Without a reliable cost estimate it is impossible to decide whether a project should go ahead, what scope makes sense and how it will be financed. The estimate becomes more precise as the project progresses, and each stage has its own purpose.
Levels of cost estimate
Preliminary estimate at the planning stage
Gives the order of magnitude: is this a 50,000 or a 500,000 euro project? It is based on statistics and experience-based unit rates. Accuracy around ±30%.
Design-based estimate
Prepared from the designs before tendering and considerably more precise than the preliminary estimate. Accuracy around ±15%.
After tenders are received
Once bids have been received and checked, the construction cost is known fairly precisely. Accuracy usually ±10% or better.
What do the costs consist of?
- Building works: demolition, structures and finishes. Often the largest cost item.
- Building services: HVAC, plumbing, electrical and automation. Often underestimated.
- Design: typically between five and twelve per cent of the total budget.
- Owner's representation and supervision: typically between two and five per cent.
- Contingency: between ten and twenty per cent, because renovation projects always hold surprises.
- VAT: remember to include it if the client is not VAT-registered.
Repair backlog
The repair backlog describes the value of repairs that have not been carried out, in other words how much would need to be invested to bring the building into good condition. The calculation is useful in property transactions, investment decisions and a housing company's long-term financial planning.
When does an independent estimate pay off?
- before a property transaction, when the buyer wants to know what they are committing to
- when a contractor's price level raises questions
- in loan negotiations, where a reliable estimate speeds up the process
- when negotiating insurance compensation
- in disputes and claims
The most common mistakes in self-made estimates
Typical mistakes include underestimating building services, forgetting design and supervision costs and leaving out a contingency.
We prepare cost estimates for every stage of a renovation project. Get in touch to find out more.