Aprao | Blog

Property Development 101: Managing Additional Costs

Written by Rebecca Nixon | February 27, 2020

While construction, finance, and site purchase costs make up the bulk of your appraisal, there's a host of other important costs to consider.

 

Below we've pulled together some examples of these costs, which may or may not be required for your project - but are important for you to consider when budgeting. If you're using Aprao, you can add these costs as a flat amount, or as a percentage of the build costs.

 

 

Architect

 

Architect's fees can range from 5-12% of your core construction costs on a new build development, depending on the size and complexity of the project. If the scheme has an existing building to work with (for example, an office to residential scheme) then the costs may be lessened given there is an existing structure.

 

 

Engineer

 

Out of all the professionals involved in a project, the engineer’s fees are likely to be the least expensive - however this is heavily dependent on the complexity of the project. Engineering is a broad term and can be broken down into various disciplines including structural, building services, construction and civil engineers. As a general rule of thumb, engineer costs are 1-2% of the build cost.

 

 

Planning Costs & Consultants

 

We have previously outlined the structure of the Community Infrastructure Levy (CIL) and the S.106 payments in a previous article, but in addition to these, there are statutory planning application costs, council charges, and the professional estimates.

 

If the site does not have planning consent then a planning expert with a sound understanding of the planning authority that the scheme lies in is very important. Specialist input is useful at the start of a project to assess if the site has viable development potential. As with the other professionals detailed above, planners’ costs will vary on the complexity of the planning application. For instance: a greenfield site that sits within a conservation area will have significantly higher planning costs than a brownfield site sitting in an area earmarked for residential development.

 

 

Quantity Surveyor (QS)

 

Quantity Surveyors (QS) - otherwise known as cost consultants - provide detailed reports on the cost of construction. Larger developers sometimes have in-house QS’s, but smaller developers may appoint a QS to verify the build costs of a proposed project. They charge as a percentage of the construction cost which ranges from 0.5-2% depending on the nature of the appointment.

 

 

Marketing Costs

 

Marketing costs can vary greatly depending on the target audience. For instance, a new build tower in prime central London will have a different buyer from a new build housing estate in suburbia. Typical marketing costs may include the design of a website, the construction of a show suite, brochure design and print, newspaper or internet advertising campaigns, and potentially a launch day.

 

 

Project Manager

 

Project managers or development managers ensure the successful delivery of a project. They are involved from the very start, and will liaise with all your appointed professionals and contractors. In developments over £3mil GDV, this tends to run at about 1-2% of build costs; but in smaller projects the project is usually self-managed by the developer.

 

 

Building Warranty

 

A structural or building warranty is a form of liability insurance, where your provider carries out an inspection process as the build progresses and issues a 10-year warranty on completion. It covers any major defects in design, materials or workmanship. The earlier you can start getting quotes, the better - there are a number of providers available, so shop around. Alternatively you can obtain an architect's certificate; which means if something goes wrong, you can sue the architect and prove negligence in order to obtain payment. This isn't a popular option, and most builders and architects prefer to take out a warranty instead.

 

You can see how to manage these costs in Aprao by watching the video below:

 

 

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Can you think of any other costs you feel we ought to include here? leave a comment below or email us, info@aprao.com.