How Building Work is Priced

Estimates for Building Work

Building work, on a commercial scale (alterations, extensions, refurbishment, renovation etc.) is priced by professional Quantity Surveyors in a way which reflects the degree of difficulty and cost effectiveness of each operation.

The method used is called (since August 2010) the New Rules of Measurement (NRM) which replaced a method called the Standard Method of Measurement which had been used for many years previously.

The Royal Institute of Chartered Surveyors (RICS) have adopted the NRM and any surveyor measuring the work either done, or to be done, on a building of any kind, will use the NRM to measure by. An update to the NRM (NRM2) was published and has been in use since 01 January 2013 by all those using JCT (Joint Contracts Tribunal). The update to the new rules of measurement can be found on the JCT website.

Alternatively you can visit the RICs website to download copies.

The importance of using the NRM is that it takes into account the variation in cost of large jobs as opposed to small jobs. This ensures, when pricing jobs, everyone should be on a level playing field and prices from different builders or construction firms should be fairly transparent.

This is not necessarily the case on smaller “domestic” jobs such as extensions, alterations, gardens, and patios etc. where the builders experience is very much relied on to price the work rather than a set of Industry prices.

An example of this might be: If a plasterer is called to plaster a wall which has a patio door and window in it, it will take much longer than the same wall if it were without any openings.

The amount of plaster he uses will be roughly the same because of the reveals (sides and top) of the window and door. Even if it were less, he could not buy half a bag of plaster so he would have to charge for a full bag anyway.

You will often see Builders pacing out dimensions rather than measure them. Accuracy in the first measure is not vital for the same reason. As well as not being able to buy half a bag of plaster, you can’t by half a patio slab, 1.085m of timber or 17 screws. Even if you can, you will pay more than buying standard quantities.

The labour time will be considerably more expensive because of the “fiddly” nature of the work. The plasterer, instead of having no time-consuming corners on a flat wall, will have 3 corners around a window or door.

All this means that, to measure and price a job properly, various factors have to be taken into consideration. It is therefore not possible to price a job accurately simply by working out the size of the wall, house, extension, conservatory etc.

With this in mind, many builders will instinctively know how much it will cost to do the jobs they price. They may not however, detail all of the individual jobs in your quote. It is therefore very important that you ask for a list of things that are, and are not included to avoid any assumptions on either part.

How to Price Building Work

DIY Doctor (in conjunction with surveyors and software engineers) have developed an online platform called Price Doctor which will accurately reflect the cost of home owner’s building projects starting firstly with an extension.

We have developed our own Desired Outcome Contract which can be used by Home Owners and Builders for domestic contracts up to £75,000. This contract is FREE and is available from our page on building contracts.

Price and Quote Checking Software

You will be able to work out the cost of an extension yourself by using the new DIY Doctor Pricing Software called Price Doctor. You can also use Price Doctor to check quotes you have already received.

The Basics of Pricing Building Work

Within this project page we have also included some very basic pricing methods you can use to check the quotes you receive from tradesmen or even use to build your own extension etc.

As mentioned above however, these prices do not necessarily reflect the difficulty of the operations involved in the build and they all assume an easy approach to the job. Prices used on this page can vary as much as 60% for particularly difficult or unusual jobs.

It is for this reason we suggest you NEVER accept a quotation price from a builder or tradesperson unless they have explained to you in their quote the various procedures they intend to go through to complete your job.

Materials

Unless you work in a builder’s merchants or large DIY Shed, the builder should always be able to get materials at a better price than you. This is because they should get “Trade” discount and the more they spend with any particular merchant, the more discount they should get.

The quality of a builder or tradesperson can be measured by the amount of work (and consequently, the turnover) they get. The more work the get, the more materials they will need to buy. The more materials they buy the more discount they command. Good builders get as much as 40% discount on some of the building materials you need.

You should always ask the Builder to pass some of this discount onto you. But if they ask you to go with them to the merchants to pay for the materials ask them why. It may be that by reducing their turnover they can stay under the VAT threshold. It may be that they do not have an account locally. If not, why not? Don’t they spend a lot of money on materials? If they do they should qualify for discount so it makes sense for them to buy them, not you.

