House or extension construction costs are far too often underestimated. It makes it a risky investment. How can you predict the return on investment if you don’t know how much we will put into it? You must know the cost of the project, not only to know whether it will ruin you financially, but also, to give you a better position in negotiating during the construction. Building a house is an ongoing process, in which you will be constantly buying supplies. If you know how much they should cost, you will negotiate better.
The General Rule of Thumb
Cost per square foot or cost per square meter is an estimate that is used to compare prices on the market. The basic rule of arriving at the right figure is taking the total cost of your project, as provided by your builder, and dividing it by the total number of square feet/metres. Using this construction estimate you can easily compare the costs of houses in your location, desired standard, style, or size. Additionally, the total cost should include the labour cost and material cost, which is essential for successful negotiation.
Estimating the Cost Step by Step
There is one significant mistake in this method. Calculating the cost by square foot, you solely rely on the estimations provided by your construction manager. He may be a specialist in building, but most likely his estimations are done after his main responsibilities and after working hours. You may consider putting more effort into calculating it, but this would require you to independently research the market prices of labour and materials cost needed for your project. Come up with a list of all the materials and work that is going to be carried out in your project. Cement, sand, aggregate, steel, fittings, paint, tiles, bricks, windows, doors, plumbing, sanitary, electrical, etc. The next step will be estimating the quantity of those products for your project and contacting various suppliers to get the numbers. As an outcome, you will get more independent estimates. To the cost of materials, you need to add the cost of labour and +10-15% for unexpected expenses.
Comparing the Estimates to the Prices of Similar Buildings
If you’re looking at your final calculation, the last step would be to research average construction prices in your area. Professional companies gather data and can give you the most accurate estimation. However, even a basic google search will show you some ballparks. The final price is affected by the location, style, type, standard, or purpose of the building, so bear in mind what you’re hoping to achieve. For example, in the UK the average, most common standard building cost is between £1,310/m2 to 3,040/m2. Surely, it gives you some idea about the prices, but for successful budget planning, you would need accurate data to your desired location.
