Why the rate/m² cost is flawed

by Ofentse Sefolo
Why the rate/m² cost is flawed

The method of expressing building cost as a “cost per square metre rate” should be used with extreme caution by both clients and contractors involved in the cost comparison and cost-planning process, warns former president of the Association of South African Quantity Surveyors (ASAQS), Bert van den Heever.
He points out that a number of design variables can influence the square metre rate, resulting in a false impression of the cost of a building project.

“As a client, a generic cost per square metre rate doesn’t give you the detailed information regarding finishes, fittings, services, site development costs, etc. There is a wide range of other building elements that also have an impact on costs and therefore quantity surveyors normally do elemental estimates to derive the square metre cost of a project,” Van den Heever explains.

“An elemental estimate provides cost build-ups for elements such as the substructure, ground floor, external facade, roofs, etc. and enables the quantity surveyor to advise the client on aspects of cost at a very early stage. It is important to note that less than 40% of a building’s cost is the structure itself. Smaller contractors who tender on a cost per square metre basis put both themselves and their clients at risk,” he states.

“We have, on numerous occasions, been approached by clients or their attorneys when building contracts turn sour, only to find that because there was no detailed breakdown of the costs, the project had run into trouble or came to a standstill due to overpayments on the structural elements,” says Van den Heever.

Bert van den Heever

The calculations explained
A square metre rate is calculated by dividing the net cost of the building (excluding site works, cost of land, etc.) by the gross square metres of the building or gross floor area (GFA).

“As a general rule, the simpler the shape of a building, the lower the unit cost will be, but even this can be misleading as a square building of 10 x 10m and a rectangular building of 25 x 4m have the same floor area, but the rectangular building requires 45% more walling to enclose it. More intricate designs generally result in higher perimeter/floor area ratios – increasing excavation costs, drainage costs and a number of other construction-related costs significantly,” explains Van den Heever.

Hiring a quantity surveyor early in the project will put clients in the best possible position to achieve the look, finishes and final touches they want and still remain within their budget.

“Both the client and the architect need to be aware of any additional costs or savings that may arise from shape, size, circulation space and a number of other variables in the design of a building. The services of a registered quantity surveyor can help them to adopt an approach that will help achieve a suitable balance between cost, aesthetics and functional aspects,” concludes Van den Heever.

Association of South African Quantity Surveyors
Tel: 011 315 4140
Website: www.asaqs.co.za

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