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Construction Cost & Project Cost

Neil Kahawatte

What is the difference between Construction Cost & Project Cost



The Construction Cost is the cost of contracting a builder to carry out the works, and should include for all fixtures, fittings, materials, labour, supervision, and management, etc. This cost should also include the Contractor’s overheads and profit for the job, but excludes VAT. The costs of any ‘client supply’ items, or other elements of the project commissioned outside of the main building contract (i.e. joinery or landscape), should also be included within the construction cost.

 

The Project Cost is the total cost that you should allocate for the project. In addition to the Construction Cost, the Project Cost should include for any professional fees (Architects, Engineers, Surveyors, Project Managers, etc), fees for statutory approvals (Planning, Building Control, etc), and also VAT (where applicable).

 

You should also allow a contingency sum, typically of at least 10%, to cover any unforeseen variations to the scope of work that may become necessary. You may also need to factor in additional costs of temporary accommodation, storage and finance, etc.

 

It is important to note that the construction industry generally uses the Construction Cost (i.e. excluding VAT, fees, other costs and contingency) when discussing the cost of works, fixtures, fittings and materials. If in doubt, always check whether any figures you have been given are inclusive or exclusive of VAT & other costs.


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