Money
Construction costs: how a building price is actually built up
A building price is not a single number; it is a stack of labour, materials, subcontractors, preliminaries, overhead and risk. Once you can see the stack, comparing quotes and understanding increases becomes much less mysterious.
What sits inside a price
- Labour, by trade and by duration.
- Materials, which move with market prices and lead times.
- Subcontractors: groundworks, roofing, electrics, plumbing, plastering.
- Preliminaries: scaffold, welfare, skips, plant, site management and insurance.
- Overhead and profit, which is legitimate and should be visible.
- Risk: what the builder has priced for the unknown, or has chosen not to.
Allowances, and why budgets drift
Most 'the project went over budget' stories are really 'the allowances were always going to be re-priced and nobody tracked them'.
- A provisional sum is an allowance for work not yet fully defined; it will be re-priced.
- A prime cost sum is an allowance for a product you have not chosen; exceed it and you pay the difference.
- An exclusion is work that is simply not in the price at all.
- A contingency is your money for the unforeseen, not a discount fund.
Holding the budget together
- Keep a single running budget that includes fees, VAT position, allowances and variations.
- Price every change before it is instructed, however small.
- Tie payments to progress, not to dates alone.
- Review the forecast monthly rather than at the end.
Case-style example
The cheapest quote that was not
A homeowner accepts the lowest of three quotes, £22,000 below the next. It carries eleven provisional sums and excludes groundworks below 900mm.
By completion the two projects would have cost within £4,000 of each other, and the cheaper route arrived there through six anxious conversations instead of a plan.
The price was not wrong. The comparison was.
How The Construction Clinic helps with this decision
We do not produce cost estimates or act as quantity surveyors. We help you read the quotes you have, see the allowances and exclusions, and keep a running picture of where the budget stands as decisions are made.
Common questions
Questions homeowners ask about this
Why do builders' quotes vary so much?
Usually because they are pricing different scopes, different allowances and different levels of risk, not because one is dishonest.
Is VAT included in a builder's quote?
Not always. Check whether the figure is inclusive, and whether the contractor is VAT registered, before comparing prices.
What is a reasonable deposit?
Small, and linked to materials being ordered rather than a percentage of the whole job. Large up-front payments transfer your risk to you.
How do I stop a budget drifting?
Price every change before it happens and keep allowances visible in one place. Drift is almost always untracked, not sudden.