What Everybody Ought To Know About Building Costs

Andy Parker, Project Director at Complete Oak Home

 

It may surprise many people to know that in 2017 most self-build project costs are between £1,600m2 and £2,000m2 of usable floor area or Gross Internal Area (GIA) for a fully completed house, ready to move in to. The bulk of the difference between these building costs is due to variations in design complexity and material and product specification. These figures hold true whether you are self-managing your build or using a main contractor.

These building costs are well evidenced and properly documented if you know where to find them e.g. Royal Institute of Chartered Surveyors.

If you consider a 4-bedroom house typically needs around 160m2 of useable floor area, this represents a variation in cost for the construction of £64,000. Whilst this is not immaterial, if your budget is in the middle of the cost range i.e. £1,800m2, a rise to £2,000m2 is an 11% increase. This is about what one should allow as a contingency.

For most people, if they could be confident at the very early stages of the process, they had a budget that was going to be within 11% of the final cost, they would be happy to progress their project.

So why do the figures that most people have to rely on vary so much? The answer, hugely misleading information!

Sadly, misleading information so far outweighs reliable information, it makes the task of having confidence they have a realistic budget almost impossible to achieve for most people.

The most prolific source of confusing information is the very source most people have ready access to i.e. self-build publications and programmes. To give just one example, the July 2017 issue of a leading self-build magazine included two conflicting articles – one about benchmark house construction costs, the other a reader’s project.

The benchmark house takes an architect designed, self-build project and sets out a well-researched cost plan. It is an uncomplicated, 4-bedroom family home built using mid-range materials, run as a self-managed project. It concludes that the house would be built for £1,695 m2.

The article on page 51 of the magazine covers a reader’s project. The house design is considerably more complicated, includes a basement, an oak frame and is built to a much higher level of specification which includes handmade tiles and bricks. It states the building cost as being £1,468m2.

To make matters worse, the oak frame costs £259m2. Given the oak frame construction will give little or no saving over a conventional form of construction, this suggests had the house been built using the same method of construction as the Benchmark House it would have cost just £1,209 m2.

Why the enormous difference?

Simply, the benchmark house has been properly costed by professionals. The costs for the reader’s house have been supplied by the reader and taken at face value. The magazine appear to have not checked them.

IF YOU HAVE A PLOT, AND WOULD LIKE TO TALK TO ONE OF OUR PROJECT ADVISORS ABOUT GETTING PLANNING PERMISSION, BUDGETING, BUILDING COSTS OR ANYTHING ELSE RELATING TO BUILDING A BESPOKE HOME, SCHEDULE A CALL HERE TO PICK OUR BRAINS!

Where are the anomalies?

The article on the reader’s house gives some insight into the more likely cost of the project.

1. The house is currently on the market so we checked it out. The agent’s details give a Gross Internal Area of approximately 521 m2 which we’ve checked against the floor plans. This suggests the area of 613 m2 published by the magazine is the Gross External Area (this is a budgeting trap the magazine themselves raise as a risk to self-builders in their benchmark house article saying ‘so you can see how using the wrong figure could lull you in to a false sense of security over your budget’.) At the build cost given by the reader of £900k this would equate to a cost per square metre of Gross Internal Area of £1,727

2. The project was started in September 2012. Allowing for inflation, the cost per square metre now would be more like £1,935 m2

3. The reader has his own business in the construction industry and used his own employees and plant for significant parts of the house project. In his own words, after 18 months working on the project he ‘Wanted to get his team back to working full time in his swimming pool business’. It is probably reasonable to assume his business didn’t make a profit on the time his own employees spent on his project and that he had this labour at cost.

Taking all this in to consideration I don’t think it is unreasonable to assume the actual building costs were in excess of £2,200m2. This is certainly more in line with our experience of projects of this size, quality and complexity.

Why is this so important?

Because of the high cost, financially and emotionally, to unsuspecting, aspiring self-builders!

What really bothers us, is so many people embark on self-build projects in the belief their budget is reasonable, only to have their hopes dashed, often after they’ve spent money to get planning permission or worse get to the point of tendering their project. Some will have invested in building plots in the belief their budget stacks up. Their assumption is not unreasonable based on the information available to them.

The cynic in me is inclined to think that self-build publications (programmes and shows, who are almost all linked to a publication) have a vested interest in encouraging as many people as they can to undertake a self-build project. Their commercial existence relies on it.

If you would like to talk to us about your new oak frame house, and would like some information on how to work out a realistic budget, please don’t hesitate to call us on 01249 479890, we’re very happy to help.

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