How to accurately calculate the cost of your development project

If you are just starting out in property development and haven’t yet found a builder, a good way to get a pretty good idea of what your construction costs may be is to engage a quantity surveyor (QS) to work with you in the early design stages of your project.

A QS can estimate the building cost of your development by using a trade based cost plan.

Provide your QS with architecture plans, including the engineer designs for stormwater and slabs. Your QS can then calculate all areas of your dwellings including floor, wall and roof areas.

There are literally hundreds of calculations made from the plans in order to complete the report.  The report contains a number of breakdowns so you can see for instance what the plumbing costs of the build will be.  The report contains calculations for the length of sewer drainage pipes and all the plumbing materials that will be required to connect the dwelling to the street’s service, installation of fittings and the internal pipework and stormwater drainage.

Once measurements are completed they are all combined to give a total cost of materials and labour for the project.

The QS will also break down the project into the different trades that will be needed to complete your project and apply costs to those trades.

I spoke to Bob Macansh from Quanto Pty Limited about the degree of accuracy between a builder’s quote and a cost plan.

“We receive requests for a cost plan from mum and dads wanting to build their own house right up to architects designing high density unit projects," Macansh said.

"Interesting enough, we have found that no matter the size of the project, our cost reports generally come in within 10% of the actual builder’s contract.

"We recommend our clients use the cost plan as a working tool with their builder, rather than a tool to try and prove them wrong or catch them out.  At the end of the day, you need your builder on your side as a property developer and the report gives both parties the opportunity to review cost areas to see if there are opportunities to trim build costs."

The cost report can be an important tool if you are having more than one builder quoting on your project. You can supply the report (less the costs) and ask the builders to quote on each section. This way you will be able to accurately compare quotes.

In my experience, builders prepare and present their quotes or tenders in different ways so having a template for them to provide costs on can give you the edge as a developer and determine the areas the builders are more cost effective in.

Glenn Cartwright of Quanto Pty Ltd says: "Too many times you hear of developers running out of funds before the development is completed. By having a trade based cost plan prepared by a quantity surveyor, developers can see not only how much the overall project will cost, but exactly where the costs are going. They can then alter the design as they see fit to meet their budget. It is easier to plan a realistic budget prior to commencement rather than seeking extra funds towards the completion of a construction project."

Jo Chivers is director of Property Bloom, which manages property development.

     

Jo Chivers

Jo Chivers

Jo Chivers is director of Property Bloom, which manages property development.

Community Discussion

Be the first one to comment on this article
What would you like to say about this project?