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How much will my building project cost?

Rules of thumb - cost per square meter

Historically, when I first came into the industry, 23 years ago, a rule of thumb build cost for residential new build houses and extensions was bounded around as £100 per square foot. It would be nice to think that this was still the case (£100x10.7=£1,070 per square meter), but it is not. There is always a difficulty in advising clients about a build cost because, namely, ‘how long is a piece of string?’. Due to project complexities varying so much, size, finish, economy and timescale etc., and even though we still do advise, the likelihood of giving any client the correct project cost from the square meter calculation, prior to sending the project out to tender, is slim. However, you have to start somewhere and generally, our rules of thumb, which are based on previous priced projects, tend to come out somewhere close to the actual figure.

I am going to discuss here, in more depth, some of the things mentioned above which will change a project price. I hope that this will give any would-be client a good idea of what to expect their project to cost. Most of this article is based around the individual house and extension market. Of course, the larger the project, generally, the lower build cost per square unit (feet or meters), because of economies of scale. The contract sum is also affected by the current economic climate. Currently in Cambridgeshire, at time of going to press, we are experiencing a boom. This means that contractors and sub-contractors are much busier than they were, 2 to 3 years ago throughout and toward the tail end of the recession. What this means to individual domestic projects is that either you pay a premium to get a project started on site, or the project programme suffers and delays occur.

We would say that the range of build costs, per square unit figures, is between £1,300.00 per square meter and £2,500.00 per square meter. The bottom figure, perhaps, being a larger single dwelling on the lower side of ‘standard of finish’ and the top figure being a plush fit out for a medium sized dwelling. Of course, this a very large gap with £1,200.00 difference between the two upper & lower figures, and you might say, ‘well how on earth can you advise on that basis’. Well, through consultation and defining the brief stage, discussed and clarified with the client, we usually get told where the figure is to be set. Either a client will say to us something along the lines of ‘we don’t want anything to special, just nice and suitable for our needs…’, where as others will say something like ‘we want the best there is…’, and of course many say 'we want the best for as little expense as possible...', either way, this gives us the fore site of where the project cost is supposed to be.

Let's set a scenario up to show how we advise our clients and what other costs there are to consider when planning a project.

Theoretical project credentials for 1 new dwelling (The Brief):

The site is located in a rural location, on its own and 3 miles from the nearest village. (i’m be purposefully awkward here)

The couple would like to build a good sized, new, 4 bedroom house. They would like to achieve approximately 200 square meters of floor space, finished to a good standard, but not too expensive.

They would like to position the dwelling on the northern boundary of the site so that the south side of the site can be used for the external spaces with ease of access.

The total budget for the scheme to build (excluding land costs) is £380,000.00.

On this basis we would start by doing some quick calculations, as follows:

  • High quality standard of finish @ £2,500 per square meter x 200 square meters = £500,000.00.
  • Lower standard of finish @ £1,300 per square meter x 200 square meters = £260,000.00.
  • Middle of the road standard of finish @ £1,900 per square meter x 200 square meters = £380,000.00.

So, the above shows us that the build cost has got to be somewhere between the lower two figures. We would expect it to be somewhere closer to £1,600 per square meter. Whilst the last, middle of the road figure equals the budget figure, you would have to allow some of the budget to be reserved for the following:

Contingency sum_we always suggest that any client reserves an amount of money, usually 10% of the final contract figure, what we in the industry refer to as 'the contract sum', for unknowns that, not always but often do, crop up. This could simply be something like the discovery of well, previously not known about, which you the client would have to pay, if positioned under the intended building location, to be secured up and made structurally sound. Or, even, particularly in areas known to have been targeted heavily during World War Two, unexploded bombs. Whilst not a regular occurrence, I've not come across one yet, they are discovered and whilst you may not have to foot a bill from the bomb squad to diffuse it, you may suffer some loss of time and a claim under the contract, known as a relevant event, from the contractor if he has to send sub-contractors home.

Builders margin

Like the contingency sum, this is usually set at around 10% and is included within the contract sum and the ball park figure square meter approximated figures, shown above.

Local Authority (LA) Fees:

Fees vary from LA to LA but will be set somewhere close to the following:

Pre-app Advice Planning Application-£200.00 (dependant on level of service required, if chargeable at all. Some councils don't charge for this and others don't offer this service at all for smaller domestic extensions.)

Full Planning Application - £385.00
Build regulations full plans fee + site inspections - £600.00

Professional fees (all approximated exclusive of VAT & expenses):

  • Architect - £25,000.00
  • Principle Designer (CDM 2015) - £1,200.00
  • Structural Engineer - £2,000.00
  • Party Wall surveyor - £2,000.00
  • Topographical Site Survey - £700.00
  • Arboricultural (tree) Survey - £1,200.00

Project Totals:

Contract sum (@ £1,600 per square meter) = £320,000.00
10% Contingency = 32,000.00
LA Fees = £1,185.00
Professional Fees = £31,100.00

Total Project Cost = £384,285.00

This shows a total project cost of £385,285.00, whilst nearly £5,000.00 over the budget figure, we would suggest that as a ball park figure ‘guesstimate’, the project is definitely feasible considering the clients budget figure.

For an extension, exactly the same principles apply. As an example I would suggest as follows:

Theoretical project credentials for a single storey extension (The Brief):

  • Pre-app Advice Planning Application - £150.00.
  • Full Planning Application - £175.00.
  • Build regulations full plans fee + site inspections - £500.00

Professional fees (all approximated exclusive of VAT & expenses):

  • Architect - £6,900.00.
  • Principle Designer (CDM 2015) - £600.00.
  • Structural Engineer - £900.00.
  • Party Wall surveyor - £2,000.00.
  • Topographical Site Survey - £700.00.
  • Arboricultural (tree) Survey - £900.00.

Project Totals:

Contract sum (40 square meters @ £1,600 per square meter + 10% for tying into existing building) = £64,000.00 + £6,400.00 = £70,400.00.
10% Contingency = £7,040.00.
LA Fees = £825.00.
Professional Fees = £12,000.00.

Total Project Cost = £90,265.00.

Conclusion

Whilst we hold no liability for these calculations, we do consider them to somewhere along the lines of a realistic guideline. Many of the items shown with a cost next to them, Party Wall Surveyor-£2,000.00 within the Theoretical project credentials for a single storey extension part, for instance, may not be required on some projects, as with many of the other variables that I’ve shown. There are also some geographical variations of costs with, unsurprisingly, London seeing the highest build prices in the country, although I don’t think Cambridge is far behind.

If any client requires a more surer estimate on a build cost, prior to sending the tender package out to chosen builders, the client could appoint a Quantity Surveyor to price the work on their behalf. Sometimes this is what the builders will use in any case, to price the work for them. This would add an additional small professional fee on top the whole project cost, however, from our experience, certainly on the larger projects, this can often be a useful method for the client to have a better understanding of their project, and to enable securities of loans and investments, mortgages etc.