$/m2 Construction Rates Are No Longer Relevant – What to do…
.
$/m2 construction estimates have always been questionable but with recent price volatility they’ve become even less accurate. Here’s why and what to do…
Estimating construction budget of sketches is a balance between effort required and accuracy. Unsurprisingly, architects and designers (sometimes even builders) may opt for a square metre rate to ‘ball-park’ the budget.
But, in the current environment, this approach can lead to nasty surprises that damage your practice’s reputation and client relationships.
So, for accurate cost guides on construction, make sure the method you use:
Draws Upon Current Data from Real Builders Costs
In the current environment, builders are regularly updating their costs in line with suppliers and labour costs.
Your costing method should capture those updates with real builders’ market numbers to accurately inform your thinking on budget.
Draws Data from the Whole Market, Not Just a Small Number of Builders
In any competitive residential building tender, the highest bid is often 20% more than the lowest bid. That’s because builders have varying business structures, requiring builder-specific margins for overheads.
Additionally, builders sometimes make mistakes pricing jobs.
Instead, make sure the system you use employs pricing structures of builders throughout the market so that you have a true market perspective of what a project is worth.
Relying on single builder can be risky because their pricing may by inaccurate and they’ll need to substantially increase their estimate once they obtain real costs from suppliers.
Treats Kitchens and Bathrooms Accurately
The square metre rate for bathrooms, kitchens, laundries and non-wet areas are all entirely different.
If your costing system conflates or confuses them, your price guide will be wrong.
Demolition
Will your site require extensive demolition work? Will walls or part of the existing dwelling be knocked down? Make sure you factor in these ‘hidden’ costs.
Treats Cosmetic, Alterations and Additions Methodically
Many projects have a blended scope requiring different rates for different areas of the project. Make sure the system you use captures these project nuances with a systemic method.
Considers Poor Site Access or Sloping Blocks.
A square metre rate doesn’t consider the slope of your land which can bring a new level of variation to costs. Impacting on costs and planning are: poor site access, sloping blocks and land size (small blocks).
Assesses Quality of Fitout/Finish
Account for quality of your fixtures and finishes for specific rooms. Whether you opt for high-end (premium) or budget finishes – and the rooms they’re allocated to – will dramatically affect your final costs. Be sure your costing method uses an informed approach to this.
Acknowledges ‘Builders Sentiment’
Builders’ sentiment about the project is affected by various factors such as client needs, type of building contract, tender process, site access or complications plus more.
Concept estimates that don’t incorporating these elements will struggle for accuracy.
What to Do
Accurate construction costs for early concepts has always been challenging but if you incorporate these pointers, you’re well on the way to eliminating price shocks.
By using an industry calculator such as ProCalc all these factors are included to ensure your clients have a sensible starting budget for their project. That means a more relaxed and professional project environment with far fewer surprises
Got a Project to Estimate? Take a Free 2 Week ProCalc Trial
You Might Also Like:
