What is total build cost?
A simple question. If you factor in your prelims and additional site costs – skips, scaffolding etc, and add them to your labour and materials costs, then you’ll come to a total build cost. And, you’d be right, if you were answering the question asked by a contractor.
But what about if you’re talking to a developer or the end client? Well you will find that the cost of finance together with the total project duration and their return on investment become the key drivers in their total cost of build. They will also be looking at their risk profile and they’re be looking at the risk or cost of maintaining programme.
Whilst this is relevant to most clients, it is arguably less relevant in the current climate to private house builders as ‘house price’ inflation has invariably offset any cost overruns and in fact with the exception of not achieving their ‘target volumes’ this can often be seen as an additional profit. That is not however so with the majority of Housing Associations, Care providers or other Managed facilities where ‘time’ has a direct impact on their business plan and their ROI.
Time and the delivery to programme becomes a critical factor in their decision making, time and prelim overruns are an unwanted additional cost, but the cost to the business of the not being able to free up their finance, their return on investment and subsequent delays to their next project are incalculable.
Conversely, an early handover means the early release of units and therefore income coming in sooner. Ultimately, the quicker you turn the project around, the quicker you begin to receive income, the sooner you can release the finance, the better your Return on Investment.
Whilst the same is true for our private house builders, certainty of delivery and the early sale of the properties will underpin their profits; for HA’s, PRS and Care Home providers the benefit of early occupation to him is much more appealing, in the London and the South East this can be in excess of £150 per apartment per week.
Certainty of delivery and build speed are two of the major benefits of the alternative build methods that we promote in masonry frame systems and our large format element system.
And, when you factor in all of the other benefits; elimination of scaffolding, reduction in waste etc. you’re looking at a significant reduction in both time and costs versus the typical build programme of the traditional masonry option.
In addition to this, all systems offer improved air tightness, fire resistance, the robustness of Solid Masonry and PC Concrete together with excellent thermal mass, sound performance, minimal shrinkage as well as significantly reduced defects.
We at MFS, advocate that the choice of build method should be selected following a fully integrated review, which takes into account a whole array of factors including the certainty of delivery, cost of defects, build time and the client benefits including life cycle costs the cost of finance and the benefit of early occupation.
Selecting a solution based on lowest price in bound cost rather than looking at the wider picture how closely it fits the vision of the end client, may invariably mean that elements will change as the project progresses, which lengthens the build schedule and increases the overall cost of the project.
Furthermore, we would advocate that the key manufacturers and installers should be involved in the early design stages of the project, along with the end client, the architect and the commercial team. If all delivery partners were engaged with earlier, it would be possible to ensure the designs and construction methods were fit for purpose, again, removing the need to make changes to adapt to requirements further down the line of the project.
If you want to learn more about how our methods and recommended products can provide time and cost savings for your next project, get in touch today.