The true price tag

Dec 9, 2017 | Advice, Agents

Why should your clients be wary of the cost per square metre rate? Follow these pointers

Clients and contractors involved in the cost comparison and planning process should use the cost per square metre rate, a method of calculating building expenditure, with caution. There are a number of design variables that can adversely affect these rates, thereby creating a false impression of how much a building project actually costs. This can lead to serious problems. You would not compare a Porsche to a Volkswagen based on the cost per square meterage, so why do it with buildings?

A generic cost per square metre rate doesn’t give clients the detailed information they need regarding finishes, fittings, services and site development costs. A wide range of building elements also have an impact on price.
Instead, elemental estimates provide cost build-ups for elements such as the substructure, ground floor, external façade and roof. This enables quantity surveyors to advise clients on price earlier in the process.

UNDERSTAND THE DETAILS

Less than 40% of a building’s cost is the structure itself, so the project is far from complete once the foundation has been laid and the walls and roof are built. Smaller contractors who tender on a cost per square metre basis put themselves and their clients at risk.
Clients or their attorneys have approached us on numerous occasions when building contracts turn sour. Only then do they find that, because there was no detailed breakdown of costs, the project has run into trouble or come to a standstill due to overpayments on structural elements.

HOW DESIGN VARIABLES CAN PLAY A ROLE

The cost per square metre rate is calculated by dividing the net cost of the building (excluding site works and cost of land) by the gross square metres of the building, or Gross Floor Area (GFA).
Typically GFA is the total floor area inside the building envelope, including the external walls, but excluding the roof.
As a general rule, the simpler the shape of a building, the lower the unit cost will be. But even this can be misleading: a square building of 10m by 10m and a rectangular building of 25m by 4m have the same floor area, but the rectangular building requires 45% more walling. More intricate designs generally result in higher perimeter-to-floor area ratios, increasing excavation, drainage and other
construction-related costs significantly.

ACHIEVE A BALANCE

Hiring a registered quantity surveyor early, preferably before an architect draws up the sketch plans, will allow your client to achieve the look, finishes and final touches they want, within budget.
Both the client and the architect need to be fully aware of any additional costs or savings that may arise from shape, size, circulation space and other variables in the design of a building. A registered
quantity surveyor can help the client achieve a suitable balance between cost, aesthetics and functional aspects.

Words: Bert Van Den Heever