Payments

Expect to pay a builder or tradesperson about 30% of the contract value in advance. Make sure however this payment is receipted and documented. Please click through to get a free copy of our Desired Outcome Building Contract to understand how the payment process works and exactly what to expect from your builder.

Why should you expect the builder to pay for materials for your house?

Can you go into a supermarket and fill your trolley while telling the check-out clerk that you will pay for them after you have tried them all? No, of course you can’t!!

Most of the television programs that tell you never to pay anything in advance are made by people who have never spent a moment in the building trade. It is not realistic for a builder to spend upwards of £20,000 building your house. Our contract will tell you how to overcome all the usual hurdles involving payment for building contracts up to £75,000.

It is realistic and safer for both parties to pay in agreed stages of the build, so as we say approximately 30% up front as a deposit/working fund for material costs, then one or two stages along the way making up 60% of the total which leaves about 10% as a retainer until the builder has finished, cleaned up and you as a customer have had a chance to inspect and live with the work before paying over the final amount.

Overheads

The Builder will also need to build into his prices a percentage of the cost of his Public Liability Insurance, cost of tools, cost of traveling and cost of administration (invoicing, pricing etc….). These costs are called “Overheads“.

The Builder is in business; therefore he needs to make a profit to meet future costs of expansion or new equipment etc. Good tools are very expensive and they have to be replaced from time to time. A reasonable proportion of the replacement of these tools needs to be included in the prices charged to the customers he or she is buying them to serve.

Removal of rubbish from site can be expensive – and if it isn’t you should question what is happening to the waste. In addition to the costs of recycling and treating waste the tax on skips and the removal of builders’ waste (excluding “inert” waste such as soil, brick, stone, concrete, plaster and glass) costs £94.15 per tonne (as of 1 April 2020). This is the amount the Government charges in Landfill Tax since an increase in Landfill tax in April 2020. The Builder obviously has to pass this cost onto you. Please follow this link to see how the HMRC landfill tax is applied to builders waste.

It must also be remembered that excavations “bulk up” when soil is taken out of the ground. 1 cubic metre of soil, when excavated, bulks into 2 cubic metres although the weight remains the same. So if you are considering using earth from excavations elsewhere on your site to save money you will need to bear this in mind when you are doing your calculations.

When foundations are measured and calculations are made for the removal of spoil from site, check with your builder that the additional material is accounted for, and that costs are included in the quote.

With all this in mind, make sure you have a solid contract with your builder and a signed agreement for an advance payment for materials and a stage payment system for the remainder of the money. All of this is done for you in a standard building contract you can get from DIY Doctor. You can download a copy of our free contract from our building contracts project page.

Basic Costs and Prices of Building Work

Again it is stressed that these prices are approximate and will vary greatly as the size of a job increases or decreases. They will also vary across regions of the UK.

Using the UK averages of 2020, (Nationwide Building Survey) building a standard 2 storey house in 2021 will cost somewhere between £1,750 and £3,000 per m2. Depending on where you are in the country and the plot you are building on.

So a “normal” two-storey, three-bedroom house (total floor area of both floors = c150m2) will cost approximately £2000 per square metre for the ground floor (which includes foundations, water and sewer connections etc and £1200 per sq m (40% less) for the upper floor and roof. This price allows for budget fixtures and fitting and assumes there are no constraints getting in and out of the site. Total estimate = £240,000

For a specification which includes higher quality materials and finishes you should expect to pay £2500 per square meter and for top of the range, about £3000 per square meter for the ground floors and 40% less per sq m for the upper floors.

Connection to all services, gas, electricity and main drainage is assumed to be straight-forward when using these prices i.e they are all already on-site and just need connecting (see below). This price does not include the plot of land, the costs of architects or any other professional or legal fees, such as stamp duty, land tax, structural engineers fees (if needed), planning application fees, building regulation fees etc.

Obviously the ground floor is considerably more expensive to construct than the upper floor because it includes foundations, drainage and concrete slab (or oversight). The upper floor is constructed with timber joists and floor boards of some kind. The roof is an expensive item as you can see from the table below and some “feature” or complex roofs can take the upper floor build costs up as high as the ground floor.

