There are many differences between QS Pre-commencement Reports in the marketplace. The differences between QS reports can have a huge impact on the financial viability of a project. It is important to know the difference between these reports in order to assess their accuracy and reliability.

For the financier to receive the most accurate costing for a development, a quantity surveyor must undertake a full elemental estimate on the proposed development using the most complete project documentation available. This will establish a working budget for project elements extending from structure to finishes and form a valuable assessment tool in the project decision-making process for the financier and developer. An elemental estimate involves breaking the building down into its various components for the most accurate cost breakdown. Some quantity surveyors will only complete a square metre estimate on the development; missing vital elements that need to be costed to gain an accurate estimate of detailed construction costs. This may mislead the financier as to the real ‘total’ cost of the development.

Reports compiled using square metre estimates can create serious deficiencies during construction as they do not properly allow the quantity surveyor to assess the value of the construction works to site. As individual building components are not specifically identified within the report, they are easily overlooked when determining the cost to complete for a project. This allows the contractor to front load progress claims and expose the project to the possibility of not maintaining the cost to complete as construction continues.

While some financier instructions specify that full elemental estimates must be utilised, many quantity surveyors do not complete the report with enough detail and this exposes the project to unnecessary risks.

There are a number of vital elements that a pre-commencement report should contain. These include:

• Detailed analysis of major construction cost elements
• Breakup of elemental costs
• Easy links to financiers funding table for quick reference
• Contingency allowances
• Consultants fees
• Variations budget
• Anticipating cash flows throughout the project

Information Levels

Often when finance is being established in the earlier stages of planning, only limited information and documentation is available from the developer or builder. This will obviously impact on the accuracy of the QS report, as many of the project risk areas are still subject to further design changes. If an initial report is completed at DA stage, it is often recommended that another report is completed prior to construction starting. This will make sure that any changes made since the design has progressed from DA stage are updated as cost variations. This also ensures that the cost to complete will be as up-to-date, accurate and reliable as possible.

The more information that can be made available at the time of producing the report, the more accurate the construction costs will be, and essentially, the more informed the financier will be on the cost aspects of the development. Therefore, the risk of sudden cost increases resulting from unforeseen circumstances is reduced.

BMT & ASSOC Pre-Commencement Report

BMT & ASSOC provide a report that we believe is above and beyond all other products in the market. We provide a report that, while remaining easy to read and understand, is detailed and heavily focused on the key risk areas affecting the construction cost of a project.

Our pre-commencement reporting standards set an industry benchmark and have been developed over years of auditing many hundreds of projects for some of the country’s largest financiers. If you require any further information about BMT & ASSOC reports, please contact Tom Plenty, Brendan Farrugia or Bradley Beer at the office.

Due to continued growth in the Queensland property market, BMT & ASSOC are proud to announce the opening of two additional offices in Queensland – in Cairns and the Gold Coast. In addition to our current office in Brisbane, these new offices will enable BMT & ASSOC to better serve the Queensland market.

Recently Completed Projects

Location: Campbelltown, NSW

Project type: Mixed Use Development - 26 units

Approx. Construction Cost Per Square Metre: $700/m2

Location: Castle Hill, NSW

Approx. Construction Cost Per Square Metre: $1,100/m2

Location: Potts Hill, NSW

Project type: 1 commercial property

Approx. Construction Cost Per Square Metre: $2,500/m2

Location: Byron Bay, NSW

Project type: 15 townhouses

Approx. Construction Cost Per Square Metre: $2,900/m2

Location: Box Hill, VIC

Project type: 24 residential units

Approx. Construction Cost Per Square Metre: $1,300/m2

Location: Rockhampton, QLD

Project type: 65 lot residential subdivision

Approx. Construction Cost Per Lot: $42,700/lot

Location: Doncaster, VIC

Project type: 10 residential units

Approx. Construction Cost Per Square Metre: $1,900/m2

Location: Castle Hill, NSW

Project type: 62 residential units

Approx. Construction Cost Per Square Metre: $870/m2

Location: Dubbo, NSW

Project type: 1 industrial unit

Approx. Construction Cost Per Square Metre: $420/m2

Disclaimer: This information should be read subject to the following conditions:

• Information is published as a matter of interest only and is not intended to be relied upon by readers. In any
situations which may be similar to matters herein readers should exercise and rely upon their own judgement.
• Neither BMT & ASSOC Pty Ltd nor any of its officers or employees bear any responsibility for any error in the
material published in this publication or in any previous publication, or for any damage or loss resulting from any reliance on any material published in this publication or in any previous publication.
• This newsletter is issued as a helpful guide and is not intended to, and does not cover all aspects of the topics discussed. Professional advice should be sought before any action upon these topics is undertaken.