Do you understand your project budget and cost of works budget?
If you are thinking of carrying out a new build, renovation or extension it is important to understand the difference between the two above terms, and to make adequate allowances in your budget.
The Cost of Works is exclusive of GST and is defined as the final cost of all work designed, specified or scheduled by the architect, including all work designed, specified and/or scheduled by specialist consultants coordinated by the architect, including:
- •the final adjusted contract price (excluding GST) in accordance with any building contract,
- •plus the equivalent final cost (excluding GST) of any work or items supplied to the building contractor by the client (as if provided by the building contractor under the building contract),
- •along with the final cost (excluding GST) of any part of the project provided under a contract other than the building contract.
- At the beginning of your project we can derive a preliminary assessment of the indicative Cost of Works. We will consider market trends for projects which are similar in nature, but indicative costs are not a guarantee of the actual costs for your project. A preliminary indication of cost will assist you in understanding your brief and your Cost of Works budget as it relates to your Total Project Budget, as discussed below. We always highly recommend the engagement of a quantity surveyor or professional cost consultant to assist you in managing your budget by providing more accurate estimates as the project takes shape.
The Total Project Budget includes the Cost of Works plus all other costs that relate to the project including (but not limited to): removal and relocation costs, design and construction contingencies (including escalation costs), architectural, consultant and other professional fees, authority fees and charges, legal fees, landscaping, loose furniture, fittings and equipment, finance charges, marketing and promotional costs.
As the client you are responsible for managing the Total Project Budget, because it has components that we are unable to control, manage, or take responsibility for. One of these is the addition of GST to those components which are expressed as ex GST, such as the Cost of Works and our fees. However, we recommend that you include in the Total Project Budget a “contingency sum” to allow for unforeseen expenses that may eventuate as the project proceeds. With the Quantity Surveyor we can assist you in establishing a “contingency sum” which is normal expressed as a percentage of your Total Project Budget. A few examples of expenses which might arise that you do not presently expect could be:
- you might later decide to have us carry out extra services you have not presently anticipated,
- the services of another specialist consultant may prove desirable or necessary, or
- during the construction of the project, you may decide you want to change something which involves extra cost to you (variations).
Thus your Total Project Budget may require you to make an adjustment to the funds available for your Cost of Works.