On Costs

Overview of On-Costs and Preliminaries

  • On-Costs:

    • Definition: Costs estimated as a percentage of building costs, added on top of construction and risk allowances.

    • Purpose: To cover unforeseen circumstances and ensure smooth project completion.

    • Typical Allocation: Generally, on-costs range from 9% to 13% of the total project cost.

Preliminaries

  • Definition: Preliminaries are necessary costs that do not form part of the final construction project but are essential for its execution.

  • Purpose: Cover overhead costs, planning, and other project needs that are not directly tied to the final build.

  • Determination: Preliminaries can vary based on project location (e.g., rural vs. urban), site access, and specific project requirements.

VAT (Value Added Tax)

  • Types of VAT Rates:

    • 23%: Standard VAT rate applied to professional fees and main contractor supplies.

    • 13.5%: General rate applied to most construction works done by contractors.

    • 0%: For costs where VAT has already been paid, such as performance guarantee bonds.

  • Calculating VAT:

    • Typically shown at the end of the Bill of Quantities and in the Form of Tender.

    • Compliance with VAT legislation is crucial to avoid significant penalties for incorrect reporting or late payments.

Employer's Representative (ER)

  • Role: An ER represents the employer’s interests throughout the project execution, managing communication, designs, and compliance with project specifications.

  • Typical Responsibilities: Involves coordinating between various stakeholders, overseeing project design completion, and resolving design clashes.

Costs Associated with Design Team Members

  • Architects:

    • Typically charge fees between 3% to 5% of the contract sum, reflecting their comprehensive involvement from design inception to project completion.

  • Quantity Surveyors:

    • Costs range from 1% to 3% of the contract sum, focusing more on project financial aspects.

  • Civil Engineers and Other Consultants:

    • Costs may vary; services like the Project Supervisor for the Design Process (PSDP) are minor, often less than 0.5% of the contract sum.

Planning Fees and Development Contributions

  • Planning Permissions: Fees are required when seeking permissions for new constructions or significant extensions.

  • Development Contribution Fees: Paid to local authorities, encompassing infrastructure improvements like roads, utilities, and community amenities.

  • Example Costs:

    • Residential developments may incur fees such as €2,500 for up to 25 sq meters, with additional costs for larger areas.

Summary of Project Costs Calculations

  • Key considerations include allocation of fees to each project participant based on their level of involvement and the nature of the project.

  • Importance of accurate calculations for budgeting and compliance with local regulations.

Contingency Planning

  • Contingency Allowance: Planning for unexpected costs or schedule delays is essential, ensuring that the project can proceed smoothly even under unforeseen circumstances.

  • Utilization of float time: Allocating time before exams for review and revisions to reinforce learning and ensure familiarity with the material.