What’s the Real Cost of Construction?

When it comes to the cost of construction, the real numbers can often differ drastically from initial budgets. If you’re planning to build a block of 10 apartments, covering 700m², with a budget of £2,200 per square meter, plus 10% professional fees, it may seem like you’ve done your math correctly—just shy of £1.7 million. You might even anticipate a healthy return of 20% profit.

However, the reality of building projects often involves unexpected costs and challenges.
Let’s a realistic look at the true cost of construction, the risks of cutting corners, and how you can protect your profit margin by investing wisely in professional fees and planning.

The Initial Budget: A False Sense of Security

At the start of your construction project, you instruct an architect to draw up planning drawings. Once these are approved, you move forward with building regulation drawings. You might even hire a Quantity Surveyor (QS) to ensure that your cost plan aligns with
your expectations. A construction contractor is hired, and you think you’re ready to break ground.

But this is often where things start to go wrong.

Common Issues in Construction Projects

As work progresses, unforeseen complications can arise—issues that many developers are unprepared for.

Here are a few of the most common construction problems:

1. Planning Department rejects materials: A late-stage change in building materials due to planning rejection can escalate costs significantly.
2. Japanese knotweed on site: This invasive plant requires costly removal and remediation, sometimes delaying construction by months.
3. Foundation issues: Unanticipated ground conditions may require deeper, more expensive foundations.
4. Unidentified services running through the site: You may discover hidden utility lines that need to be rerouted, adding to your construction budget.
5. Structural Engineer requirements: Additional steel or support structures may be needed to accommodate your design.
6. Fire stopping not detailed: Essential safety features, such as fire stopping, may be overlooked in initial plans, causing delays and cost overruns.
7. Insufficient space for M&E services: Lack of planning around mechanical and electrical services can lead to costly redesigns.
8. Limited electrical network capacity: Your project may face issues with connecting to the local power grid, requiring expensive upgrades.

These problems are not rare; they’re common and can easily turn your budget upside down.

Cutting Costs: The Risky Approach

When faced with unexpected expenses, many developers start making compromises to protect their margins:

• Swapping aluminium windows for cheaper alternatives.
• Downgrading from bespoke kitchens to standard ones.
• Using stone for the car park instead of block laying.

While these decisions might seem like quick fixes, they come with risks. Lowering the quality of materials and finishes can impact the overall value of the property, reducing both the sale price and buyer satisfaction. Moreover, cutting corners may lead to future problems with building regulations and quality control.

What Went Wrong?

One of the most common mistakes in construction is seeing the 10% professional fee as a cost-saving opportunity. Developers often believe they can save here since it doesn’t involve laying physical bricks. However, this approach can lead to disastrous consequences down the road.
By undervaluing professional input in the planning stages, you may miss crucial details that could save you time, money, and stress later.

The Real Solution: Maximising Your Professional Fees

At Lestari, we believe that the secret to reducing the real cost of construction lies in comprehensive planning. By making full use of your professional fees from the outset, you can avoid many of the surprises that blow up budgets later in the process.

Here’s how:

1. Bespoke professional team: We assemble a team tailored to your project needs, ensuring that every aspect is covered, from planning approval to structural design.
2. Detailed site investigations: We conduct thorough ground investigations, including ground-penetrating radar surveys, to avoid surprises.
3. Coordinated Mechanical and Electrical drawings: These are often overlooked in the initial stages but can lead to significant delays if not accounted for early on.
4. Service provider input: We ensure that all service providers, including utilities, are involved from the beginning, so there are no surprises when it comes time to connect to power or water.
5. Comprehensive budgeting: We include all potential costs—like deeper foundations, rerouting utilities, or upgrading the electrical network—in the initial budget, so you’re not hit with unexpected expenses later.
6. Value engineering at the right time: If the budget exceeds expectations, we work with you to value engineer without compromising on essential elements of the project.

By planning carefully and coordinating with all relevant parties, we minimise unexpected costs and keep the project on track from day one.

Planning Equals Savings

The real cost of construction isn’t just in bricks and mortar; it’s in the planning, foresight, and expertise that guide the project. The 10% professional fee should be seen as an investment in the success of the project, not an area to cut corners.

At Lestari, we specialise in assembling the right team and planning every detail before construction even begins. This proactive approach prevents costly surprises, maintains the quality of the development, and protects your profit margins.

Remember, failing to plan is planning to fail. Don’t let hidden costs and unexpected issues derail your project. Let us help you build smarter from the very start.