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The provision of an accurate budget estimate forms part of an architect's responsibility and should be met through either the architect's own skills or managed through the services of a quantity surveyor. The architect remains responsible for meeting design-cost objectives, except where otherwise provided for in the terms and conditions of engagement.
Contracting out of supplying budget estimates does not obviate the architect's responsibility to manage a budget, nor to exercise responsibility in the administration of a construction contract.
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Standard of care
The minimum standard of estimating skill that an architect should display is that of the 'reasonable architect'. The architect's duty is neither as detailed nor as rigorous as the duty of a quantity surveyor.
The Architects Accreditation Council of Australia (AACA) establishes the minimum standard of skill and knowledge expected of architects. The standards include performance and skills that mandate a degree of proficiency in estimating and assessment of project budgets.
The Australian Institute of Architect’s Client and Architect Agreement provides that the architect's basic service includes the provision of a forecast of the Cost of Works in the concept design, design development, planning/development application and construction - documentation stages.
Limits of expertise
Architects are responsible for estimating the project budget in accordance with the standards of reasonably competent architects. Where the degree of accuracy and/or complexity is beyond the skills expected of reasonably competent architects, the architect should use specialist expertise. Quantity surveyors, professional builders' estimators, or specialist architects may be able to provide the necessary expertise. Where the architect engages specialist services the architect remains responsible to the client for the management and coordination of that estimate except in circumstances where specific terms of engagement excuse the architect from that responsibility.
Budget estimates
It is part of the architect's overall responsibility to design within a stated or developed construction-cost limit that has been given or agreed to by the client. Where maintaining the construction-cost budget is not feasible the architect has a responsibility to notify the client. It is the responsibility of the architect to remain within budget to the degree of accuracy of the figure indicated by the client.
It is in both the architect's and the client's interests to establish a construction-cost budget as early as possible, to avoid wasted time and effort. A project budget is usually stated in one of two ways:
- An approximate cost for the project, which allows a limited degree of cost flexibility.
- A maximum amount, obtained from the client, which should not be exceeded. It is advisable that such a cost should contain an appropriate contingency for design and construction.
Drawing reference
It is important for the Cost Planner to state clearly the documentation basis of the cost estimate by noting the drawing numbers, amendments and specification issue.
Types of budget estimates
Cost per square metre rates
Initial estimates can be produced using cost-per-square-metre rates. These however, can be inaccurate as they often do not take into account the many factors that are likely to influence or add to construction cost. Refer to Budget estimate – influencing factors. It is important to qualify your advice when adopting this approach.
Elemental analysis
This method breaks the design up into the various elements of the building and site works. Elements generally follow the construction sequence, eg. Preliminaries, Demolition, Site Works, structural works, etc.
Bill of quantities
Is prepared by a Quantity Surveyor when accuracy is required.
Refer to Budget estimates – methods.
Design contingency
Establishing an appropriate design contingency is related to the nature of the work. It will commonly vary from 2% to 10% to account for possible variations in design and cost prior to the commencement of construction. This is based on an assumption that a project is completed within a reasonable time. The amount of contingency allowed is time sensitive.
A separate contingency should be allowed during construction that is sufficient to take into account costs generated by unforeseen changes in the scope or quality of work.
Clients should be advised that construction contingency sums do not generally cater for variations arising from changes to the brief. Refer to Acumen note Contingency sum.
Inclusions and exclusions
The project budget estimate should state what is included and excluded. A typical list of exclusions could be:
- land costs, legal fees, interest charges and financing costs
- development application, construction certificate and other authority fees and charges
- council contributions, fees, levies, deposits and charge
- various consultant and architect fees
- escalation after stated dates
- tenancy and fitout costs including fitings, furniture and equipment
- provision for GST
- relocation costs.
Resources
Elemental cost rates are available and published by various quantity surveyors, e.g. Rawlinson's Australian Construction Handbook and Construction Cost Guide for Housing, Small Commercial and Industrial Buildings, and in various trade journals, eg The Building Economist (the journal of the Australian Institute of Quantity Surveyors) and Cordell’s Building Cost Guides and Indices.
It is important to identify the inclusions and exclusions in such published rates and to identify and cost the differences between the information on which the scheduled rates are based. It is also important to ensure that the descriptors used in the publication match or can be correlated with the elements of the design. It is also important to ensure these values accurately reflect the quality of the work undertaken.
Architect's responsibility
The role of the architect in the maintenance of project viability is dependent on the nature of the architect's commission. The architect is required to design and deliver a project within the constraints of a budget agreed with the client. The ability to meet this responsibility requires that the architect use their own project budget estimating skills or an external estimating resource.
The fiscal management of a project is commonly carried out by establishing the likely project end-cost and ensuring that any changes made to the proposals for the project are incorporated into it. This process is commonly termed 'cost planning' or 'project cost control' or ‘forecast of the Cost of Works’ and is aimed at providing predictability of cost within the design process.
Quantity surveyors' estimates
Preparing a detailed estimate of construction costs is a specialised service normally provided by quantity surveyors whose objective is to ensure that the final construction cost bears a close relationship to the client's stated construction or project budget.
The involvement of a quantity surveyor facilitates the cost planning process and provides the architect and client with independent cost information to aid in the design and administration of a project.
Clients who require a high degree of detail or for whom a highly accurate estimate is necessary should appoint and pay for a quantity surveyor. The fees for detailed estimates arrived at through approximate quantities or full quantities are variable depending on the level of detail required. The cost of a fully specified bill of quantities can be substantial.
The accuracy of a quantity surveyor's estimate is dependent on the accuracy and completeness of the information provided by the consultant team. Undefined or poorly defined items, inclusions, services and the like will either be missed or will be subject to assumptions which affect the accuracy of an estimate. It is essential that the architect is aware of and discusses such matters with the quantity surveyor prior to finalisation of the estimate.
Submitting cost information
Keep the client informed
All cost information should be submitted to the client by the architect, regardless of whether it is the architect's budget estimate or that prepared by a quantity surveyor. Variations to project-cost outcomes should be reported to the client as they occur. Before proceeding with a design or authorising a variation, instructions should be obtained from the client. For further information, refer Acumen note Guide letter 16: Advice to client on implications of changes.
Caveats
Care should be taken to ensure that the limitations of the information on which an estimate is based are explained to, and understood by, the client. The anticipated effect of rising (or falling) costs and changes in market conditions should be explained to the client and specific references made to any relevant factors. Suggested allowances for such factors may be given, though it should always be made clear that any figures relating to them are opinions only. They are in the nature of explanatory material.
Errors in estimates
The architect is obliged to inform the client of all variations to budgets including errors made in the preparation of the project budget estimates, whether made by the architect or by a consultant. If the construction cost significantly exceeds the construction budget, it is possible that the architect may be involved in considerable expense in amending documents to meet the budget limitation.
Disclaimer
This content is provided by the Australian Institute of Architects for reference purposes and as general guidance. It does not take into account specific circumstances and should not be relied on in that way. It is not legal, financial, insurance, or other advice and you should seek independent verification or advice before relying on this content in circumstances where loss or damage may result. The Institute endeavours to publish content that is accurate at the time it is published, but does not accept responsibility for content that may or has become inaccurate over time. Using this website and content is subject to the Acumen User Licence.