The Hidden Costs That Kill Construction Budgets

Ground conditions are a good example. A site can appear straightforward on paper, but until investigations have been carried out, nobody really knows what’s happening beneath the surface and what could come up once the works commence.

Many issues can be hidden below: poor soil, unexpected foundations, contamination or drainage issues can all have a significant impact on construction costs. These aren’t the most exciting parts of a project, but they’re often the things that end up affecting the budget the most.

Likewise, utilities can cause similar problems. Existing services don’t always sit where you expect them to; in fact, they rarely do. Discovering a major electricity supply, drainage run or telecoms connection in the middle of a proposed building footprint can trigger redesign work, delays and additional costs. By the time a contractor uncovers the issue on site, it’s usually far more expensive to resolve than if it had been identified during the design stage. How do you prevent this at the design stage? Soil investigation, topographical and services surveys, drainage consultancy or sometimes even just consulting the O&M manual, if the existing building has one.

Planning permission is another area where clients can be caught out. Securing consent is obviously a major milestone, but it’s not always the end of the planning process. Every planning application will have conditions attached. If one is lucky, the conditions are quite straightforward and do not require discharging. Conditions attached to approvals often require further reports, surveys or technical information before work can begin. The worst that can happen, is having pre-commencement conditions with your planning permission. These usually require time and money to discharge, but even worse, they can cause delays to the start date. 

We have seen projects delayed by ecology reports, drainage requirements and materials approvals that weren’t fully budgeted for at the outset, and other projects where the works had to stall for months while the information was gathered and submitted. How do one overcome this? This is difficult to anticipate, as the demands of the local authority vary, depending on the officer allocated, the area and the project. The best mitigation is addressing the conditions as early as possible, appointing reliable consultants who can address the issue in the most effective ways.

One of the biggest cost risks, however, is design change. Understandably, ideas evolve as a project develops. The difficulty is that changes become progressively more expensive as construction progresses. Moving a wall on a drawing is relatively simple, even though some knock-on effects are inevitable. Moving it after services have been installed and finishes have been ordered is a very different story. We advise design freeze once the planning permission is in place, and encourage all our clients to challenge decisions and finalise them as early as possible.

This is one of the reasons we place so much emphasis on developing the design properly before construction starts. Spending more time at the front end of a project often saves both time and money later on.

Building regulations can also have a bigger impact than many people expect, particularly when working with existing buildings. A client may be planning what seems like a relatively straightforward refurbishment, only to discover that fire safety, accessibility or energy performance upgrades are required as part of the wider works. Also, consequential improvements might be triggered by small changes in an existing building, so the client is required to address items completely outside the scope of works. These requirements are entirely reasonable, but they can affect both programme and budget if they’re not considered early.

The final issue is usually not a technical one at all. It’s optimism.

At the start of any project, everybody hopes things will go exactly to plan. Sometimes they do. More often, there are unexpected challenges along the way. That’s why contingency allowances exist. A sensible contingency isn’t an admission that something will go wrong. It’s simply recognition that construction projects involve a large number of moving parts and some degree of uncertainty.

The projects that achieve the best outcomes are rarely those with the lowest initial budgets. They’re usually the ones where enough time has been invested upfront to understand the risks, coordinate the design and make informed decisions before work starts on site.