Extensions to properties are priced at a similar, if not higher rate. The complexity of getting levels exactly the same, the time taken matching bricks, mortar, stone etc is expensive and then there is the cost of knocking through from the main house to the extension. It’s very rare, unless it doubles the size of the house, to have a good quality extension coming in at under around £2,250 per sq m. If it has a flat roof, it may come down to £2000 per sq m.

How Much Does it Cost to Build a House?

The following figures give you some idea (approximately) how the costs of building a house are broken down.

• Foundations will account for 10% of the cost of the build
• External walls will account for 16% of the build cost
• Roof will account for 12 – 15% of the build cost
• Doors and windows will account for 10% of the total cost
• Electrical work will cost about 5% of the total cost
• Heating costs will be approximately 4% of the build costs
• Water and waste will amount to 3% of the final bill

The % of labour to material costs is about 50/50 when off site time is taken into consideration (collecting materials, admin, waste disposal etc) Finishing’s such as stairs, upper floor, internal walls, plaster, cupboards, flooring, ceilings will be around 25%.of your build cost.

Kitchen and bathroom/toilet fittings usually come in at 12 – 14% of the build costs but this is a huge variable and it has been known for customers to spend up to 20% of the total cost of their build in these two areas. The variation in costs for average – excellent kitchens and bathrooms means that most builders will deliberately not include these items. Double check when you go through your quote.

Other considerations are the costs of running services to the property if they are not already available. If your plot is not currently connected to mains services, you will need to budget approximately £10,000 for connection to water, sewers, electricity, telephone and gas.

Where mains gas is not an option you may have to make allowances for having a gas tank or oil tank on site or budget to install renewables.

If you are unable to connect to a mains sewer, you will need to budget for an off-mains alternative such as a septic tank, but then of course you will have less to pay on connection to services as listed above.

If your plot already has a dwelling on it that you intend to demolish then you will already have services connected, but you will need to factor in demolition and waste removal in your budget.

There are some hire costs you might need to consider such as securing your site with temporary fencing, and also skips and scaffolding if these are not included in the quote.

Finally don’t forget the cost of fencing or walling, plus landscaping at the end of the build.

Make sure you consider any non-standard build specifications such as chimney or basement (which are not usually included in new buildings these days). If any of your build is “shaped” rather than square it will cost you more. Curves are more expensive, angles other than 90 degree ones are more expensive, and a curved turret will cost double what a square tower will cost (in case you are thinking of building a castle!).

You should always allow yourself a contingency fund of around 10-15% of the build for unforeseen circumstances, which can include, for instance, a rise in the cost of materials, or finding something in the ground at foundation level which will affect the ability to proceed. This last is the biggest area of variation in a build, since it is almost impossible to predict conditions completely accurately before breaking ground.

Saving Money on a Build

Labour accounts for approximately 65% of the total cost of building a house. Some people decide to substitute some or all of the labour costs with their own DIY labour, which can be cost effective providing you don’t hold up any other aspects of the build.

With the exception of gas fitting and some electrical work you could undertake almost any of the building work yourself, providing you have the time, tools and skills required. However you should calculate whether you can earn more offsite than you can save onsite by using your time to do building works.

“Finishing” jobs are perhaps the easiest places to save money: tiling, decorating, laying floors and landscaping can generally be fitted in at evenings and weekends and are unlikely to hold up any other trades from coming in.

As a final word can we point out that any changes to the plans can have knock-on effects for the rest of the build, which may or may not have quite dramatic cost implications. If you want to make any changes or additions during the build then make sure you discuss carefully with your builder what you want, why you want to make the changes (i.e. what you are intending to achieve) and what the ramifications are for the rest of the build including time and costs.

We suggest you book a meeting to do this and not have a “while you are here” conversation on site, that way you can both give it due consideration. If you have chosen your builder carefully, and built up trust, then remember your builder is a professional and may be able to suggest changes that are more cost-effective to give you similar results. Find out more about employing the right tradesperson here.

As a final, but really thorough check, go to our sister website and download a free white paper which will explain everything you need to know about commissioning builders to build your home or extension.