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Last edited 20 Jul 2021
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.
'Quantification of resources needed to achieve a task by a set time, within which the task owners are required to 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.'
The RIBA Plan of Work 2013 defines the project budget as; 'The client’s budget for the project, which may include the construction cost as well as the cost of certain items required post -completion and during the project’s operational use.'
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 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.
- Consultant fees.
NB: NRM 1 defines the authorised budget (sometimes referred to as the approved estimate or cost limit) as; 'the maximum expenditure that the employer is prepared to make in relation to the completed building.'
NB: In the case of Riva Properties Ltd & Ors v Foster + Partners Ltd , the Technology and Construction Court (TCC) found that Foster + Partners had been negligent in failing to design a hotel that could be constructed within Riva Properties budget, and then suggesting that it could be value engineered down to the budget after planning permission had been granted. Foster + Partners were held liable for client's costs of £3.6 million in developing the scheme which was almost £100 million over the budget.
Stephen Homer, a partner at Ashfords LLP, the lawyers that acted for Riva Properties said; "This case serves as a warning to designers that they cannot design in a vacuum. Cost and budget is a key constraint and should always be identified and considered when designing any project, even when the provision of cost advice is expressly excluded from the designer’s obligations."
 Related articles on Designing Buildings Wiki
- Approximate quantities cost plan.
- Best value.
- Bills of quantities.
- Building society.
- Business administration.
- Business case.
- Business plan.
- Capital allowances.
- Capital costs.
- Capital value.
- Commercial management.
- Construction loan.
- Construction organisations and strategy.
- Contract sum.
- Contract sum analysis.
- Cost certainty.
- Cost consultant.
- Cost control.
- Demand chain.
- Difference between cost plan and budget.
- Elemental cost plan.
- Final account.
- Financial hedging.
- Financial year.
- Forecast period.
- Initial cost appraisals.
- Market value.
- Net Present Value.
- New Rules of Measurement.
- Outturn cost.
- Pre-tender estimate.
- Price certainty.
- Tender pricing document.
- Trade credit insurance.
- Working capital.
- Whole-life costs.
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