Construction costs are all costs directly associated with the realisation of a building, from foundation to completion. They include material costs, labour costs, subcontractor costs and ancillary costs such as site establishment and the contractor’s overheads.
Breakdown of Construction Costs
Construction costs consist of several components:
- Direct costs — materials, labour and subcontractors directly attributable to the works
- Indirect costs — site costs (hoarding, welfare facilities, temporary power), supervision and plant
- Overheads — the contractor’s office costs, insurance and management
- Profit and risk — the margins added on top of the cost price
Application
Construction costs play a role at every stage of a project:
- Feasibility — a rough cost estimate determines whether the project is financially viable
- Design — the architect designs within the available budget
- Tendering — contractors calculate the construction costs and submit a tender
- Construction — actual costs are tracked and compared against the budget
Indicative Costs (2024)
| Type of work | Cost per m² (excl. VAT) |
|---|---|
| **New-build house** | £2,000 – £3,000 |
| **Extension** | £1,800 – £2,800 |
| **Renovation** | £1,000 – £2,200 |
| **Loft conversion** | £1,500 – £2,500 |
Related Terms
- Budget
- Specification
- Contractor
- Provisional sum
- Variations
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