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It is important that the architect informs the client at each stage of its commission and at any time when the architect becomes aware, of any significant change in the cost or scope of the project. It is prudent to confirm costs at every stage of a project and proceed with the certainty that the ground rules have been properly set and are understood by all.
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Although the provision of project budget estimates is a normal part of the service provided by or through the architect, an exception may arise where the client-architect agreement explicitly excludes the provision of estimates. However this does not obviate the architect's responsibility for designing within a budget if the budget is stated.
Estimates provided to clients should state what is included and excluded. Reporting of project estimates should include, as well as the construction-cost budget, items such as professional fees, disbursements, travel, legal fees, court work (planning appeals, contractual and industrial disputes) and the like. Other professionals may be required to supply specialist input in a project budget as this should include (or specifically exclude) all potential costs related to the project.
Margins of accuracy for each stage
The accuracy of an estimate is related to the quality of information available. In the pre-design/schematic-design phases of a project the accuracy and verification of briefing information supplied by the client together with the architect's ability to supplement such information from their own skill and knowledge is a significant factor in the accuracy of an estimate. The accuracy of estimating tasks during the preparation of construction documents and contract administration is dependent on the adequacy of information available.
Clients should be advised that a reduction in the level of service provided by the consultant team will result in an increase in the level of risk that a client accepts in terms of the accuracy of estimates.
There are five important stages in advising a client on costs.
Pre-design
Estimates prepared from a brief or preliminary design provide a client with advice on project affordability. Inappropriate advice can at this time lead to a commitment beyond the capacity of the client or the project. An estimate at this stage will generally be given on the least amount of project information, but will likely be the most important figure of all to the client.
The architect must make it clear to the client that any opinion given at this stage is a 'ball-park figure' or 'best guess'. It may have an order of accuracy broader than plus or minus 20% to 25% and possibly more for projects which are complex or unique.
Schematic design
Estimates provided after the pre-design stage confirm that the design meets the cost objectives of the client. A schematic-design estimate provides a more realistic figure than the pre-design estimate and will allow the client to make a decision whether and on what basis to proceed to the next stage. This estimate should have an increased order of accuracy of plus or minus 15% to 20% for new buildings and might preferably be expressed as a range (eg $200,000 to $250,000). The order of accuracy is not fixed and will vary with the nature of the project, its technical or design complexity, the degree of certainty of the value of provisional and prime cost sums, and the like. The order of accuracy will also vary according to the prevailing economic climate.
At this stage the estimate should include a reasonable design-risk contingency sum as well as construction-cost contingency.
Design development
At this stage, all matters relating to the brief will have been basically resolved. The architect or the contracted professional cost advisor can then provide, within the framework referred to above, a further estimate confirming the design's compliance with the project objectives. Estimates provided during the design-development phase of a project should progressively improve the order of accuracy to that expected in a pre-tender estimate.
Contract documentation/tendering
A pre-tender estimate is required when the documents are ready for tender. The purpose of this estimate is to ensure that the tender is not abortive. At the tender stage, and in a stable market, it is reasonable to expect that the estimate can achieve an accuracy of plus or minus 5% to 10%.
The quantity surveyor's tender estimate is indicative of the mean or average of construction tenders.
Contract administration
The architect must keep the client informed of the current financial status of a project at regular intervals during the administration stage of the project. This task is most commonly related to the processes involved in the issuing of progress certificates, variations and extensions of time. It includes monitoring of expenditure against provisional sums, cost escalation and probable future costs that will affect the end-cost.
Cost information should be prepared in a format consistent with industry practice and should also inform the client of project-related cash-flow requirements.
In projects involving the preparation of a bill of quantities, consideration can be given to extension of the quantity surveyor's appointment to assist with project cost-control services.
Disclaimer
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