Cost Planning for Residential Projects

Every project needs a clear budget, and every project has to be designed to meet the financial expectations of the client, otherwise the project will not progress far beyond being a nice idea.

At the beginning of a project the client’s list of requirements can read more as a wish-list, with little basis in a realistic budget. It is understandable that a client’s budget could be a poor fit for their brief, as most residential client’s knowledge of building costs is informed by what they have heard from friends, from reality programs on TV, or what they think should be a reasonable price for the work. It is one of the jobs of the architect to better align the budget and brief, to make sure that the client understands from early in the process what can be achieved with their budget, and trim their brief if necessary, or raise the budget to suit the brief.

But before a budget can be agreed on, it is important for the architect to appreciate the scale and complexity of the project sought by the client, and what are their design intentions.

To achieve a desired outcome from a project, the architect must make best sense of the client’s requirements in a way that can be built and enjoyed by the client.

Only then can any discussions about money be meaningful.

Generally, public knowledge about the cost of building relates to the cost of building per square metre, which is an inaccurate metric of building costs when looking at all of the costs of a specific project.

These square metre rates usually only refer to the area of the house measured to the outside of the external walls, and do not include work outside of this area such as decks and balconies, swimming pools, driveways, siteworks or landscaping.

Eventually all projects need to be priced in detail, the sooner the better.

The type of project, the location, the quality of the project and the access to the property all have an impact on the project cost. For example:

  • How large will the house be: 300sqm, four bedroom, three bathroom, two cars; or 140sqm, three bedroom, one and half bathrooms, no car?
  • What materials will the house be constructed from: full brick and render, or lightweight cladding on steel frame?
  • What quality of fit-out will the house have: timber and stone with traditional joinery, or concrete and steel with minimal detailing?
  • What area is the house located in: regional, or inner-city council with strict heritage controls?
  • What type of site will the house be built on: level site with clay soil, or steeply sloping on rock?
  • What environmental factors may affect the house: suburban site affected by aircraft noise, or in a bushfire prone area?
  • What sort of access does the site have: easy access on two sides, access via a narrow rear lane only, or does everything have to enter and leave through the front door?
  • How complex is the design: highly detailed with a ‘wow’ factor, or simple perimeter between two party walls?

To accurately find out the cost of a project you can use a Quantity Surveyor (QS) or Building Cost Estimator. A cost plan is a measure and pricing at current market costs of the proposed design solution (usually at Concept Design stage) for a specific location and a specific client. A QS makes allowances for what has not yet been drawn but should reasonably be expected to be included, whereas Builders tend to price what is included in the documents. For this reason builder’s costings may not be reliable early on in the design process and can increase greatly when the full scope of work is revealed. Builders also tend not to provide a QS’s detailed cost plan, which can be useful when considering alternative design solutions.

After the cost plan the the brief may need to change to accommodate the budget, or the budget may need to be a bit more flexible to help achieve the brief.

Perhaps both brief and budget are adjusted. This process of designing, costing and adjusting may need to happen a few times when the brief and budget start far apart. It is better to understand real costs early in the design process. It is not an easy stage in the process, as many aspects of the project are still being formulated and both the client and the architect are familiarising themselves with both the project and each other. But grappling with real costs cannot wait until tender prices are received from builders. By then the design will be too far developed and costly to unpick. Dreams can turn into nightmares when costs exceed client’s budgets. For the project to have a good chance of success the budget needs to be treated as a critical part of the process from the beginning.