at Stage Four

At what is known as ‘practical completion’ your project is finished to the point at which you can move in. However, the contract retains a sum of money from the contractor for 12 months. During this 12 months, any rectification work can be done. At the end of the 12 months a final account is agreed and the final payment can be calculated and made. It is only at this point that the absolute final cost of your project is known. However, by working with us on the preceding Stages you will have much greater foresight and knowledge about what this final sum is likely to be before you are committed to paying for it. It is unusual for the contract price that is agreed at the end of Stage Two to change significantly by the end of the Stage Three. This is because the works will have been agreed upfront, rather than ‘on site’ which take out much of the risk of the project.

Understanding how much your project will cost

You need to know how much your project will cost and we understand that. You can have confidence that we will not agree to work with you unless we have good reason to believe we can achieve your vision at your budget. We will work with you to take the cost from ball park to accurate as the project progresses and more information becomes available. Whatever happens, we will never proceed any further at any stage unless you are happy that the cost reflects value for money in giving you your vision.