Avoid Costly Mistakes: Understanding A Project’s Full Financial Commitment

We’ll go for the big one first. Construction costs are ever changing and therefore hard to pin down, especially at the outset of a project that may not get to site for a year – or more if you subscribe to the Cornish ideal of doing things ‘dreckly’, which is to say very slowly.

Luckily, there are ways to gauge the likely outlay at all stages of the project:

• • Initial Appraisal
  • Concept Design
  • Technical Design
  • Tender/Construction

Initial Appraisal

Before starting your project, we can carry out an Initial Appraisal. As part of this, we provide you with a ballpark estimate based on the likely square metreage of your proposal and the current median cost of construction for your type of project.

Concept Design

Once we have pined down a concept design, or various options, based on your brief, we can engage a Cost Consultant to give us a more defined estimate of costs based on the actual design.

Technical Design

Once the technical aspects of the design have been agreed and accepted by Building Control, we can then engage a Quantity Surveyor, who will give a more defined cost for the works.

Tender/Construction

Finally, once the tender package has been prepared for construction, we can request definitive tender prices from contractors. Even if the price of the build comes back too high at this stage, there is no need to panic, we can provide Cost Engineering services to help you reduce costs.

Professional Fees

Next, you should consider professional fees. With ever tightening regulations, the demand for professional services is increasing, and this can be a big hit on budget, particularly for small projects. On average, you are looking at around 25-30% of the construction budget again for professional fees, with Architectural fees being a significant portion of that. This may be less if a Planning or Building Regulations application is not needed, as there are often reports and surveys needed for these that otherwise aren’t required. However, for complex sites with small construction budgets, it could be more.

The good news is that any good Architect will advise you on the likely reports and surveys required for your project near the outset, so you can plan for these costs.

Key consultants that are often required include:

• • Your Architect, who will co-ordinate with all other collaborators on your behalf.
  • Topographical Surveyor
  • Ecologist
  • Arboriculturist
  • Structural Engineer
  • Party Wall Surveyor
  • Conservation/Heritage Consultant
  • Planning Consultant
  • Energy Assessor
  • Quantity Surveyor
  • Highway Consultant
  • Mining and Contamination Specialist
  • M+E Consultant (Mechanical and Electrical)

Statutory Charges

It is often necessary to gain Planning and/or Building Regulations approval before starting works, but these aren’t the only statutory charges to take into consideration. You should be aware of:

• • The Community Infrastructure Levy (CIL). Luckily, there are exemptions that include extensions under 100sqm, or when you will live in the property as your main residence for 3 years following approval and as such it often doesn’t effect homeowners.
  • Section 106 and 111 Agreements. These agreements are drawn up during the Planning process by the local planning authority.
  • Biodiversity Net Gain credits. This does not apply to householder applications such as house alterations or extensions, and can be mitigated by providing new habitat onsite where it does apply.

You should consider these if they are likely to impact your project. If you are unsure, it is best to instruct us to prepare an Initial Appraisal for your project so we can advise you on what statutory charges may apply.

VAT Rates

For a lot of works, VAT is chargeable at the current government rate on all service and construction costs. However, for some types of project, this is cut to 5% or is even zero rated to incentivize works. The caveat being that this is only for construction costs and does not include professional or other fees.

Based on HMRC’s guidance, zero rated projects include:

• • Building a new house or flat.
  • Work for disabled people.

And reduced rate projects include:

• • Upgrades to qualifying energy-saving products and certain mobility aids for people over 60.
  • Conversion from one residential use to another.
  • Renovating a residential building that’s been empty for two years or more.

If you are unsure if your project qualifies for reduced or zero-rated VAT, HMRC offers a free VAT helpline. They also publish guidance on VAT for construction work.

Contingency Pot