Budget for building design and construction projects

A budget is a statement of the amount of money that is available to spend over a period of time, or on a specific thing, such as a building. It may include an outline plan for how that money will be spent, and a breakdown of the items it will be spent on.

The CIOB Code of practice for project management 4th edition, defines a budget as 'Quantification of resources needed to achieve a task by a set time, within which the task owners are required wo work... a budget consists of a financial and/or quantitative statement, prepared and approved prior to a defined period, for the purpose of attaining a given objective for that period.'

Budgets for construction projects help determine what is affordable and should be set as early as possible. It is important that they are based on evidence and that they are realistic.

A project budget can be established by:

• Assessment of projected income and expenses through the life of the project.
• Comparison with similar projects.
• Assessment of the funds available.
• Pre-design analysis of requirements.
• Analysis of preliminary design options.

The budget is set by the client and is distinct from cost plans prepared by a cost consultant which are likely to focus on the construction cost.

The client's total project budget may include:

• The construction cost.
• Land or property acquisition.
• Approvals fees.
• Planning costs (Section 106 Agreement or Community Infrastructure Levy).
• Financing costs.
• Site investigations.
• Fixtures, fittings and equipment.
• The cost of decanting and relocating, including costs associated with moving staff.
• Contracts outside of the main works.
• Insurance.
• Consultant fees.
• Inflation.
• Contingency.
• VAT.

It is common on projects that the project budget and the project brief diverge over time and it is for this reason that careful cost control is important.

It is important that the client makes clear what costs should be monitored by the cost consultant and what will remain within the control of the client organisation.

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• Bills of quantities.
• Business administration.
• Business case.
• Business plan.
• Capital allowances.
• Capital costs.
• Commercial management.
• Construction loan.
• Construction organisations and strategy.
• Contract sum.
• Contract sum analysis.
• Cost consultant.
• Cost control.
• Elemental cost plan
• Final account.
• Initial cost appraisals.
• Microeconomics.
• Net Present Value.
• New Rules of Measurement.
• Outturn cost.
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• Whole-life costs.