Construction Budgets
Setting a construction budget and balancing that with your brief requirements at the beginning of your residential build project can be a fairly difficult task. Add to that a fluctuating (and hot) construction market, as well as outdated figures mentioned by friends and family (who built 5-10 years ago), or random figures on the internet that do not (at all) apply to what you are planning on building, and it can be a recipe for disappointment. The following is just a brief introduction to a few tips about building budgets. It's best to talk with your Architect specifically regarding rates applicable to your project, site location, and what you have in mind to achieve in your brief.
1. Meter squared rates
These are very ballpark figures that really do not include all the project costs. It is super important to obtain up to date m2 rates that are applicable for YOUR site, your location, your project brief. Are you building one storey or two, is your site in central Auckland or is it a remote site requiring higher delivery costs, what quality are you expecting - are you using a 'group housing' builder or building a unique architectural home with an award winning builder, is it a renovation or a new build - one generic rate does not fit all, particularly when it comes to Architect designed homes, complex remote sites ... or renovations. Meter squared rates relate to the build budget, but not the project budget.
2. Project Budget vs Build Budget.
These are two different figures - the project budget includes all the costs associated with the project (including fees, contingency, professional fees, landscaping, servicing the site, driveways) and the build budget relates to the house alone. The diagram included here describes the different items that go into the project budget.
3. Cost monitoring during design stages
When designing bespoke Architecture, because it is not designed to a set recipe, it is super important that you and your project team monitor the potential construction costs as the design evolves, and adjust the scheme accordingly. We recommend two early costings by a Quantity surveyor (who are the professionals at costing) at concept stage and preliminary design stage. Often your preferred builder may also have an estimator or QS employed on their team and can price a concept level costing at the labour rates they would apply to the project. The Architect is not the cost expert on your project. The Architect is reliant on that up to date cost information and uses that measured data as a tool (together with you) to shape the project so brief and budget can align.
This is a great collaboration stage and it's important that everyone is on the same page regarding shaping the project at this point. We collaborate with amazing builders who love building Architect designed homes, and together we both work hard, with different ideas and input, to ensure budget, dreams, quality, and vision can align. Sometimes this requires tweaks and adjustments to suit current material and labour rates, but that is part of the process to achieve the end vision and make the clients dream a reality. The client needs to be a part of that process too and have ensured their priorities and values have been confirmed early on in their brief, and who are are engaged in the process rather than expecting a costing miracle. Sometimes compromises when you are under a fixed budget need to be made - builders we work with are honest about their pricing and paying their builders a fair wage, it is not often matter of discounts or 'deals' of 'mates rates' the client thinks they can make.
Remember there is always going to be a degree of estimation as the design progresses in a bespoke build (and I'm talking specifically about Architect designed unique high value builds - rather than those built to a set pre-costed plan + 'would you like fries with that' add-ons offered every week). Every one has an ultimate budget, whether it is high or low, the budget parameter is a key part of the design process. That is why the contingency amount needs to start higher at the beginning concept level costing (when the structural design is totally estimated if the engineer is not on board yet), until reducing to an appropriate level once on site that accommodates any residue risks in either the ground works, price fluctuations or renovation 'finds' that may impact the budget. The way of mitigating some of these is to do early investigations to reduce the cost risk that may pose to the project... this may have an initial cost to undertake, but consider if it's worth it to you in order to mitigate time and cost increases on site.
4. Cost monitoring during construction.
The builder should be able to provide an accurate firm tender price when its based on FULL detailed construction documentation. Without this they are having to make many assumptions or allocate 'provisional sums' which in construction language equates to 'it's roughly this much to build, maybe more, maybe less' For cost certainty, you want to reduce construction packages that have that uncertainty factor. By the time you have building consent package of information ready to go, with additional site specific construction detailing - you should have a detailed package of information that has sufficient data to cost accurately - this high level of documentation (rather than at concept stage) reduces cost variations because technically all the details and junctions should be fully described in the documents by then. After that point, Variations to the tender price need to be valid - such as sub-surface finds, excavation volumes, things that lurk beneath linings in renovations, changes that occur on site, things that really couldn't be anticipated or forseen or that couldn't be 'fixed' (Covid delays, steel price increases).
The documentation needs to be specific in order for the price to be accurate. If your documentation is full of 'cut and paste' generic details (and you have cut costs just to have a consent package of info), unless it's an extremely simple build, you are likely to have cost increases because it will not reflect the site specific work required by the builder to build the project. Ensure you have briefed your Architect that specific construction level of documentation is a requirement (not just a consent level of information).
5. Changes
Try to reduce making your own changes during construction- the electrical subcontract for example is often a source of changes as you walk around site and add in items, and this value can creep up quickly. Try to have made all fixtures and fittings selections in advance with your architect during the developed design stage (see previous post for the stages) and ensure that you are fully familiar with the scheme prior to going on site. Changes made on site incur 'Variation' level pricing - these are often higher rates than if it had been part of the project at tender stage.
We hope that helps with your planning stages! As with most things in construction, make sure that you talk with experts and work with your Architect to put together a good project team that can provide you with accurate and up to date costing advice.
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